Successful innovators always have a long-term strategy that helps them stay focused. At the same time, they need to be able to react fast to unexpected events and changing market conditions. How do they manage to reconcile both?
Competitive pressure often makes companies chase short-term success. A new feature can quickly make a product more competitive and boost sales. On the other hand, with a short-term focus, companies sacrifice the possible gains of longer-term opportunities. When you fail to invest in the long term, you risk being overtaken by the competition.
Your business has to invest time in drawing up a long-term strategy. The problem is, when market conditions change, a long-term strategy can quickly become obsolete. By the time a detailed long-term plan is in execution, the change might already be happening. So, how do you develop a strategy that is able to deal with this?
Building an agile strategy: what you should know before you start.
A long-term strategy that is able to deal with today’s fast pace of change is different than a traditional long-term strategy in at least three different ways:
- It’s proactive: More than a reaction on what happens to your company, a long-term strategy should anticipate, focus on what’s ahead. What will happen in the close and broader environment of your company and how is it supposed to react on it? How will competitors react on it?
- It’s agile: A strategy today should be adaptable and sufficiently agile to be able to exploit opportunities and mitigate risks that present themselves.
- It’s robust: A long-term strategy should be robust enough to be able to deal with uncertainties. At least, it should address and explore different possible future scenarios.
A long-term strategy is proactive, agile and robustDorothy Mingneau, TomorrowLab
Ready to build your agile strategy? These are the next steps.
Every strategy development is different. However, at TomorrowLab, we have identified five steps that typically come back in every strategy exercise and that have already resulted in a successful strategy development process.
1. Collect insights
It’s critical to know your business environment. That is why collecting intelligence is the first essential step of strategy development.
- Start looking at the close environment in which you operate: the market, new technologies, your competitors, and of course the needs of your customers.
- Then, widen your scope: Look at broader trends and external developments. Which demographic, economical, politic trends might influence and impact your business?
Looking at the broader context is what often lacks in strategy exercises. Broader developments can be rather predictable, such as an ageing demographic, or unpredictable, such as the Corona virus. Others have been clearly a subject of debate, but are difficult to predict in terms of which direction they will go.
Broaden your scope by looking at industry reports, interviewing customers, or inviting external experts. The outside-in view of an external expert can be worth its weight in gold. Looking at the broader context often goes together with scenario planning, a methodology that TomorrowLab has already offered with great success.
2. Talk strategy
Bring your decision-makers together for strategic sessions. Use these sessions to explore the direction your organisation could take, what to do and what to avoid at all cost. Use brainstorming best practices: diverge to explore many possibilities, then converge to focus on the best route forward. Take your time for this and, if possible, go off-site. It will help to trigger new ideas.
3. Formulate a vision
Sometimes, your new strategic direction will require a change process. You will need to think about how you will convince your various stakeholders to go along with your vision. You will need to persuade them that they will need to transition from the old to the new way. A strategy formulated in an inspiring, compelling narrative can help to get everybody in your organisation on board. This is where management can make a difference, by acting as a true ambassador of the company’s strategy.
4. Spread the word
Make sure your strategy is described in a strategic plan. Make it tangible by formulating clear strategic and operational goals. Communicate your new strategy relentlessly throughout the organisation, so everyone is on board.
5. Make it actionable
It was CEO of TSMC Morris Chang who famously said that ‘Without strategy execution is aimless, without execution strategy is useless.’ We couldn’t agree more. Many long-term strategies die silent deaths on PowerPoint presentations.
To avoid this, business leaders need to create the right organisational climate to enable strategy execution, with room and freedom to experiment, but also with the ability to accelerate developments when the opportunities arise.
A strategy is never etched in stone. It's fluid.
In the dynamic marketplace of today, businesses that are able to capture the early signs of change, move fast and adapt to the ruling conditions are more likely to win. But how do you catch these early signs of change? How can respond rapidly to unexpected and unpredictable changes and events, market opportunities, and customer requirements?
Your business needs to keep its eyes and ears open all the time. The key here is to install some kind of early warning system or process for outside influences that can affect the business. This can take many forms, ranging from studying industry trend reports, over DESTEP (demographic, economic, social, technological, ecological and political) analysis, to making use of upcoming AI tools to discover trends and developments by intelligently scanning different data resources.
Don’t be the boiling frog.
A well-known metaphor for reacting to gradual change is the boiling frog. The idea is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death.
If your business wants to avoid being boiled to death, it will need to learn to recognise the weak signals in your environment. Legislation for example is typically something that can remain under the radar for a long time, and then suddenly come to the surface.
Instead of letting the information come to you in a passive way, your business needs to actively monitor for signals. This will allow you to notice the changes that may be going under the surface.
When noticing those changes, you should immediately go into question mode:
- What is the potential impact of that change on our business and business environment
- How fast is change coming to us?
- How should we anticipate that change? How should we react? Possible answers could be: a new strategic project, a small improvement initiative, postponing an action, or even doing nothing.
Let's start your innovation journey together.
Recognizing early signs of change can help you build a robust long-term strategy. However, in our search for early signs, we run the risk of looking for data that only confirms our beliefs, as opposed to challenging those beliefs. This is what is commonly called ‘confirmation bias’.
The best way to avoid confirmation bias is to look for a range of sources, including external ones. Taking an external source on board helps you to see changes from multiple perspectives and ultimately make better decisions based on those external views.
TomorrowLab is the ideal partner for this. We help organisations along the journey of long-term strategy development, so they are better armed to anticipate changing circumstances. Get in touch, send an e-mail to firstname.lastname@example.org
This Strategy Stress Testing program is an assessment of how your current strategy and business model perform under realistic but severe or unexpected market changes. Across different phases and through challenging questions, your business will be examined, the most critical future challenges will be identified, and pathways to address these challenges will be determined.