You Can’t Win Tomorrow With Yesterday’s Strategies

Strategic imperatives are dead! Long live strategic imperatives!

Companies are finding that their carefully crafted plans have been replaced by dramatic macroeconomic disruption.from supply chain issues and The ripple effects of climate change, pandemics and wars, higher commodity, energy and labor costs and The Emerging Recession – Most business leaders have never experienced a period of uncertainty like the present one.

They have a lot to think about. Strategic imperatives or long-term plans that many companies crafted a year ago (or less) may now be outdated or lead the company in the wrong direction.

But amidst the dizzying pace of change lies opportunity. Now, savvy businesses aren’t just developing new strategies; they’re fundamentally changing their planning processes—making them faster, more agile, and more predictive. They revisit these plans quarterly or even monthly rather than annually. These practices will enable leading companies to navigate the short term and build long-term resilience.

To adopt this new way of operating, companies need to do three things:

  • practice Ruthless prioritization. For many companies, product rationalization is one of the keys to prosperity and even survival. Just look at consumer goods companies – their products often have long tails that are hard to manage in an era of supply chain disruption. These companies need to rationalize their product mix to make economic sense. Do they really need eight different sizes of a particular product, or four?

    Likewise, companies see benefits in rationalizing corporate projects and initiatives. Instead of focusing energy and energy on 10 projects, does it make sense to prioritize 5 and completely ignore the other 5? Can the company complete the five selected projects faster and profitably?

    Every aspect of the business can be prioritized. Does your talent acquisition strategy prioritize using the right skills in the right geographies? Is your sales strategy prioritizing the right customer segments? What about manufacturing — do you need all these facilities?

Incorporating an outside-in or diverse perspective can help rethink existing strategic priorities.

  • Learn to sense, understand and amplify weak signals to gain meaningful insights from noise. Insights lurk in the ocean of information companies collect every day—often without realizing the potential value. If analyzed properly, faint signals can emerge from this trove of information.

Fortunately, Machine learning and artificial intelligence systems, cloud computing and data science can help companies master the ability to detect weak signals and turn them into amplifying forces in the organization. Accurate predictive models allow organizations to move from a reactive detect-and-response model to a proactive predict-and-prevent model. For example, companies can analyze internal and external data to provide short-, medium-, and long-term pricing insights, enabling them to make better decisions.

For example, technology companies transitioning from an asset-based business model to a consumption-based business model are often challenged by customer churn and licensing revenue churn. Analytical models that combine internal data such as customer bookings and license usage with external data such as competitor products and wallet share can be used to create tailored offerings and pricing.

  • Infuse radical agility into everything you do. I know that “agile” has become the most frequently used buzzword—probably because it’s easier said than done! Anyone who has worked in a non-agile company knows that planning is often daunting, requiring input from many teams at a deliberate pace. A style more suited to previous eras than to today’s fast-paced environments, it rewards the ability to move quickly in ambiguous situations.

    Consider supply chains, which must become agile if companies are to avoid situations where there is supply but no demand or vice versa. This requires learning how to forecast demand more accurately and procure materials just in time.

The team must also be agile – action-oriented, yet reflective and resilient, willing to take risks and not afraid to fail.

These three necessary conditions do not exist in isolation. They influence each other in ways that amplify their respective interests. A weak signal is easier for a company to understand if it prioritizes its business. It is easier for a company to become agile if it understands weak signals.

Companies that adopt all three will implement new capabilities that directly impact business performance. Perhaps most importantly, they will be able to more accurately assess their own needs. Armed with new insight, they may discover holes in their portfolio or capabilities that they no longer need. or both. These businesses will be well-positioned to make big moves—acquisitions or divestitures—to prepare for the next period of growth.

Additionally, with a deep understanding of all aspects of their operations, they will be able to get closer to consumers and deliver a superior customer experience. They will be better equipped to operate ethically, making social responsibility central to their corporate mission.

It’s nice to think that one day we’ll soon return to a period of fewer, more benign disruptions – that’s unlikely to happen. Companies that don’t adapt to the new reality now will have to adapt later. If they are still there.



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disclaimer

The views expressed above are the author’s own.



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