ICG

The classic, strategic planning rituals are increasingly reaching their limits. They often cannot provide the orientation and answers to current alignment issues that were hoped for. Innovative and agile elements in the strategy process also offer answers to changing rules of the game.

Changing challenges

Companies are increasingly facing new, unknown complications. New technologies, digital business models, changes in the global balance of power or most recently the Corona crisis are increasingly challenging. Decision-makers in companies can rely less and less on verified facts. Therefore, they need to adapt proven ways of strategy development and make them more agile.

New rules of the game in strategy work

In times of crisis with great uncertainty, as in the current situation, many executives want more clarity. Reliable analyses, concepts and action plans are in demand. Is this even possible in the current situation with great uncertainty? This question occupies the minds of many who are responsible for strategic work and is of course justified.

Strategy development under uncertainty is important but requires different approaches than in stable phases (see graphic).

Strategy as guard rails and framework

At the beginning of the strategy process, the question should be: What are the expectations for the outcome? If the situation is clear, i.e., if the relevant developments can be easily foreseen, it is still possible to orient the strategy to a picture of the future and to define the strategic path to get there. When the fog is thick, i.e., when developments are uncertain or contradictory, the strategy can provide a rough direction and guardrails, supported by shared principles and values. Within this framework, opportunities, chances, and risks are identified, acted upon, reflected upon and the next steps are planned in small steps.

Strategic ambidexterity and room for experimentation

Strategy must be consistent and free of contradictions! This is what it says in many not so old textbooks. Behind this is the assumption that there is only one reality – and we know it. More and more often we have to say goodbye to this paradigm and instead learn to deal with plannable and uncertain issues simultaneously and differently. For this there is the term “strategic ambidexterity”. This leads to a professional handling of inconsistency. In the case of uncertain topics, thinking is done in terms of affordable loss. Experiments are allowed and evaluated and learned about experiences. Thus, speedboats can be launched in different directions to quickly identify the better way. The basic understanding of strategic ambidexterity can also resolve the often-observed contradiction: On the one hand, a detailed five-year strategic plan is required – on the other hand, it is unclear what our world will look like in half a year. Furthermore, employees are more closely involved in strategy work and entrepreneurial culture is promoted. Thereby opportunities can be seized more quickly, and a broader employee base is involved in strategic developments.

Intensive customer and market coupling

A strategy process often begins with a careful analysis of the figures and data on market development in recent years to estimate future trends. In the case of stable developments, this makes perfect sense. However, trend breaks, and other VUCA effects cannot be recognized by looking in the rearview mirror. The market and customer perspective are integrated intensively into the strategy work right from the start. This is achieved by observing customers and users, through prototyping and rapid feedback on ideas, to integrating customers into developments. In this way, the detection of blind spots and weak signals of completely new, disruptive changes should also succeed. Getting into action quickly and living the strategy thrives on action – and the right forms of implementation must be selected for this purpose. This can take the form of classic, strategic projects, which are accompanied by steering teams at longer intervals. Alternatively, or as a supplement, agile implementation formats such as speedboats or Rapid Results Teams are used to achieve rapid success. The key here is to foster intrinsic, entrepreneurial energy within the company. This can be achieved with good management attention, the temporary removal of obstructive rules and a supportive error culture in the logic of Minimal Viable Products. Based on the strategic framework, these initiatives and speedboats are set up and anchored in day-to-day business through agile methods and rituals. In this way, it is possible to raise awareness and increase the speed of implementation.

Continuously evaluate, refine, and learn

It is not perfect plans that are decisive, but implementation experiences that evaluate and refine the ongoing. A particularly effective agile tool for this is the OKR method. Here, measurable goals (objectives) are defined for a specific period (usually three months). A maximum of five key results, concrete, and measurable outcomes are then assigned to each of these objectives. After a certain period, often three months, these are reviewed, and the next phase is planned. In times of great uncertainty and rapid change in the environment, the strategic direction must be adjusted at shorter intervals. Quarterly Strategy Refinement Workshops allow an adaptive strategy process. A strategizing team manages this process. In this way, the strategy is continuously sharpened. The purpose of the organization provides orientation. Experiences are regularly evaluated; learning is stimulated within the organization and improvements are initiated for the next phase. Strategy thus becomes the driver of a learning process for the entire organization.

Using virtual opportunities

Classic strategy work usually takes place in closed-door meetings in seminar hotels with selected participants. This form of strategy work is hardly feasible in the current situation with Corona-driven restrictions. Digital tools now offer opportunities for highly effective virtual strategy development and implementation. Virtual workshops can be conducted in a mobilizing and dialog-oriented manner, even with many participants. There are plenary impulses, dialogs in small groups, immediate feedback from real-time query tools from all participants, and even joint work on digital whiteboards.