The environment of most companies is becoming faster, more dynamic, and more complex. The most important areas of action for mid-sized companies are strategic
We live in a VUCA world: volatile, uncertain, complex, and ambiguous. This is not an entirely new insight, but its implications can hardly be overstated. In what is hopefully the final phase of the pandemic, strategic topics such as securing innovation and competitiveness and shaping digitalization have once again moved to the top of decision-makers' agendas. Over the next 20 years, we face a necessary and radical transformation of our economy. The driver of future prosperity and growth is innovation. Technology cycles will continue to accelerate, and with them the need to rethink planning and strategy.
Strategy and execution are closely intertwined
2018 study at the Massachusetts Institute of Technology (MIT) found that only one quarter of senior executives can correctly name their company's top three priorities. In an already complex and dynamic market environment, that number is a significant problem. Decision-makers at every level of an organization must be able to make the right calls quickly and coordinate with one another without waiting for central approval. Traditional, highly centralized decision-making processes are too slow and too rigid for that. For it to work, a company's strategic priorities must be clear and clearly communicated.
Three impulses for strategy development
- The team must be involved. The knowledge sits within the organization. Strategy cannot be developed at the "small card table" alone; it must emerge in collaboration with the core team. Beyond the substantive benefit, this ensures that a strategy is absorbed and accepted by the organization during the process of its creation.
- Clarity on the business model, today and in the future. Regardless of how the world evolves, every company will have a business model. Thinking in clear business model dimensions helps reduce complexity to the essential questions, run the right analyses, and move beyond an incremental mindset focused solely on improving the status quo. Thinking in business models makes it easier to look ahead.
- North Star and strategic goals. A strategy development process should end with a North Star and a coherent set of strategic goals. The North Star sets the direction: the why behind the work and a long-term, ambitious objective. The strategic goals deliberately break down the complexity of the analysis into a simple, measurable set of targets that every decision-maker in the organization can orient around
Author
Stefan Benndorf, Founding Partner scaleon GmbH
stefan.benndorf@scaleon.de
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