In 2013 we asked if agility has killed strategy and planning, sharing our Top 10 Tips to keep Strategy & Planning approaches simple, flexible and focussed on outputs.
Now I'd like to dig a little deeper into some of the critical capabilities businesses need to develop successful strategies and plans in today's dynamic environment.
But first, let's get our language straight. Strategy is making choices about WHERE to play and HOW to win and Planning is making choices about WHAT to do. All businesses should be able to answer 3 simple questions no matter how volatile the market or what size the business:
So what are the critical capabilities that a business needs in order to answer these questions?
Know what you stand for
A business needs to understand the role it plays in the lives of its customers and the value it creates for them. Or as our client, PepsiCo would put it: 'A good company is more than just an engine for the generation of profit. People want corporations and brands to stand for something'. PepsiCo's mission is 'Performance with Purpose'. This clarity of purpose should act as a North Star – a guiding light that is fully understood and embraced by all employees.
Businesses need to hold fast to this purpose whilst adapting to the constant upheavals in the world around us. We need to anticipate opportunities and threats while managing our day-to-day tasks and responsibilities. And, above all, be responsive to changing customer needs.
The extent to which we need to adapt will depend on the nature of the market in which we compete. The more persistently unpredictable the environment is, the more adaptable we need to be.
The Spanish fashion retailer Zara, which claims that 'the customer is at the heart of our unique business model', does not rely heavily on a formal planning process. Instead it has built a highly flexible supply chain which enables it to respond quickly to information from its retail stores and smoothly adjust to events as they play out.
Compare this to some of the large oil companies or other established businesses in mature markets. Here, a company sets a goal, then tries to build and fortify its position through orderly, successive rounds of planning. Once such plans are set, they tend to stay in place for several years.
Learn, learn and learn some more!
In today's environment, even large businesses in mature markets need to learn how to do new things. Businesses which are thriving today are quick to read and act on signals of change. They have worked out how to experiment rapidly, frequently, and economically – not only with products and services but also with business models, processes, and strategies.
Take the example of Ikea. After the company entered Russia, managers noticed that whenever it opened a store, the value of nearby real estate increased dramatically. So Ikea decided to explore two business models simultaneously: retailing through its stores and capturing the appreciation in real estate values through mall development. It now makes more profit in Russia from developing and operating malls than from its traditional retail business.
'Disruption is now our friend not our enemy' say PepsiCo who advise setting up internal disruption groups that are able to question every practice and look in unusual places for ideas. This is a tangible example of a company building a strategic capability to enable it to become more agile. If we don't disrupt ourselves deliberately, we can be sure that the competition will do it for us. Just ask Nokia.
And we need to be prepared to fail. Experimentation necessarily produces failure and as Bill Gates said 'it's fine to celebrate success but it is more important to heed the lessons of failure'.
So, has agility killed the need for strategy and planning? Definitely not. A great strategy is more essential then ever, but we do need to be more agile in the way we deploy it.
- Creative adaptability – PepsiCo's strategies for an uncertain world, David Tiltman, Event Reports, AdAsia, November 2011
- Playing to Win A.G. Lafley & Roger L. Martin 2013
- Your Strategy Needs a Strategy, Martin Reeves, Claire Love, and Philipp Tillmanns HBR Sep 2012
- Adaptability: The New Competitive Advantage, Martin Reeves and Mike Deimler August 25, 2011
- Shifting From Strategic Planning to Strategic Agility, Holly Green, Forbes May 2011
- Strategic Learning, Willie Pietersen 2010
This post is by Amanda Jenkins, Marketing Capability Director at Brand Learning