The need for new strategy rules for business now
Updated: Jul 13, 2020
In these challenging and unprecedented times, we need new thinking when it comes to business strategy.
I am a strategist by trade. It’s my bread and butter. This is especially the case when it comes to helping people and businesses to do things differently during times of change or with innovation.
But I’m about to get controversial.
There is a well-worn path for strategy: the use of Michael Porter’s five forces to identify the competitive environment and how to identify your value proposition within that environment. But how can you do this when everything is in a state of flux? When supply chains are broken and are no longer working? When the next pandemic surge and impact is unknown? When businesses (new or existing) may disappear or appear overnight?
Why then do we think that conventional strategy frameworks still apply?
While Porter made the following comment related to a new industry, I believe it is still relevant in these times. He stated, “managers face a high level of uncertainty about the needs of customers, the products and services that will prove to be the most desired, and the best configuration of activities and technologies to deliver them”.
During these times of uncertainty, a more effective approach may be for companies to be peers rather than competitors. Borrowing successful strategies that work and developing prototypes quickly and cheaply, rather than competitively crushing each other into oblivion based on price, may see more businesses successfully navigate the current dual crisis of the pandemic and economic recession.
Businesses will also have to test new offerings in the market and be agile enough to learn, pivot and experiment further in times of uncertainty. This is where innovation and the process taken to innovate becomes key. This too goes against conventional strategy which teaches that the cost and loss of flexibility cannot be justified in uncertain times. Perhaps the strategy frameworks created in the past were built on underlying assumptions that do hold true during an extended pandemic and its subsequent disruptive effect on economies world-wide.
Any strategist will tell you that once you have identified your competitive advantage in the market, you commit to a business model and deliver against this with alignment of the organisation’s structure, talent, supporting structures and delivery. You have to have big cojones to do this right now. The instability in the current market is likely to present surprises that are unforeseen and that no research, testing or networking would reveal. Instead, leaving the business model undetermined allows businesses to adapt to the changing market. Commit to a general approach, test, pause, observe and adapt the basic elements of the business model based on market feedback seems to be a more pragmatic approach.
This is not to say that we should throw away traditional strategy frameworks with reckless abandon. It is to say that this should not be the starting point in a market that remains in a state of unprecedented flux, where the underlaying assumptions and laws of traditional strategy no longer hold. Businesses are focused on remaining viable and this will require a new way of thinking, new approaches and new strategies in order to successfully navigate the current historical health and economic conditions we are currently experiencing.
Marion is a highly experienced and accomplished strategy, innovation and leadership professional with a focus on the enterprise and government sectors. She is a trusted advisor to CEOs and senior executives, providing practical and pragmatic solutions to the challenges they face. Marion is the Managing Director at Azolla Holdings Pty Ltd, a Board member, thought leader and member of an international entrepreneur association.