If the pandemic and the ensuing few years have taught us nothing else, it is the fact that we are in a world of terminal turmoil. Change comes fast and often. Black swans lurk around every corner. Yet many companies are still executing their strategic planning like it’s 1985. The new unpredictable normal calls for a different approach.
Historically, strategy creation was a long, linear process with a singular plan to win. This method worked well when product lifecycles were lengthy and technology-fueled disruptions were infrequent. The challenge with that now is that when conditions change—and they inevitably will—an organization wed to a singular plan is left paralyzed without an alternative. Or they overcompensate by trying many different things, reacting in the moment. On either extreme, a few things happen that rapidly derail growth and progress.
Some companies march toward their long-term plan ignoring signals that it’s time to shift—like lemmings off a cliff, they are unable to save themselves. Polaroid, Blockbuster, and Blackberry are unfortunate examples.
Then there are the companies that adopt a rapid reactive mode, trying to quickly pivot, without a future-focused view as their North Star. These organizations suffer from shiny ball syndrome, chasing something new with every market signal. They can’t gain any solid ground and they exhaust themselves in the process.
Walking the line requires “both/and” leadership: 3 ways to make it real
The middle and most optimal course is to hold on to the tension of creating energy and excitement in setting a compelling long-term vision while also working with all the teams to figure out how to realize that goal. The “how” is the hard task and will require leaders—and their teams—to do their best thinking and most challenging work.
Here is what to do differently to bring those two tensions together.
1. Deliberately broaden your approach and strategic aperture. When thinking through strategy, the best organizations look beyond the common or expected path, seeking not just to rely on a given Total Addressable Market or on packaged industry trends created by an in-house strategy team. To be sure, market size is important, but deliberately embracing strategy development in a different way can help teams break the common pattern of merely extrapolating current trends into the future. The best ideas and new perspectives truly come from everywhere, so engaging leaders (and the organization more broadly) to think bigger can help people break out of their current rivers of thinking, allowing them to view the business of today and the potential business of the future in fundamentally different ways.
2. Create discrete possibilities to focus thinking. With a wide runway for strategy creation, people (and leaders) can easily produce a list of strategic alternatives a mile long, to a point that they become quickly overwhelmed. This result is driven by the same logic that makes someone lose their way in the cereal aisle, paralyzed by having so many choices. After starting with a wide approach to explore strategic possibilities outside of a given industry or against known competitors, the best organizations then intentionally narrow the list to frame a few discrete and mutually exclusive options for the leadership team to consider. Evaluating a few potential options allows leaders to better access longer-term strategic thinking.
Take, for example, the experience of a fast-growing founder-led software company that had just gone public. Shortly after their IPO, the senior managers told Wall Street they would reach $1 billion in revenue in three years. Unfortunately, there was internal disagreement over which direction to take to achieve that target, creating unrest and confusion throughout the organization. We started by helping the senior managers gain clarity about which approaches to pursue and to define three mutually exclusive strategic plans. We then helped the executive team to better understand current state realities, to determine potential risks, and to solidify the ideal execution plan. We did that in part by leveraging the power of a quantitative model of their business to help them see the challenges and opportunities within each of the three strategic options.
1. Extend scenario planning beyond the C-suite. Stress-testing various scenarios and pre-planning responses is a well-honed tactic for traditional strategy development. Much of the power of scenario planning is that it creates space for debate and discussion, and for placing concerns on the table in a productive way. It also builds confidence and a sense of ownership in the planning group tied to the belief that their best thinking has been considered and applied. And it leads to more resilient and adaptive strategy execution. Rather than trying to cascade and communicate a linear plan throughout the company, the most adaptive organizations define the overall direction and use scenario planning to engage employees to work together on a solution. Here’s an example.
A company in a highly regulated industry was facing a slew of new carbon regulations being debated in the state legislature. Eager to prepare a response to whatever emerged from the legislature, the executive leadership team looked to their functional and business unit leaders for a deeper understanding of the technical and business implications of the full range of likely outcomes. We helped the functional leaders assess the potential regulatory paths, use scenario planning to explain the implications of each path for the company’s business, and scope out the likely responses of competitors to all of the possible changes. The cross-section of this data was then used to identify no-regret decisions that the company would make for each of the outcomes. The use of scenario planning allowed the functional leaders to suggest a menu of strategic options to the C-suite—and then provide the opportunity to continue down the various paths and “experience” the technical and business problems they would likely encounter. Overall, the approach exposed the functional leaders to the core strategic trade-offs of each decision and created a strong sense of ownership of the problem.
The fact is that while the world is no longer predictable, companies still approach developing their strategies as if markets are consistent and reliable. This is one of the 3 biggest reasons why companies fail to execute on great strategies (check out this white paper to find out more about the other two.) Actionable strategy is about engaging the organization in an integrated process of defining the future state, making that future believable and real to the touch, enabling people to change to make the organization ready for its changes, and creating the environment to assess and pivot along the way. Our work and research have shown that people can and will change—happily—and it’s our role as leaders to provide the conditions for their success. Start by embracing the unpredictable and make strategy development your organization’s super power. You’ll be well on your way to making your strategy actionable.
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