Develop Strategy for Uncertainty in the Future
When developing strategy, we have to make assumptions about the future of technology, customer needs and economic trends; in particular, what will change and how. Because the future is uncertain, we face the risk that our assumptions, and thus our strategy, are wrong.
Past Traditional Strategy: Slow, Predictable Changes in Environment
A traditional approach to creating strategy can be described as a waterfall. Strategy is set at the top levels of the organization and it cascades down from the enterprise to business unit to product lines in successively more detailed strategies. A waterfall approach is not quickly redirected, but it has served companies well during times of slow, predictable change. However, in today’s world, most companies are seeing rapid change in their business due to new technologies, new global competitors, the creation of whole new industries and changing customer needs. A new approach to strategy is needed, one that can handle uncertainty.
Today’s Strategy to Manage Uncertainty: Rapid Changes in Environment
The s2m Strategic Framework is meant to handle uncertainty. Strategy is built upon certain assumptions about the external environment (for example, competitor activity, customer needs, technological developments and regulatory changes) and assumptions about what the company can control (for example, the capabilities it maintains and the markets it serves).
Need to Monitor Strategy Assumptions
Change in the internal or external environment creates opportunities and threats for the organization. The more change or the more uncertainty about the future, the more important it is to monitor the assumptions that support the strategic framework. Unfortunately, many organizations miss these changes because they do not have a way to monitor and provide feedback to the system.
Need to Capture and Leverage Valuable Feedback
Valuable feedback can enter the organization in many different locations and manners. In a fast-changing industry, the most valuable information may come through customer-facing personnel or external parties that interact with competitors. Unfortunately, many organizations lack a mechanism for capturing and leveraging this information.
Maintain an Adaptive Strategy
Probably the biggest impediment we see to maintaining an adaptive strategy is a lack of understanding of the current strategies and business models within the organization: What key characteristics of the market, competition, technology and internal capabilities, for example, make the current strategies and business models work? And, related to this, what kinds of changes can invalidate the strategies and business models, or create valuable new opportunities?
The first step in making your strategy adaptable to uncertainty is to identify current assumptions, the kinds of uncertainties to monitor and establish a feedback mechanism. If you haven’t read it yet, feel free to download our s2m strategic whitepaper.
Also, learn more about our new software tool, Business Fit Framework® that helps to identify product uncertainty and risk.
Strategy 2 Market helps companies increase growth and decrease product development complexity. www.strategy2market.com