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ABSTRACT: Due to the rapid pace of disruption, empowered customers and employees, and fundamental shifts in the business environment, you need a new approach to design your business strategy. The key to sustainable growth in this era is combining human-centered approaches with business strategies rooted in data and analytics.
Wed May 1, 2024 Dr. Vidya Priya Rao
The modern business world is like the Choco Taco, Enron, Google Glass, Hershey’s Kissables, Satyam, McRib – here for a while, gone for good, or back again in some new form. A company can close its doors permanently, get acquired, or resurface with a totally new concept.
For instance, many tech companies that grew exponentially during the pandemic are now seeing a decline in sales and struggling, and are reducing headcount to improve numbers the old-fashioned way. A bigger player may view it as a signal and an opportunity to acquire them.
A classic example of industry leaders missing the future is Kodak, Nokia, Sears, Thomas Cook. Kodak patented the digital camera in 1978, but commercially launched in 1991 as they did not want to cannibalize a highly profitable, yet rapidly eroding core. As a market leader they were unable to make a huge impact, as their initial moves were small and scattered. To play catch-up with competitor Fuji Photo Film, Kodak entered into a joint venture with Hewlett-Packard in 2000 to create photo-developing kiosks, which failed to make a dent.
The recent headlines of Open AI’s ChatGPT threatening Google’s business model is a reminder that a brand can only capitalize on a temporary competitive advantage.
Extreme weather events is likely to worsen the fragile global supply chain by raising the price of raw materials with limited reliable supply sources, slow ground transportation, making facilities unusable and not safe for employees, interrupting production, and hurting revenues.
So, companies that view their supply chain as game changers can no longer just focus on the operational damages. They have to decarbonize the supply chain, set up green manufacturing facilities, and minimize greenhouse gas emissions to fight climate change. They need to understand the threats play in the supply chain in terms of location, type, and timing to safeguard critical core assets essential to running operations to become resilient.
Today's consumers are more powerful and have greater opportunities to voice their demands and need for transparency. Businesses are now being compared not only with direct competitors but with all other businesses that interact with their customers. The legacy of cost reduction programs combined with this fact means that companies must redefine value to attract customers and win over existing customers.
It's a candidate’s market only for limited skills, but attracting such talent is difficult for many companies. Layoffs, a slowdown in hiring, mortgage payments, and rising food and fuel prices increase job insecurity and stress levels among employees. As organizations want to do more with less, there is a risk of an increase in employees being overworked and burned out. Maintaining competitiveness, however, requires a capable, motivated, productive, and empowered workforce.
That’s business in the era of uncertainty for you. Increasing global disruptions, macroeconomic trends, and interconnectedness of the ecosystem components have resulted in a complex and competitive environment. It is possible for unforeseen events and random occurrences varying significantly by region and industry, to lead to a wide range of outcomes, impacting business and operating model.
In light of these uncertainties, more and more companies are trying to avoid their own Kodak moments. It does not mean all companies struggling will get acquired or shut shop.
Many companies find themselves in this situation because traditional approaches to strategy formulation and execution is not calibrated for the high degree of changes in the market conditions.
Most of the companies are realizing exponential growth is not continuous. They need to put in place systems for realistically attainable, ethical, repeatable sustainable growth. Those with deep pockets could turn themselves around through strong leadership and embrace new ways of working for sustainable growth.
Consequently, as business leaders of a small, mid-sized, or large organization, there is an urgency to become agile and resilient – to navigate unchartered waters based on your assessment of the possibilities and risks. Additionally, increasing customer expectations, managing the supply chain talent, and the need for an engaged workforce require you to step up your game. As people are at the core of these fundamental shifts in your business, your response has to be in a human-centered way.
As business leaders, you also realize, that in the world we live in, what worked yesterday won’t necessarily work today or next year. The future is a blind spot, as the benchmarks of the past years or forecasts based on past customer demands are not reliable anymore. In most cases, the assumption you made may be deemed invalid.
As you can’t make decisions in a vacuum, you need human-centered data-driven insights. In this context, do your five-year strategic plan and annual planning exercises hold any merit?
Hence, to beat the odds and capitalize on the emerging opportunities, you need to prepare and experiment by creating alternate futures and work backwards to make it a reality. You need to play offensive, by “betting on failure.” The outcome is not to articulate the perfect strategy, as it wouldn’t likely last for long. Instead, provide a playbook to focus on the present and lay the path to the future state, so the teams can pivot on the go to accomplish the audacious and stretch strategic goals.
To deal with uncertainty, your strategy needs to address a wide-range of questions:
To find answers to these questions, your first step is to humanize the organization and engage people across all levels to identify the threats, acknowledge the problem(s) and issues you have, and prioritize the infinite opportunities. Using facts and data, you can collectively find ways to fix the problem, building in accountability to achieve your ambitious goals.
Here are few suggestions to get started:
Understand. Gain clarity on what’s the business case for revisiting your strategy.
Establish. In order to redefine success, establish your guiding principles and mindsets that keeps your core business values at the centre and benefits your stakeholders and the supply chain. Review your existing practices to understand what is ok and what are not ok to get started. For example if you need to build an equitable and inclusive business, you will have to define – how to advance inclusion, change systems to end exploitation or exclusion.
Assess. Do a reality check, to take into account the organization’s readiness (leadership support, expectations and concerns, ability to adapt to change, governance and decision making, people’s beliefs and behaviors, ways to minimize strategy implementation failure) to handle the stress of the major shifts.
Sense. Observe trends, define and monitor critical weak and strong signals, that is impacting the business and your customers. Identify the full scope of internal issues and interdependencies that could derail the company. In order to prioritize, know the level of uncertainty and associated risks to business by building a categorization system of ranking it from a low to high levels. Brainstorm solutions by inviting relevant stakeholders to listen to every opinion, argument and idea and gather diverse perspectives. Co-create to arrive at a realistic solution that works and wows. Outline a set of scenarios and selection criteria to assess business decisions.
Adapt. Utilize human-centred, data-driven insights to uncover unknown interdependencies, and shape and reshape business and operating models according to market conditions. Identify alternate sources of funding and pressure test your proposed strategy. To uncover the root cause of a problem, you may have to explore the unknown. Therefore, as you gain more clarity on the unknowns, you may need to revisit assumptions made in the past. The key is to pivot to a different route to deal with changed circumstances without losing sight of the original goal.
Thrive. Seize growth opportunities and strengthen your competitive advantage by moving quickly from assessment to action. Break down strategic initiatives into smaller manageable chunks with clear accountability. An executive at a senior level should be involved in this process to support dedicated teams to innovate, explore and exploit opportunities.
Monitor. I urge you to revisit your strategy every three months, to keep it real and relevant. Along with the strategy team, you need to monitor progress on short-, mid- and long-term goals.
So, take a few minutes to reflect your organization’s approach to embrace uncertainty. Note that there may be more than one right answer, so go with an option that helps your organization make visible progress towards the set direction. Proactively managing change allows your winning strategy to respond quickly in times of crisis.
If you want to discuss how we can support your organization to become future focused by formulating and executing an agile and resilient strategy, feel free to get in touch.
Dr. Vidya Priya Rao
Vidya's purpose is to equip 1 million people with adaptive skills and toolkit to ride the waves of change for breakthrough results. She is the Founder of Innovatus Marketers Touchpoint LLP and author of the book Master Agile and Resilient Strategy. She can usually be found facilitating a strategy / innovation workshop, designing actionable visual tools, teaching design principles at business and design schools, or raising awareness of design to solve complex problems. When not absorbed in writing her second book, Vidya loves cooking, trekking, and travelling. She lives in Mumbai, India.