How can you prepare for the future when you don't know what it looks like? Here are four key elements to consider when building any strategy.
The business environment is constantly changing. Building a strategy, then, requires a good amount of foresight. But foresight alone isn’t enough.
A successful strategy involves a number of practices, including fostering adaptability, developing back-up plans, and keeping an eye on both the short- and long-term trajectory of the organisation.
To make sure you are promoting the right behaviours and practicing an accelerated strategy, think in terms of the acronym “META.”
Mobilise: Capitalise on uncertainty
Uncertainty is a given in business.The best strategies embrace and mobilise that uncertainty, helping leaders achieve clarity and alignment on the most important forces shaping the future and helping pinpoint where some of the most profitable opportunities exist.
To capitalise on these uncertainties, dedicate time to play with assumptions about the future of the business to see how they might be able to develop into opportunities. And adopt traditional tools such as influence diagrams, real-options analysis, and system dynamics modelling to embrace and capitalise on ambiguity.
Execute: Prepare multiple strategies
One of the most important parts of a good strategy is, surprisingly, having multiple strategies.That’s because, often, market conditions change, new threats arise, opportunities emerge, and competitors pursue unexpected avenues.
Work to understand your competitors’ possible reactions and build your own approach around this thinking. Role-playing, for example, can help you imagine the competition’s strategic intentions and thus build multiple strategies to address them.
While most organisations make plans as if the world were predictable, accelerating organisations are among those that recognise the value in adaptability and thus are ready to act quickly when the environment changes.
Transform: Split resources between short- and long-term initiatives
Winning strategies focus on pursuing long-term ambitions without sacrificing performance in the short term. It’s easy to get sidetracked by near-term initiatives with a clear return on investment.
For example, a leading global chemicals manufacturer was losing its edge in long-term innovation because its resources were primarily going to short-term initiatives.
So executives began allocating investments into three categories: core (short term/low risk), new (medium term/medium risk), and experimental (long term/high risk).
Since each category is based on its own time horizon and risk level, the executives ensured that short-term focus wouldn’t crowd out longer-term investment. By investing in initiatives of diverse risk levels, leaders are also more likely to know when to pull the plug on a flagging effort.
Agility: Look ahead and adapt
Some projects will inevitably fail. The best companies learn not only to fail fast but also to anticipate, recover from, and learn from setbacks.
Adaptability and foresight are vital to developing successful strategy. It is not enough, however, merely to work to anticipate shifts in the industry. Leaders must know what to do with that information.
Sometimes that means adjusting their strategies and processes, even if they have been successful in the past, to ensure continued performance in the future.
A famous scholar once wrote of Darwin’s On the Origin of Species, “It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.”
Prepare diverse strategies
The most successful strategies rely on the ability to look to the future and prepare for it in every way possible: by brainstorming diverse strategies for different situations, being ready to adapt as information and trends change, anticipating competitors’ moves, embracing uncertainty, and planning for both the short and long term. Only then can an organisation be prepared for an ever-changing world.
About the author
Steve Krupp is partner in Heidrick Consulting and a member of the CEO & Board Practice. He is based in Philadelphia.