Beyond Strategy: Acknowledging the Role of Chance, Luck, and Serendipity

“We didn’t do anything wrong, but somehow, we lost" --Stephen Elop

Here is a thought experiment. Imagine being in the shoes of Nokia’s CEO during its decline in the early 2010s. Have you ever wondered what it feels like to be at the helm of a company facing an unexpected downfall? Reflecting on the situation, he said, “We didn’t do anything wrong, but somehow, we lost.” Despite their efforts and strategic planning, Nokia could not maintain its competitive edge. This scenario is not unique to Nokia; many of us have experienced similar situations where, despite meticulous planning and execution, desired outcomes remain elusive.

Strategic management theories often attempt to bridge the gap between planned actions and actual outcomes. One notable theory is Barney’s Resource-Based View (RBV), which was later enhanced by Teece’s dynamic capabilities framework. Teece’s model emphasizes three core capabilities that firms must develop: sensing opportunities and threats, seizing opportunities, and managing threats through reconfiguration.

Despite these theoretical advancements, the question remains: why do some companies succeed while others fail under similar circumstances? The answer might lie in three factors that are often overlooked: chance, luck, and serendipity.

Chance involves events occurring without a predictable pattern or cause. It's about randomness and unpredictability. For instance, a sudden change in market conditions or technological advancements can significantly impact a company's strategic direction without prior warning.

Consider Netflix, a company that began as a humble DVD rental service by mail. As technology evolved, so did the opportunities available. The advent of streaming technology and the rise of broadband internet access were chance events that significantly impacted Netflix's strategic direction. Recognizing the potential of these technological advancements, Netflix pivoted from its original business model to online streaming. This strategic shift was a gamble influenced by the unpredictability of market conditions. However, by heavily investing in streaming technology and original content, Netflix capitalized on this chance occurrence, ultimately transforming itself into a global entertainment powerhouse.

Luck is a favorable or unfavorable outcome that happens due to random events but often intersects with one's actions. It's the unexpected windfall or setback that isn't planned for but can dramatically affect outcomes. A lucky break, such as meeting a critical investor by chance, can propel a startup to success.

Luck often plays a pivotal role in the success stories of many businesses, bringing unforeseen opportunities that can change their trajectory. Take Airbnb, for example. Founders Brian Chesky and Joe Gebbia were struggling to pay rent when they decided to rent out air mattresses in their apartment during a local conference that had hotels fully booked. This stroke of luck brought them unexpected attention, and their idea caught the eye of a larger audience. This lucky break led to initial funding from Y Combinator, which propelled Airbnb's rapid growth. The company soon revolutionized the hospitality industry by providing a platform for people to rent out their homes, becoming a billion-dollar enterprise.

Serendipity is making fortunate discoveries by accident and through sagacity. It involves recognizing and capitalizing on unexpected opportunities. For example, stumbling upon a new market need while addressing an unrelated issue can lead to significant innovation.

Serendipity often results from an open, explorative company culture. A prime example is the development of Post-it Notes by 3M. Spencer Silver, a 3M scientist, was attempting to create a super-strong adhesive but instead developed a weak, reusable one. It seemed like a failure until Art Fry, another 3M scientist, realized its potential for bookmarking pages without damaging them. This accidental discovery turned into one of 3M's most successful products. This story of serendipity underscores the importance of fostering a culture that encourages experimentation and collaboration, as it can lead to significant and unexpected innovations.

Understanding and accomodating chance, luck, and serendipity into strategic management can help firms navigate uncertainties, seize unexpected opportunities, and foster innovation. By acknowledging these elements, firms can better navigate the unpredictable business landscape, turning unforeseen events into strategic advantages and creating an environment conducive to growth and innovation.

Has chance, luck, or serendipity influenced your firm’s strategic or personal life’s decision?