In times of constant change, crafting an adaptive strategy with building blocks and practices to accelerate an organization's response to opportunities and threats and build resilience is key to ensuring both business sustainability and its ability to thrive.
Traditional strategic approaches were not designed for a rapidly changing world, and were based on week-long management team meetings, cut off from the day-to-day, developing strategies not just for a year, but for 4-5 years.
An adaptive approach to long-term strategy is more appropriate for a world where business models are changing frequently and often radically. The faster the rate of change, the more adaptability becomes a key imperative.
Companies that can spot new opportunities earlier and respond faster than their competitors are the most likely to succeed in today's dynamic digital world.
basic practices
The practices presented below are not intended to replace the organization's existing strategy approach. It is intended to provide guidance on how to adapt or modify the approach with digital transformation in mind, and to encourage viewing strategy as a continuous learning activity rather than a one-off planning exercise.
While a truly adaptive approach will build on these core practices, organizations can focus early on those that address their immediate strategic challenges. Most traditional companies will initially focus on one or two of the core practices as they start down the path to a more adaptive approach to strategy.
1: Start execution as soon as possible
The strategy defines the long-term options and actions that the company must take to create, deliver and capture value as envisioned in the business model. But the more time spent creating a plan, the less time there is to execute it, which increases the risk that the market and society have moved on and the plan is out of date.
Implementing early also helps expose errors in the plan and identify where to improve. The adaptive strategy does not require perfect or complete information to execute; uses available information to identify the most immediate actions needed to be successful.
2: Respond to changes as they happen
Given today's changing conditions, few companies can afford to wait a year to review strategy, as was typical when the business environment moved slowly and disruptions were infrequent, if any. Some now review their strategy quarterly or even monthly, but a truly adaptable company monitors its business context on an ongoing basis, initiating a strategy review whenever new information becomes available to reframe the context.
The vision that guides an adaptive strategy can still be long-term, but it must be continually reviewed (not completely changed once every few years) to push the boundaries of what the business must do to be successful.
3: Embrace and explore uncertainty
Uncertainty creates opportunity, so while it inevitably involves accepting a certain level of risk in some areas, companies that embrace risk and respond quickly to events as they occur are more likely to succeed in an uncertain world. Adaptive strategy in business helps to achieve this while mitigating risk.
4: Involve the entire organization in the strategy
A top-down strategy process involves a select few people, while an adaptation process is inclusive, engaging, and collaborative, with ideas and insights contributed by anyone inside or outside the organization. This approach increases the company's ability to create, update and implement strategies and improves the quality of the result.
Strategy based on functional blocks
There are a definite number of building blocks that help establish the four practices.
Most traditional companies will initially focus on the subset of building blocks that will help them establish the two core practices they focus on first. They use these building blocks in response to specific problems and in conjunction with a more traditional strategy process to gradually add elements of an adaptive approach. Businesses that were born digital often use many more building blocks than those listed below.
The building blocks include:
- Appetizers: how the ideas, knowledge and information relevant to the strategy are generated, obtained or captured. The blocks are real-time information, crowdsourcing and continuous scanning.
- Our Process: the way in which the strategy is created, reviewed, maintained and updated. Blocks: distributed decisions, strategic sprints, continuous process.
- Result: The format, content or structure of the strategy. Blocks: Option-Based Strategies, Experiment-Based Strategies, and Minimum Viable Strategy.
Implementation process
Because changing conditions affect each organization differently, they will select the blocks most appropriate to address their immediate strategic challenges.
- Define the challenges of the strategy. You have to ask if the strategy approach takes too long to develop or implement. Is he slow to respond to change or perhaps lacks commitment?
- Map those challenges to the practices you need. For example, if the strategy is taking too long to implement, focus on the practice it takes to start execution as soon as possible.
- Select the right building blocks. You don't have to use the core components. For example, you can focus on strategic sprints to create a minimum viable strategy.
Companies will only realize the benefits of an adaptive approach if they can respond quickly to changing strategic priorities. For example, operating plans, budgets, roles, and team structures may need to be revised if there is a change in business strategy. The adaptive strategy therefore has implications for the organization as a whole, which is why companies will also need an adaptive operating model.
