Strategy in Turbulent Times of COVID
How to come up with a strategy?
In turbulent and uncertain times of COVID, it is tempting for everyone to wonder whether companies do actually require a strategy. When there is total uncertainity, the last thing you want to do is to be paralyzed.
You need to make difficult choices based on what information you have at the time.
The need to stop analysing and start doing even if you are not entirely sure that what you are doing is going to be successful.
Once you start, new information will appear which will allow you to revise your plan. Therefore, strategy is all about making difficult choices in the face of uncertainity and adjust as you move forward.
How to come up with a strategy?
A lot of competing companies have the same business model, same suppliers, same structure, same information etc. yet some companies come up with totally unique and different strategies. This is because successful companies process the information in a different way. These companies are innovative and differentiate themselves from others.
We need structures which encourage creativity and innovation. We need to accept that the world is full of complexity and uncertainity, and we can not plan the future precisely.
Hence, innovation is very important in turbulent times. But creativity and innovation are different. Innovation is deciding which ideas to pick on and implement to create value. Innovation is not just coming up with ideas but also scaling them up to create big markets.
Most companies try to become better than their competitors but being better is not the right way for most companies except the established player and they should play a differentiated game.
One should think of new ways to play the game. Most companies get the same input however what matters is what they do with the inputs to change the rules of the game.
The incumbents develop a winning strategy and then spend all their energy trying to improve it but rarely cannibalise the current strategy in favour of a different one. Yet they lose to startups that adopt different strategies.
Hence, established companies should not only improve their existing strategies but also discover new strategies. Playing two games at the same time is very difficult but not impossible.
The established players don’t necessarily have to respond to startups by adopting the same game.
They can respond by focusing on ways to kill the new game. Most of the startups fail because they did not know how to scale and sell to masses.
Large companies are good at scaling up rather than coming up with new ideas but they try to become creative like small startups. Instead of taking ideas from startups and scaling it up, they try to come up with ideas themselves which is what startups excel at.
The focus should be towards making a large company better at what it is good at and not making it like a startup.
Organisations exist in a rapidly changing environment necessitating responsive and often radical strategic capabilities. Organisations are often struggling with difficulties such as strategic confusion and preoccupation with day to day activities.
The solution lies not in focusing on improving the current situation but rather in taking the step changes necessary to realise the future requirements of the organisation.
Most people have difficulty stating their organisation’s strategy. The business and operating units march to priorities different from their company strategy. Majority of the employees focus on day to day operational matters and their individual aspirations so the strategy is never realised.
Frustrated executives launch re-organisation, process changes, or new technology initiatives and yet performance stagnate or even decline.
If they are to survive and succeed, businesses need to find ways to rapidly and measurably change their strategy, processes and roles. Individuals need to know precisely what to produce and what reward they will get for doing so.
Strategic planning by itself does not guarantee either competitive advantage or business success. Too often companies mimic each other’s strategy which is not exciting and the execution is poor.
In today’s hypercompetitive economy, infusing a company with a clear, compelling, cutting edge strategic direction is critical. We have made strategy far more complicated than necessary.
A cutting edge strategy generates unique value
In today’s crowded marketplace with multiple global competitors and overwhelming choices for customers, most important strategy is uniqueness. A cutting edge strategy means that the company is doing something different and innovative.
A cutting edge strategy provides exceptional value
Cutting edge strategies demonstrate value by leading markets which includes leading customers and not just by responding to their current desires.
Significant value comes not from incremental improvements but from marketplace breakthroughs. Companies with cutting edge strategies create value by providing things that inspire excitement and delight by providing exceptional functionality, design and execution.
A cutting edge strategy provides personalised value
Mass market or mass production is not working anymore. Customized products are creating true value for customers. Real time action based custom marketing is the only thing which creates an ROI for companies.
A cutting edge strategy provides high speed value
Make speed a strategic priority in goal setting and execution. A winning organisation does everything very fast. The competitive advantage is how the company can reduce decision and cycle times.
How quickly they can implement a change, put together a team, share knowledge throughout the organisation, start a pilot and go to market.
The executives should have regular policy making conversations with colleagues. Allow strategic initiatives to come from anywhere in the organisation. CEO’s should encourage innovation, allow experiments, reward new ideas, do not punish mistakes and so on.
There is a need to train people how to think, not what to think. When this process is followed by top management and executives in an organisation, strategy becomes an agile, market centric collaborative process.
This can only be achieved by giving employees autonomy and helping them understand and respond as they see fit.