“Do Nothing” Strategy Explained By कौआ

When we think of strategic responses/options for any situation/scenario/problem, we often think of multiple ways to respond. However, many a times we forget that “Do Nothing” is also a strategic option. In fact it is Option #1 which is always available. And yet we do not give enough importance, thought to that option. We do not exercise option of doing nothing as often, or maybe ever. Why is that so?

One of the main reasons is that we are hard-wired for Causality (Cause-Effect relationship) and Attribution (attributing the outcome or effect to some cause). That’s what drives us to “Do Something and Take Credit”. If you are just a sitting duck and getting paid for it, what’s your “contribution”, or to express it in terms of one of the most abused corporate jargons – “what’s your value add“?

That’s why we never take “Option #1 Do Nothing” seriously.

Imagine this. You have been hired as a CXO (with a fat paycheck and stock options and perquisites) and you assess the organisation’s As-Is situation and the competitive landscape and you figure out that the best response would be to do nothing! How can you articulate that to the owners/Board of Directors and not look fool? How will you justify the fat paycheck and stock options if all you are doing is to maintain status quo and do nothing?

Another example. You are a Portfolio Manager managing portfolio of your clients. You are getting paid Portfolio Management Fees (usually 2% per year plus some profit sharing above a threshold minimum return). You inherit the existing portfolio and assess it. You also have additional funds in cash waiting to be invested. On a thorough analysis if you feel that it is better to leave the portfolio as it is and also maintain the cash, will you be able to realistically execute that decision? Probably not. Because it would again make you look foolish, or overpaid, or both. Whereas, if you have been a long-term investor for long enough, you would know that often “doing nothing” is the best policy to manage your investments.

Faced with a problem or a situation we have an innate urge “to do something”. Sir Humphrey Appleby, the iconic Permanent Secretary in the legendary British Comedy “Yes Minister” summarised this perfectly when he said: “Politicians like to panic. They need activity; it’s their substitute for achievement!” This penchant for activity often kills the “Option #1 Do Nothing” choice.

If a Government is faced with a pandemic, it MUST DO SOMETHING. And hence the lockdown, and other restrictions, and guidelines, and relief packages and so on. If there is a terror attack or a bomb blast, the government MUST DO SOMETHING. And hence surgical strikes, aggression at the border-front, building new missiles, flexing muscles, imposing import restrictions and cutting business ties.

Same is true about the Central Bank faced with challenge of rising inflation or slowing growth, or a company’s CEO facing a potential competition from the competitors or a person who feels that his personal relationships (with spouse, close friends etc) are stagnant/unchanged.

If you over-intellectualise it and see it from a lens of Payoff Matrix between you and your competitor, you may come up with something like the below:

Looking at above, one may interpret that if you DO NOTHING and your competitor does the same old thing or something different, you would lose. At best you would DRAW if your competitor also does nothing. So Do Nothing is always inferior.

Now those who think like this forget that it’s not a Two Player game. It’s not against A SINGLE COMPETITOR. Often the game has multiple players/competitors/stakeholders. Sometimes, there may not be ANY. This simplistic view of a two player game and a payoff matrix, therefore, is wrong.

Think about another example – of Penalty shoot in Football penalties. Albert Edwards, a global strategist with Société Générale, the French Investment Bank, mentioned this in his research.

While facing a penalty shot, the goal keeper almost always dives to his left or to his right. The data shows that the goalkeeper stays at the centre only 6.3% of the times. Why?

Edward mentions that the penalty shooter is just as likely to shoot the ball straight in the middle, where the goalkeeper is already standing, almost 28.7% of the times, as hit on the right or on the left. And yet, why would the goalkeeper not exercise his “Do Nothing” option and stand still with a probability of saving the goal 28.7% times?

Edward writes “Because it is more embarrassing to stand there and watch the ball hit the net than to do something (such as diving to left or to right)”. Lack of effort is the last thing the goalkeeper can afford. Effort/ Activity is the shield which would protect him and his reputation.

Reaching Do Nothing status is actually liberating. It’s like you have achieved Nirvana! It’s a grouse I share with Calvin and Hobbes maker.

Lastly, always remember that Do Nothing is an option. It may not be suitable/appropriate for you. There is a management lesson in it – that unless you are “somebody”, doing nothing is NOT an option for you.

I am a crow (कौआ)! That’s why I can spend at least some time doing nothing at work(and thus find time to blog, to read and to learn). Are you a crow (or crow-in-making) or a rabbit?

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