Insights

Strategic Planning In A Disruptive World

Strategy is something that happens a little bit at a time, every day.

Does that make intuitive sense to you? If not, you may be feeling that the future keeps showing up as a surprise, arriving faster and faster. The uncertainty – and the anxiety that goes with it – can be as vexing as the pace of change. 

However, if strategy is ‘always on’—your antennae are always up, your radar is actively sensing for leading indicators, and you are embracing the unknown with systematic experimentation—then you may find yourself able to manage back the anxiety of uncertainty with discipline of optionality. 

The future, of course, is notoriously difficult to predict. Did you see Amazon coming? Or streaming video? Or the way that online classified advertising would kick the legs out from underneath newspapers’ profit model? Many people are preoccupied with trying to foresee a narrow slice of the future as dictated by historic business models, often focused on products as they’ve been built, configured, and distributed. Few are digging deeper to understand the megatrends at work in the world, how those megatrends are triggering new demand patterns, and as a result, reshaping the competitive game.  In other words, we are often biased for the supply-driven, product-centric models of the past, as opposed to the demand-driven, solution-centric models of the turbulent present. 

The velocity of change has seriously undermined the idea of strategic planning at most companies. Planning all-too-often defaults to an exercise in painting an introspective picture of the future—how many dollars customers are likely to spend on products in your category next year—and translating that into a budget. And when disruption hits, a budget that reflects last year’s strategy will inevitably fail. Do new and disruptive competitors have your customers in their sights? Has an ambitious tech company learned how to provide a solution that is more compelling and engaging for your highly-coveted customers?

To be fair, the conventional approach to strategic planning used to work reasonably well. In a stable environment, market size was an effective way to think about the future, for years or even decades at a time. When the old model blew up, strategists would build a new one and then look forward to another relatively stable period.

For most businesses, that kind of stability is long gone. The World Economic Forum’s 2018 Global Risks Report cites more rigorous exploration of potential sources of value destruction, greater strategic agility to match a rapidly evolving market context, and sharper contingency planning for unexpected events as key priorities for today’s business leaders. Planning for a ‘new steady state’ won’t work.  We need a new discipline that embraces change as a fundamental feature, not a flaw.  

The CEO and other significant leaders need to see themselves as stewards of an ongoing conversation, and not the guardians of a process that enshrines the past in next year’s budget

Frame the future, probe the future, and repeat

In today’s environment, you don’t make a single bet on what the future will look like. Instead, you adopt a disciplined management approach. You develop a point of view about where the world is moving, then you test and revise, test and revise. You don’t separate thinking from doing. You learn to think of them as inextricably linked. The CEO and other significant leaders need to see themselves as stewards of an ongoing conversation, and not the guardians of a process that enshrines the past in next year’s budget.

It’s not an easy approach to learn. Here’s something that helps: Think a lot less about your existing products, and a lot more about your customers and the problems they need to solve. And put yourself in service of active solutions – ones that wrap around the customer and evolve as their needs evolve.  Products inevitably suffer from gravitational pull of the past, where unsolved problems push you inevitably toward the future, suggesting new ways you can give people things they need, new ways to extend your relationship with them, and new ways to monetize that relationship for the benefit of both sides.

It’s no surprise that some people dismiss this approach as a non-rigorous cop-out, a way of trying to avoid hard thinking about future outcomes. But the new rigor is actually much tougher.  It requires continuous experimentation, dispassionate ‘retiring’ of options to embrace new ones, and deep focus on customers – in other words, a more active, persistent and engaged conversation with executives than most traditional strategic planning processes.

The new strategy discipline and conversations may feel ‘a bridge too far.’  But we submit that this approach is actually therapeutic: it allows executives to set aside the gnawing sense of concern for a more lock-jawed conviction about thriving in the face of disruption and turbulence.  In today’s world, this new discipline is a necessity.