Donald Sull spent six years studying more than twenty pairs of companies competing in the world's most volatile markets — enterprise software, telecommunications, airlines, and entire economies like China and Brazil — pairing, in each case, one that navigated uncertainty well against a similar one that didn't. His most-cited finding, in "Strategy as Active Waiting" (2005): what most separates companies that survive unpredictable markets happens during the calm before the crisis, not during the crisis itself.
Sull describes real uncertainty — not the kind you can model in a spreadsheet, but the kind any company faces in a fast-changing market — as "the fog of the future." European phone carriers bet $100 billion on 3G technology licenses, convinced it would revolutionize the industry; five years later, actual adoption looked more like a slow evolution than the revolution they'd expected. And yet, inside that same fog, what Sull calls "golden opportunities" appear: brief, infrequent windows in which a company can create value disproportionate to the investment, almost always because several external conditions — technology, regulation, capital markets, customer needs — line up at the same time. BEA Systems seized one that way, reaching a billion dollars in revenue faster than any software company had at that point, because it was prepared when the window opened.
Preparedness, according to Sull, has a concrete structure. First, keep the vision blurry but the priorities sharp: state a broad aspiration — what the company is aiming for, in what market — without locking yourself into a detailed long-term plan that the fog of the future is going to contradict anyway, while setting two or three concrete short- and medium-term priorities that can actually be executed now. Second, actively probe the future: small market experiments, low-cost exploratory investments. Third, keep a reserve — of capital, of capacity, of options — ready to deploy the moment the window appears. And fourth, keep demanding operational efficiency in the meantime: a more disciplined operation is precisely what gives a company the room to act fast when the moment comes.
The example that best illustrates the value of this is Embraer, the Brazilian aircraft manufacturer, which kept financial discipline and a diverse portfolio of exploratory bets during years of relative calm in the aerospace industry. When the September 11, 2001 attacks sank demand for aircraft and pushed several competitors into bankruptcy or severe crisis, Embraer kept operating on solid ground, because the "waiting" of the previous years had never been passive.
This connects directly with the logic of running a diagnostic before executing. A 30-day diagnostic is, in Sull's language, the active probing that lets you identify where the fog sits, which two or three priorities are actually worth declaring now, and what reserve of focus and resources needs to stay ready for when the real window of opportunity opens.
Based on: Sull, D. N., "Strategy as Active Waiting" (Harvard Business Review, 2005).