Wanted: Adaptive Strategy

With 2018 already well underway, most companies have produced (or are in the process of producing) their Vision / Ambition / Destination 2021. A defining piece of work that determines the company’s targets and strategic priorities for the coming 3 years.

Industry experts were hired to watch trends and make predictions. Top management weighed the pros and cons of different strategic options. Consultants advised the best way forward. And communication specialists created an inspiring story. Confidence is at its peak − we have a plan!

And not only do we have a plan, but strategic priorities have also been cascaded down through the organisation, and their translation into concrete initiatives is well underway. We have SMART (simple, measurable, attainable, realistic and timely) KPIs, and every year we will check progress so that, if necessary, we will double down efforts to meet the targets.

Still, we may remember the last Vision / Ambition / Destination 2018, and what happened after its launch. Once past the strategy hype, the reality of running the business day-to-day quickly reclaimed the first spot on our priority list. Fortunately, the kick-off of the budget season in the 4th quarter of every year offered an opportunity for some reality check. As we dug into the numbers, we also allowed ourselves a short glance at strategy.

The strategy box was not to be opened too wide though, and not for too long. Getting the budgets approved, along with an update of strategic initiatives for the new year, is what we were after. But as we worked hard towards executing Vision / Ambition / Destination 2018, the world around us did not stand still. Customers, technology, and challengers all continued to evolve, so that some of us started to wonder: Are we still doing the right things?

Of course, we also see the opposite: companies going for short-term strategy cycles of a few months at max. This, however, typically leads to fickle ‘flavour of the month’ strategies (or no strategy at all).

The truth is that neither the long-term plans nor the short-term strategy fluctuations work well in markets where change is frequent, sometimes disruptive, and often hard to predict. The good news is that there is a third road that some companies have started adopting with promising results. We call it adaptive strategy.

Traditional strategy versus adaptive strategy

Adaptive strategy supplements − or sometimes completely replaces − the fixed strategy episodes with an ongoing strategy conversation that is uncoupled from the budget exercise. Adaptive strategy is also progressive. It is wide open to evolutions taking place in the market and beyond, and it constantly challenges the status quo so that the possible absence of change is the result of better insight, not conservatism.

But adaptive strategy is not a random walk: it’s a disciplined effort to combine innovation and focus. Adaptive strategy follows a carefully orchestrated iterative process made of three kinds of efforts:

  1. sensing the company environment to identify potential new opportunities
  2. seizing the most promising ones to realise their potential value
  3. constantly realigning the organisation with the strategic choices that are made

And these efforts take place with a clear sense of the direction in which the company wants to evolve in the mid- to long-term. Which means that adaptive strategy is directed. But the direction is not as rigid as the traditional 3- to 5-year strategic plans. It acknowledges that no one can possibly know what the future will bring. So the direction is also fed by the learning that originates from the ongoing strategy efforts and experiments.

In this way, adaptive strategy ensures that, as the world around us evolves, we continue to do the right things.

Interested to learn more about adaptive strategy? Read about our plans to launch a Centre for Excellence in Adaptive Strategy or get in touch with [email protected]

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