The New Rules Of Strategy

“In ten years’ time will people laugh at us for developing three-year plans?” The CEO of a £300 million services business posed this question during a recent interview for the new book I am publishing this summer, called The CEO’s Strategy Handbook.

“Living quarter-by-quarter is madness,” the CEO continued, “But three-year plans are equally unrealistic.”

He had a great point. With the relentless rise in the turbulence and uncertainty in most markets it seems that the majority of long-term plans last less than the time it takes to create them!

How long do your three-year plans last, for instance, before they are radically changed? Two years? A year? Six months? And yet if you don’t clarify your organization’s strategy and make concrete resource allocation decisions your company will simply flounder.

The new world demands new rules. Your strategy management should focus on these three critical success factors:

  1. Core Commitments. In the past it was easier to manage the changes affecting your core business, but in the modern world you can be overtaken by events almost overnight – just ask the bosses of Lehman Bros, Toyota, HMV and Blockbuster. The key questions you need to answer to determine what is and what is not a core commitment are:
    • Which of our target customers’ needs are unlikely to change over the next 5-10 years?
    • Which elements of our current business model will therefore remain valid, and which are open to question?
    • Which longer-term investments are we willing to support and which should we avoid?
  2. Options. When the future is so unpredictable, the winners will be those that possess and manage the most valuable set of growth options. Key questions to answer include:
    • What customer, market and technological changes can we discern and what are the implications for our organisation??
    • What scope (markets, customers, channels and geographies) should we set for our business to reflect our existing strengths and these emerging opportunities?
    • What assets and capabilities do we have that can exploit these opportunities, and what new assets and capabilities do we need to acquire?
  3. b>Speed. When asked how he was so victorious in battle, Nathan Bedford Forrest, a US Civil War general, reportedly replied, “I get there firstest with the mostest!” In business the prize doesn’t usually go to the player who simply gets their first, it goes to the player who gets there first with a great business model. You need to be ‘first’ and ‘most’. Key questions to answer include:
    • What new opportunities, in line with our agreed scope, will deliver the greatest returns to our business?
    • For each of these opportunities, how well placed are we to be the first to offer customers a compelling offer and support that offer with a winning business model?
    • What steps do we need to take to maximise our speed and effectiveness in exploiting our priority opportunities?

To grow at the speed of change you need to possess the right mix of strength and flexibility to turn your organisation on a dime. Three-year plans will not get you there; you need to be far more agile than that. The capabilities you need for future growth and success are great decision-making, execution excellence, organisational simplicity and partnering skills.

How well does your organisation meet the new rules of strategy?

 

To find out more contact Stuart by clicking here or call +44-(0)1636-526111.