One problem we face today is that strategy and vision are feeding the mistaken belief that developing exactly the right strategy alone will enable a company to beat competitors. Strategy has long been championed as the blueprint for organizational success. Strategy consultants are the private think-tanks of CEOs. Financial markets rely on it to predict performance, shareholders and fund managers to assess risk and returns. Any incoming CEO is all too familiar with the traditional greeting of "so, what’s your strategy for turning this place around? Or what’s your strategy to create new growth?" Over time strategy has become the ‘holy grail’ of business. I don’t remember how many occasions when client ask me the questions as soon as I step into the board room “what’s the strategy to increase share price?” Even before I sit down and pull out my slides titled 'strategic options for shareholder value creation'.
A strategy is key to create wealth but it goes beyond beating the competition. Sometimes that is exactly not the thing to do. Even with a good strategy and executional plan are not enough to guarantee business performance. Organizations also need strong insightful leaders who know how to power-up the collective energy and imagination of the people to its strategic aspirations. Strategy forces us to make those strategic bets on which a company’s fortune rests. Strategy should be the answer to the question, ‘How are we going to win in this over-crowded and cut throat market place?’ A robust strategy should capture an organization’s business direction and strategic choices. It should also answer to a bigger question "What's our purpose, that the strategy is designed to fulfill?".
Organizations are both ‘prisoners’ and ‘inventors’ of the external environments. A company success largely depend on the realignment and renewal capacities of their strategy development processes. It is important to understand the ‘Yin and Yang’ of strategy making – that is maintaining a balance between ‘strategic choices’ and ‘strategic adaptation’.
Strategic agility is hard, it refers to a company's ability to react quickly to changes in the external environment, or marketplace so they can avoid disruptive and competitive threats. Imagine an organization can adjust and adapt strategic direction in core business, as a function of strategic ambitions and changing circumstances, and create not just new product and services, but also new business models and innovative ways to create value for a company.
10 years ago a CEO would set his vision and strategy and then start following it. That does not work anymore. Your strategy is obsolete before you finished writing it. Organizations have traditionally responded to change through strategic planning and the foresight offered by scenarios, or through corporate ventures and an entrepreneurial drive. Today's change is both fast –where ventures can provide an answer, but also complex (in the sense that it results from multiple hard to forecast systemic interactions) – where strategic planning no longer fits because change is fast and unpredictable. Communications, healthcare, pharmaceuticals, energy, retailing, financial services… the list of industries engulfed by fast complex strategic change grows longer every day… so does the need for strategic agility. Strategic agility is closely linked to Innovation. It is about bringing innovation into business strategy.
What are the key criteria to maintain Strategic Agility?
1/ Weak Signals Scanning and Scenario Building - Most market research are lagging indicators of what’s happening. With complex systems, it is often impossible to determine if a weak signal will be self-corrected by the system or if it will put in train a series of events that will create dissonance. In these circumstances, it is essential for the human scanner to make an interpretation of the signal and its potential effect and then continue to monitor the system to see if the impact of the weak signal has been ameliorated, whether it has created tension which may cause change down the track, or if it will work in conjunction with other weak signals to change the dynamics of the system.
2/ Modular Business Architecture - Modularization and agglomeration are two significant factors that influence business strategies in many industries. Modularization is defined as the tendency to accelerate the use of commonly available components and infrastructures so company can minimize time to enter any markets.
3/ Open Innovation Network - In a world of widely distributed knowledge and disruptive innovations, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (e.g. patents) from other companies. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g., through licensing, joint ventures, spin-offs). Simply put business agility means being able to predict, adapt to, and be proactive with respect to change.
On this note, I am sharing with you a keynote I presented at a strategic planning conference in Boston 1998. My son decided to try to interpret my talk a day before I presented the keynote. Somehow I think he did a better job that me. He is turning 17 this week. He was 7.
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