In The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics, Eric D. Beinhocker argues that the traditional view of economics as a static, equilibrium-balanced system is going through a radical rethinking involving a multitude of disciplines. The new spin is “complexity economics,” in which the economy is a highly dynamic and constantly evolving system that is all but impossible to predict. Given such radical dynamism, how can companies set strategy? Beinhocker proposes viewing strategy as not singular or unified but rather a portfolio of experiments. He writes:

“The key to doing better is to "bring evolution inside" and get the wheels of differentiation, selection, and amplification spinning within a company's four walls. Rather than thinking of strategy as a single plan built on predictions of the future, we should think of strategy as a portfolio of experiments, a population of competing Business Plans that evolves over time.”

An excerpt printed in Harvard Business School’s “Working Knowledge” newsletter details how Bill Gates’ and team pursued six competing strategies in 1987 thereby enabling Microsoft to rise to dominance.

What I find compelling about this mode of thinking is its emphasis on preparedness. By preparing for multiple scenarios, businesses can be more agile within an increasingly complex and dynamic marketplace and hence remain competitive. A major step toward facilitating the preparedness and agility necessary to practice a portfolio approach to business strategy is making knowledge management a top priority. For further insights, download “The New Knowledge Management Imperative: User Centered, Focused, and Organic” and find out why Avenue A | Razorfish was named one of KMWorld’s 100 Companies That Matter In Knowledge Management.