A family feud between Adi and Rudi Dassler started a fierce between rivalry between Adidas and Puma.
As the minutes counted down to kick off, Adi Dassler busied himself checking the boots the German team would wear. Suddenly the phone rang.
His brother Rudi was terminally ill. Adi’s response to the news was cold and curt.
“We haven't spoken to each other for 26 years. He doesn't need a brother, he needs a doctor."
Slamming down the phone, he returned his attention to the match. The German players went on to lift the 1974 World Cup, beating the Netherlands in the final. Off the pitch, there was no fairy tale ending for Adi and Rudi.
During the 1920s and 30s, the brothers were a formidable team. Adi tinkered with the design of their shoes, while Rudi excelled as a salesman. But as the years passed a bitter rivalry developed.
Eventually, they decided to split the business. Adidas – named for its founder – stood to the north the river dividing the small town of Herzogenaurach. Puma’s factory was to the south.
The family feud did not die with Adi and Rudi. Continued with the same intensity by their sons Horst and Armin, it split the community into warring factions for more than 60 years.
Townsfolk frequented different bars, barber shops, and bakeries, depending on which firm they worked for. On weekends, the company’s football teams battled it out on the football pitch.
At the heart of each company’s strategy was the desire to outdo its rival. Emotions, not rationality were the driver.
This does not sit well with most strategists. A strategist is supposed to take a hard look at the facts and after carefully weighing the options, sets up a plan.
In reality, emotions have a profound impact on strategy. It shapes our cognition and subsequently our actions. The best strategists not only know this, but integrate emotions into their repertoire. In the world of business, hope and fear are particularly powerful levers to pull.
The power of hope for businesses
Most strategies fail during execution. What sounds like a perfect plan in the boardroom is often misunderstood once it is cascaded down the hierarchy.
Many of those who do understand it remain reluctant to change their routines.
This is where Snyder’s Hope Theory comes in handy. The American psychologist conducted a number of studies showing that hope is correlated with academic and athletic performance. More specifically, hope motivates people and increases their confidence of achieving the desired outcome.
In other words, hope increases our levels of resilience to get things done, even if this requires us to try something new. It is no surprise, therefore, that a study of sales employees, mortgage brokers, and management executives found that those who were more hopeful were also more productive and produced better solutions.
Hope and other positive emotions are also found to have an impact on creativity. Mozart, for example, claimed that “when I am, as it were, completely myself, entirely alone, and of good cheer—say, traveling in a carriage, or walking after a good meal, or during the night when I cannot sleep; it is on such occasions that my ideas flow best and most abundantly.” (Vernon, 1970: 55).
The link to hope and creativity matters, as the best strategies tend to offer creative new solutions to a problem an organization faces.
To use hope as a jet fuel for your strategy, there are three things you can do. First, hire people with higher levels of hope. In some functions, such as sales this comes naturally. It’s less obvious when you are looking for an analyst or strategy consultant.
Secondly, you need to create an environment conducive to hope. Use games in the strategy making process to facilitate play and open up your strategy to larger crowds.
Finally, your own communication has to be inspiring and hopeful. Remember the speeches during Barack Obama’s first presidential campaign and his powerful catchphrase “Yes we can”.
While it is often abbreviated, the full quote is equally inspiring. “Hope can find its way back to the darkest of corners; and when we are told that we cannot bring about the change that we seek, we answer with one voice – yes we can.” You can as well!
How fear can help or hinder firms
How could Nokia miss the smart phone era? Conventional wisdom suggests that the cell phone giant was simply too comfortable in its dominant position. Initially the new technology presented only a small market, compared to the millions of analogy phone sold every year. In other words, it was a classic example of the innovator’s dilemma.
Timo O. Vuori from Aalto University and Quy N. Huy from INSEAD offer an alternative interpretation. According to their research, fear was at the heart of the strategic failure. Top managers were afraid of shareholders and competitors and pressured middle managers accordingly.
To avoid the wrath of their bosses, middle managers avoided sharing bad news. Not surprisingly top managers were wrongfully optimistic about the firm’s technological capabilities and reduced long-term investment in innovation.
Fear suffocated Nokia, but the opposite effect is possible too. It can be a powerful motivator.
Darwin Smith, who led Kimberly-Clark from 1971 to 1991, once opened a meeting with the following words: “Okay, I want everyone to rise in a moment of silence.” Even though no one was sure what had happened, they followed the instruction. After a little pause Smith continued: “That was a moment of silence for Procter and Gamble.”
Smith turned the fear of the consumer giant into a powerful motivator. Who does not enjoy an opportunity to take down Goliath! By the time Smith retired, Huggies had replaced Pampers as America’s leading disposable diaper. Average annual returns to shareholders was just shy of 20 per cent.
Fear can be a particularly powerful motivator in the face of potential disruption. If it is presented as an opportunity, it is easy to postpone real action to another day. The initial opportunity is simply too small to create excitement.
As the Nokia example demonstrated, this only works if fear unites an organization rather than turning into a blame-game. The appropriate question to ask is how can we all work together to confront an existential danger.
For strategists, the choice is obvious. They can pretend that organizations work like machines and hard-nosed analysis will win the idea or they can acknowledge that people are not levers. That makes their lives more complicated, but in many ways more interesting.
Hope is typically the best way to move forward but when grave dangers await, a healthy dose of fear needs to be sprinkled in.
Stadler, C., Helfat, C., and Verona, G. (2002) "Transferring knowledge by transferring individuals: innovative technology usage and organizational performance in multi-unit firms", Organization Science, 33, 1, 253-274
Shirodkar, V., Rajwani, T., Stadler, C., Hautz, J., and Mayer, M. C. J. (2002) "Corporate political activity and firm performance: the moderating effects of international and product diversification", Journal of International Management, 28, 4, 100941
Stadler, C., Hautz, J., Matzler, K., and von den Eichen, S. F. (2021) "Open up your strategy",
MIT Sloan Management Review
Christian Stadler is Professor of Strategic Management at Warwick Business School, author of Enduring Success, and co-author of Open Strategy. Follow him on Twitter and LinkedIn or visit his website.
Read the original blog post on his Forbes channel.
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