The terrorist attack on April 21 has made all your assumptions null and void. You are now left with a choice between sticking to the same plan or adapting your plan taking into account the changed landscape. There is a serious economic issue looming as a result and no one has so far comprehended the real overall impact.
This uncertainty poses a tremendous challenge for strategy making. That’s because traditional approaches to strategy — though often seen as the answer to change and uncertainty — actually assume a relatively stable and a predictable world – I’m sure you have hands on experience on this, having been through many short cycles you have experienced in Sri Lanka over the past two decades.
The goal of most strategies is to build an enduring long lasting competitive advantage to deliver the best offering, doing what the company does well and better than competition. Managers undertake periodic strategy reviews and set direction on the basis of an analysis of their industry and some assumptions on how it will evolve.
But, given the new level of uncertainty, many companies are starting to ask: When change is so rapid, how can a one-year — or, worse, five-year — planning cycle stay relevant? Sustainable competitive advantage no longer arises exclusively from position, scale, and first-order capabilities in producing or delivering an offering. All those are essentially static.
Where does it come from? It stems from the ‘second-order’ organisational capabilities that foster rapid adaptation. Instead of being really good at doing a particular thing, companies must be really good at learning how to do new things. Those that thrive are quick to read and act on signs 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. They have learned to unlock their greatest resource—the people who work for them.
Signals of change
In order to adapt, a company must have its antennas tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model and even reshape the information landscape of its industry.
In this information-saturated age, when complex, varying signals may be available simultaneously to all players, adaptive companies must similarly rely on sophisticated point-of-sale systems to ensure that they acquire the right information. And they must apply advanced data-mining technologies to recognise relevant patterns in it.
To respond to adverse changes, traditionally, the focus has been on a company’s offerings — essentially new products and services. But in an increasingly turbulent environment such as this, business models, strategies and structures can also become obsolete quickly. Adaptive companies are very tolerant of failure and becoming an adaptive competitor can be difficult, especially for large, established organisations.
Typically, these companies are oriented towards managing scale and efficiency, and their hierarchical structures and fixed routines lack the diversity and flexibility needed for rapid learning and change. Such management paradigms die hard, especially when they have historically been the basis for success.
The speed of adaptation is a function of the cycle time of decision making. In a fast-moving environment, companies need to accelerate change by making annual planning processes lighter and more frequent and sometimes by making episodic processes continual. Your business plan is a living document that evolves with time to ensure your venture adapts and keeps pace with the dynamic marketplace. For some businesses, it has become virtually impossible even to clearly identify in what industry and with which companies they’re competing. You got to be at your best to overcome the multiplying challenges. You should build capacity to look inwards for solutions.