1 Minute Summary of
When an active pause is the best strategic choice
WHY READ THIS
Recognise when to resist the temptation of acting in the face of competition and take an ‘active pause.’
IN BRIEF
Traditionally, hesitating during times of change hasn’t been the optimal strategy. However, a strategic pause can create advantages, especially in the following three scenarios.
THE THREE SCENARIOS
When you need to further your market understanding. This scenario utilises an approach often used in agile models – the test-and-learn method. If your industry has high variable production costs or major obstacles to information flow, it’s often best to forge your own path using active pauses. These moments can be used to interpret data from experiments, develop a deeper understanding of market dynamics, and then move forward more strategically. This approach is especially useful in highly uncertain markets where numerous phase changes are needed.
Long-term change. Active pauses are also appropriate in highly capital-intensive industries, where timelines for asset development span decades. One example is the energy industry, where organisations face decisions about how to invest despite the uncertainty generated by the energy transition. Using an active pause could enable companies to conclude that the future may be a 10 or 20-year horizon, making it more beneficial to leapfrog current technological solutions and build for the next phase.
Significant technological change. This situation involves a kind of leapfrog, but in markets where fast-moving technological development is the norm. The use of AI in current markets is a good example, as the directional options for AI adoption seem to be increasing almost exponentially. The opportunity exists to skip some iterations of development, essentially creating an active pause by not moving. Benefits include preserving capital and obtaining insights into how the future might play out.
THE BOTTOM LINE
If you’re considering an active pause, keep these three principles in mind. First, focus on the active part, ensuring that learning and market engagement continue in smaller ways. Next, be aware of the prisoner’s dilemma, as if all players are pausing, it can slow progress at an industry level. Finally, take ownership of the ambiguity and acknowledge that there may be a first-mover who succeeds in doing so.
