America’s Afghanistan Fiasco—Lessons For Businesses
After 20 years US withdrew from Afghanistan
On August 14th Ben C. Solomon, a Vice Media reporter, together with Afghan elite forces anxiously awaited evacuation from Kandahar airport. “As they pack the plane”, he reported, “the soldiers hope for redemption in battles to come”. But in less than 24 hours the Taliban swept the capital.
The swiftness of their victory took US politicians and military experts by surprise. With the desperation of civilians at Kabul airport being beamed into US homes, memories of Saigon and the disastrous Vietnam War crept back into the nation’s consciousness. Once again, the mighty US military had been beaten by insurgent forces in a country far from home.
And once again, commentators noted that winning battles is not quite the same as winning a war. “Victory requires the construction of indigenous militaries that can survive without the United States in service of governments that are worthy of their people’s sacrifice,” Andrew West wrote in the Washington Post.
While the Afghanistan debacle kicked off a new round of blame-game in Washington circles and renewed the debates about nation building, a careful analysis of the strategic moves made, also provides insightful lessons for businesses.
Remember: “culture eats strategy for breakfast”
The original code name for the US military offensive of “Operation Infinite Justice” was a first sign of how little the US understood Afghanistan. Such finality can only be provided by God, according to Islamic faith.
It’s replacement “Operation Enduring Freedom” might have been less offensive but also suggested that a country fiercely opposing foreign invaders in the past, was eagerly awaiting an outside intervention. Fat chance!
It was not a big surprise the US tried to introduce a government system that seemed less complex to interact with for them, but stood in stark contrast to how Afghan society functions. As Henry Kissinger explained, the US attempt to introduce a centralized authority “cuts against the geographical and ethnoreligious essence of the country.”
In short, the United States’ ignorance reminds us of Peter Drucker’s famous quote that “culture eats strategy for breakfast”. Most strategies fail in execution. Not necessarily because the idea is bad in principle but it simply does not fit with “the way things are done around here”.
This does not imply that companies should shy away from new approaches but they have to do so in a culturally sensitive manner as I found in a study of firms that succeeded for more than 100 years.
Particularly, when firms try to internationalize this is a tricky issue to consider. What works in Bentonville, does not necessarily rock in Hamburg. Walmart’s move into Germany is a classic case study of how companies fail if they want to impose a system that does not fit with local cultures.
This includes benign measures such as requiring cashiers to smile at customers—which to Germans seemed peculiar—to strategic issues such as wrong location choices and attempts to avoid unionization. In 2006 Walmart finally pulled out of Germany, selling at a loss of $1 billion.
The solution is obvious: develop ideas together with those who run operations, don’t simply impose them. Open up your strategy!
Be wary of escalation of commitment
In 1976 Barry M. Staw published a paper that changed our perspective on how we react to bad decisions.
“Intuitively”, he wrote “one would expect individuals to reverse decisions or to change behaviors which result in negative consequences.”
But in an experiment with 240 business school students he found just the opposite. After making a bad investment decision, students doubled down, further escalating their commitment.
In 2009 the US had 67,000 troops in Afghanistan. As the situation deteriorated and violence escalated, the main response was an escalation of commitment, hoping to sort out the issue once and for all by deploying another 33,000 servicemen. The outcome: the surge turned even non-jihadist Afghans into opponents.
Both individuals and businesses are prone to fall into this trap. In a recent WorkLife podcast episode Staw himself admits, he kept cars for too long and stayed in a failing marriage.
For businesses it is notoriously hard to kill failing projects. Even successful companies like Google find it hard to pull the plug, for example spending more than $500 million on their failed attempt to turn Google+ into a success story.
While it is hard to escape escalation of commitment, the startup world offers a potential way out: ‘pivoting’ is not seen as a failure but celebrated as a sign of agility. If the stigma of failure goes away, it is easier to kill bad projects.
Small things matter in an ecosystems
With rise of FAANG few strategists question the importance of ecosystems. Still, it takes great efforts to accommodate stakeholders with competing interests and less prominent stakeholders are easily overlooked.
The US certainly did not succeed in this regard. It has been widely documented that Pakistan never fully aligned with the US vision but more surprisingly, neither did US contractors.
To make a Western-style democracy more attractive for ordinary Afghans, America invested heavily in infrastructure. In total $30 billion in no-bid contracts were awarded.
But the US government never ensured that incentives for contractors were aligned with their own goal to create a society able to prosper on its own.
A new $300 million Kabul power plant, for example, was too complex for locals to run. Dependency—in this case the opportunity to sell lucrative long-term maintenance contracts—was great for contractors but just the opposite of what the US government wanted to achieve.
Michelin’s run-flat PAX tire equally failed when a seemingly less important stakeholder was forgotten. The core value proposition of the new product was that it could drive on after a puncture and customers have it repaired later. But repair shops had no incentive to buy the equipment needed to fix the tires.
After all, they could not know how many customers would adopt the new type of tires. So when someone actually showed up, they offered them four new tires (the new type of tires were not compatible with other tires). Hardly what customers were looking for. And sure enough, their angry reaction made PAX tires run flat.
Companies need to pay close attention to all stakeholders. In a recent article Graham Kenny goes as far as suggesting that executives should let stakeholders drive their strategy. That makes sense in a complex and unpredictable world!
Being big and powerful can be a curse
The insights from America’s downfall in Afghanistan are useful for all companies but those dominating their market should listen most carefully. Like the US, it is easier for them to miss weak signals, and instead rely on strategies that used to work before—but that can have disastrous consequences.