Strategic Agility – Strategy in the era of disruption

While the world has been changing at an exponential pace over the last decade, it doesn’t compare with the seismic shifts that have transformed our lives over the past year or so. With the advent of Covid, we have moved into a discontinuous and digital world, impacting society as a whole.

As parts of the world start to emerge from the pandemic, disproportionally so, we have an opportunity to learn from the past, and we have to make choices on how we move forward. Moving forward is strategy.

The word, strategy, is derived from the Greek word, stratēgia, and means “art of a troop leader. Strategy is effectively a plan of action designed to achieve a long-term or overall aim (Oxford dictionary). It provides a general direction to achieve a desired “future-state”.

In his paper, “The meaning of it all”, Richard Feynman says that the only certainty is that the future is uncertain. We have to act with certainty that the future is uncertain.

The question is then, if we talk about continued disruption, the rapid pace of change, and the certainty that the future is uncertain, how do we plan for this future, and what decisions must we take to get there.

These are not easy questions and there is no right or wrong answer. There are a multitude of views, and in the paragraphs that follow, I hope to share some ideas with you.

I believe that there are four aspects to strategy. These are:

  • Envision
  • Strategic Signals
  • Innovation by Design
  • Iterate

The first aspect is to “Envision”. This envisioning process sets the vision as well as the mission and provides the aspirational description of what the company, product or project aims to achieve. It helps set direction and purpose (the Why). The envisioning phase is fundamental in aligning and guiding the business.

The vision is, in essence, the reason for being. It helps define the existential nature of the business, product or service. All should agree on this vision. It should be developed broad-based and bottom-up as far as possible. The vision should be shared widely and should be unifying. The vision should aim big and should be inspirational. It should provide direction but leave lots of room for creativity. It should be short and sweet, easy to remember, clear, and visible to all. One of my favourite vision statements is that of the company Lego. Their vision is “Inventing the future of play”. Everyone who works at Lego comes to work, knowing that they must achieve this vision. If what they do does not align with “Inventing the future of Play”, they should not be doing it.

Next, we need to understand the context in which we are operating. These are considered “Strategic signals”. These signals are defined as emergent changes to technology, customer needs, behaviours, the macro-environment, the political environment, as well as what is happening in the business’s sector. In effect, this aspect allows us to make sense, make sense of the organisation, make sense as an institution and make sense as an individual. Being able to sense using strategic signals allows us the have a better shared mental model of the situation. We use this shared mental model to decide the inter-related choices we need to make to respond to the environment. If the environment changes, so too must the strategy. Strategic signals can be two to three years out, or they can be ten years out. The further out they are, the better chance there is to take action now and move towards this future.

Once we better understand the environment and have an idea of where to go, we need to “Think” a little. To do this, we must “Innovate by design”. We use principles of Design Thinking, Systems Thinking, Lateral Thinking, as well as other processes to understand the problem space, create options and make choices. This should start with empathy. Empathy is where we really try to understand the customer needs through questioning, observation and synthesis. We then ideate around possible solutions and understand how it connects with within the systems we operate.

This may result in many ideas, but we know that there are rarely unlimited resources, people or time. At this stage, it is prudent to prioritise. In his book, “The Three Box Solution – A strategy for leading innovation, ” Vijay Govindarajan proposes that we put initiatives into three boxes.

Box 1 – “Manage the Present”

Box 2 – “Selectively Forget the Past” and

Box 3 – “Create the future”.

Box 1, “Managing the present”, is to effectively keep things running, improving the efficiencies of your current business models. Box 2 is where decisions are made to deprioritise efforts that are rooted in the past. This is necessary in order to focus on the future. Box 3 is creating the future, understanding how to transform the business.

By balancing the boxes, leaders can simultaneously resolve the inherent tension of innovating a new business while running a high-performing business.

It is essential to understand that innovation can happen across all three boxes. However, to remain relevant and ensure that the business continues to re-invent itself, emphasis must be given to Box 2 and Box 3. Strategy is all about Box 2 and Box 3.

Finally, when there is some awareness of where to place effort and when there is an idea of what products or solutions could be developed, the iterate aspect is triggered. Agility is at the heart of the Iterate aspect. Think big, start small, act fast, with customer focus, experimentation, getting constant feedback, and pivoting when necessary.

This requires a level of dynamic competencies, where the firm’s ability to leverage, build and change internal and external competencies to address rapidly changing environments can create a competitive advantage. It really becomes a process of speed over elegance.  In a period of uncertainty, speed matters. Leveraging trust giving autonomy, creating a culture of learning at both a people and organisation level becomes essential for making things happen; after all, as the management guru, Peter Drucker said, the best way to predict the future is to build it.

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