Strategy: the route to thriving in the New Normal
The first step to go from surviving to thriving in the new normal is to acknowledge that the environment has changed, and organizations have to change as well. The old ways of doing things, that were successful in the industrial era , are of no use in turbulent and frequently changing environments
By CARLOS DURAN
In a previous article, we discussed the changes that emerged from the COVID-19 pandemic that are shaping the new normal. It is likely that some of the changes will disappear once the pandemic is over, but others will become permanent. The focus of this article is on exploring what organizations can do to move from the survival mode to a thriving one. We’ll start exploring how strategic planning needs to be adapted to the new reality.
The first idea that I would like to share with you is the concept that the old ways of doing things that were successful in the more stable environments of the industrial era are not suitable in a different environment characterized by more profound and frequent changes.
The COVID- 19 pandemic is a major significant event that has impacted on every aspect of our lives. Most certainly, very few companies, if any, included this event in their strategic plans.
Strategy in the New Normal
There are two main reasons why organizations have to change their strategies:
1) if they chose the wrong strategy
2) if a significant event that was not anticipated materializes
We are clearly facing the second reason.
In consequence, the changes that we’ve discussed earlier will require organizations to understand the new scenario, make strategic decisions, and adapt or reinvent themselves. This includes reviewing key components of the organization such as their structures, processes, products, and services to be relevant in a new reality. In other words, it will be necessary for organizations to review their strategies as a first step to compete in the new normal successfully.
Emerging Strategic Thinking
The strategic thinking is continuously evolving. There are a series of ideas that have emerged as a response to the new challenges posed by the digital age, which are different from the ones of the industrial age. Indeed, in the industrial age, the environment was more stable and predictable, which is very different from the turbulent, unpredictable, and rapidly changing environment of the digital age.
For instance, industrial age organizations usually started their strategic planning process asking themselves a classical fundamental question: In what business are we in? In a digital world, the notion of industries, competitors, and even customers is changing dramatically. For that reason, the question that companies need to ask themselves instead is: what is the problem that we are trying to solve?. Think for a moment about the implications of finding an answer to the latter or the former question.
In classical strategy planning, one of the most common analyses that companies conducted was industry analysis. Today few environments remain classical. In the industrial age, companies were competing with organizations withing their industry only. On the other hand, in the digital age, you are competing with any other organization capable of providing value to your customers in any step of your value chain. For that reason, it is vital to look for trends outside your industry boundaries and understand how those trends can impact your organization.
Strategy in the digital age needs a much broader frame of reference to include players and trends outside the organizations’ industry boundaries
New ideas for strategy planning
The one size fits all approach to strategy planning, where one company can choose from a more or less fixed set of plans to compete successfully is dead. The new reality demands from the organizations to use a combination of approaches simultaneously. These approaches reflect a different cadence of planning and execution. For example, one of the strategic approaches could focus on the core business and another one on testing and experimenting with different products and services outside the core.
In addition to the above, the 3-5 years strategy planning cycle commonly used in the majority of the organizations doesn’t make sense anymore, given the much more frequent and drastic changes in the environment.
The COVID-19 team pandemic is teaching us valuable lessons about collaborating with other organizations in ecosystems. Yet, most leaders, especially the ones coming from successful industrial era companies, struggle to understand the importance of working in ecosystems simply because they are hard-wired to think differently.
Also, evidence showing that the most profitable companies are the ones that, at the same time create economic, environmental, and social value debunks the idea that the primary goal of the organizations is to create value only for shareholders.
In conclusion, strategy in the digital age needs a much broader frame of reference to include players and trends outside your industry boundaries.
The roadmap to thriving
We can anticipate that there will be three main stages during the pandemic: Survival, Adaptation, and Transformation.
In the survival phase, companies need to ensure that there will be able to live another day. The main goal is to keep the lights on.
In the adaptation phase, the focus is on revisiting the strategy and updating the strategic plans to reflect the necessary changes in the environment.
In the transformation phase, organizations will seek to transform the business to thrive in the new rules of engagement dictated by the new normal.
We can anticipate that these phases will overlap, and, in some cases, they will circle back to the previous. Until a vaccine or robust treatments are available, we will see new crises popping up, which will require the reinstatement of safety measures to contain the spread.
In articles that follow, we will discuss in more detail the phases described above.
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
Sun Tzu, 6th Century BC
I’ve started this article with a provoking phrase: “The old ways of doing things, that were successful in the industrial era are of no use in turbulent and frequently changing environments”. However, there are some basic principles that are true today as they were thousands of years ago. There is no successful transformation possible if organizations don’t have a clear Purpose and Vision. The strategy is the starting point. The quote from Sun Tzu “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” is still valid today as it was in the 6th Century BC when it was written.