It’s not only since the COVID crisis that we have learned that today’s world requires companies to adjust to an ever-changing set of demands and requirements. Old models can not keep up with the pace of change and the level of uncertainty which is why we need to rethink the way we do strategy, renewing it from an annual process towards a continuous practice of scanning key parameters in- and outside the company to enable the corporate leadership and board to adjust in line with the overall strategic charter set for the company.
Hold on to your belongings, it's about to get rough
It’s unquestionable that today’s world seems to be moving at a much higher clock-speed than at any time before. Information, goods and people are traveling the world at an increasing speed. The word is more interconnected and a crisis (or a virus outbreak) in one part of the word soon becomes a global phenomenon. Information while often available, can seldom be processed fast enough to make fully educated decisions but rather lead to a feeling of being overwhelmed and under-informed.
So, the world is moving faster, and uncertainty is higher than ever before. Now, what does that mean for your business and its strategic direction? How are we supposed to give our companies and our people strategic guidance when there is so little to guide us?
The traditional strategy conundrum
Traditionally the CEO had a strategy retreat with the management team once per year to think about and document the strategy. From there some companies moved to a C-level process driven by external consultants. Still the process was reserved for a selected few and happened once per year but instead of lasting a weekend, it was stretched out to 3-6 months and delivered a staggering 500-page strategy paper. And even today strategy development in many companies is still synonymous with this process rather than with the act of defining the identity and future direction of the company in a world of uncertainty.
While the way strategy was created has changed over time, it has always been the guardrail that provides the company with stability and perspective. Fuelled by past experience and data, it often predicted past developments into the future and provided a prediction of future demand and supply.
The new normal or how do you aim when everything keeps moving
Today strategy is not a fixed thing anymore but rather a collection of strategic options and scenarios that are built around alternative views of the future. Historic data plays a role in the process, but the major focus must be on understanding the guiding north star vision for the company, its identity and the different paths that can lead there.
While not all paths are known or can be predicted at the time of the strategy creation, it needs to provide enough guidance while leaving room to adjust along the way. To enable companies to trace the landscape continuously, adjust their alternative views of the future as more facts become available and to focus on strategic options & scenarios that provide the highest ROI, a highly flexible strategy model and process are required.
The Strategy 365 approach
To meet the changing requirements, strategy needs to fulfil two main purposes:
- Provide a clear vision or identity for the company that provides a guiding North Star and that will stay constant even under the most uncertain situations.
- Outline key strategic options / scenarios that are derived from future alternative realities and that enable the company to rapidly switch course should it be required.
While the North Star guidance will provide the stability for the company, its employees, customers and partners, the strategic options and scenarios will provide the flexibility and agility to weather whatever storm might come. The strategic options and scenarios are by no means stable or “written in stone” they are rather flexible and need to be adjusted and re-considered once new facts become available or the operating environment changes. Changes might come from a black swan appearing, regulatory changes or a shift in customer demand.
What this means for the strategy process is that it must shift from an annual schedule towards a continuous cycle with recurring quarterly or even monthly strategy refresh sessions during which old assumptions are being challenged and strategic options and scenarios are being reviewed to dynamically adjust the path of the company.
Figure 1: Simplified dynamic strategy cycle
The role of the Chief Strategy Officer
As the strategy review and refresh becomes a recurring activity rather than an annual process, the role of the Chief Strategy Officer needs to change as well. While often seen as a Master of Ceremony for the strategy process, the role becomes an active guardian of the company vision and identity. The Chief Strategy Officer formulates and communicates the strategy across the organization while tracing and observing key trends and developments outside and inside the company to adjust strategy options and scenarios as required. As such, the Chief Strategy Office needs to be able and enabled to adjust the strategic direction of the company in close cooperation with the CEO, other C-level executives and the Board of Directors should assumptions prove to be false, new information become available or new developments demand so.
The world is moving faster, and uncertainty is higher than ever before. Strategy development and execution need to change to keep up and stay relevant. While companies are feeling the pressure to stay agile while providing strategic guidance for the company, many companies are still maintaining the traditional, annual strategy process that is building on historic data and experience rather than focusing on relevant future scenarios that are informed by forward looking predictions and models.
Let’s be real, we will never predict a black swan like the COVID-19, but we can prepare our companies to enable us to stay operational in times of uncertainty, enable us to make rapid decisions when our competition freezes and to be part of the few that succeed despite adversity in uncertain times.
Read more about dynamic strategy approach in our article Dynamic Strategy in Times of Uncertainty.