Most businesses operate in highly volatile, turbulent and dynamically changing environments. Strategy is generally formulated on the assumption that the environment is predictable. Strategy under this assumption is reasonably static. So why bother formulating a static strategy for a rapidly changing operating environment? It seems a senseless waste of time to even think about developing strategy.
3 reasons why formulating strategy keeps you ahead of the game
- Strategy is an iterative process that is part of what we do every day – not an annual event. In a changing environment, strategy needs to be in the heads and the hearts of everyone do that it can be rapidly adapted, refined or changed to meet circumstances as they unfold.
- When engaging in a strategy development process, we go through a DISCOVERY – CHOICE – ACTION loop (the iterative process). In order to discover, we need to open our minds to all possibilities, eventualities and exigencies and not be constrained by conventional wisdom, the current status quo or the past. We can only choose from that which we discover. So, if we do not open our minds to other possibilities, we limit our choice. Finally, we act on that which we choose.
- Under conditions of uncertainty, we can think through a number of scenarios. Scenarios are not forecasts of the future. Rather, scenarios are vehicles for considering and imagining possible plausible futures and for managing unavoidable uncertainty.
I remember working with a global hotel group in Australia who relied substantively on inbound tourism from Asia. At one of the strategy workshops that I facilitated with the senior executive group, I posed the question “what if China goes to war with Taiwan?” They laughed! I said, “lets reframe the question. What if your Asian business dried up overnight? How would you react? What would you do?” That got their attention. We appliedour minds to that possibility. A few months later, the Asian crisis broke. The effect was the same although the cause was different. I met with the CEO who said “thank goodness we thought through all the possibilities. We have moved quickly and decisively. We have capitalised on first mover advantages relative to our competitors who were caught by surprise”.
To learn how to develop strategy in times of uncertainty, check out our Scenario Planning Program, and three Modules of the Strategic Fit Program – the Operating Environment Module (Dealing with Turbulence and Uncertainty); the Strategy Module (Winning in a Competitive Environment) and the Taking Action Module (From Vision to Reality)