Many organizations are facing the prospect, that the demand will not come back in a foreseeable future. You have done, what is needed in the short term.
Now it is time to find new ground. Where do you want to put your energy to? Optimizing the old business? Building positions that help your organization to regain strength and build resilience? Venturing out for new customers, or reaching your customers in new ways?
1. Map your current portfolio
A glance to the portfolio will be a good starting point. You might map your activities including the cash inflow/outflow in a chart like this (adapted from Michael G Jacobides). You will get a current view onto your question marks, rising stars or cash cows/drainers.
Since no-one knows the future for sure, it might be difficult to judge, what is challenged in the near term or what will be promising tomorrow. To help with that you might lean on trends, the result of a PESTLE analysis, or the business model canvas to map uncertainties etc.
Now you can see where action is needed.
2. Think about the future
Having established a view on the situation you need to know, where to start the strategic considerations. How do you approach strategy? How can you align short term activities with a strategy, that is still to emerge?
Scenarios can help. What are the scenarios given the uncertainties you face? What additional developments might stress or boost the operating model? Elaborate on some scenarios and uncertainties that come with them, but don't overdo the scenario exercise.
Peter Drucker said: "I never see anything in the future! I just don't believe it!". The future is already there in form of weak signals. Just find these signals. He also said, that the best way to predict the future is to create it. So don’t get paralyzed by the scenario exercise.
In the current situation you choose the scenario with the greatest impact on your organization as a reference.
Articulate how you feel about the reference scenario. Is it perspicuous what is needed now? Or do you need to invest more time into envisioning the future that will work for the reference scenario? Answering this question leads you to the next step: the gap.
3. Gap - vision vs. capabilities
At this point you should be able to answer the question: Do you need to create a clearer vision or can you start by creating new capabilities?
For example, the airline industry need months to recover, if not years. Instead of jumping on something new and to build the operating system behind, they certainly need time to draw a picture of the future. That is the starting point.
Compare this to the automotive industry. The demand for cars might snap back faster. It is also clear, that in the mid term, launches and customer engagement might become more digital as trade shows continue to be cancelled. Connecting to people and potential buyers requires more online multi-channel communication than in the past. The move to enhanced digital communication and engagement is clear.
4. Ability - experimentation vs. execution
To make the strategy approach suitable for your organization, be honest with the abilities. This allows to choose an approach, that will work in the given setting. It does not mean, to avoid training the muscle at the other end of the spectrum. But to get started, choose the end, that is familiar to you.
Looking at your organization, where did the organization excel in the past? Was it execution (e.g. driven by productivity programs, M&A or other major projects)? Or have you been good at experimentation, placing many small bets to funnel them into a major new business? Where do you see more strength?
Establishing an understanding about the ability will help to make the strategy approach workable. Consider a manufacturing company, which was much focused on improving products and processes in the past. They might not have a strength in experimentation since it was considered a waste of resources. On the other hand, companies, like pharmaceuticals are used to place bets to discover the next breakthrough.
Having established the understanding on the two dimensions (gap and ability), you can now use the 2x2 chart to see which approaches are in your quadrant or close to the your position. The placement of the approaches is based on my judgement and experience. They notoriously difficult to quantify.
A word of caution: Experimentation and execution both bear risks. Experimentation might lead to nothing other than innovation theater, if not done with the strategic guidance, some management practices (e.g. lean startup) and a strong link to customers. Execution bears the risk of climbing the wrong ladder. Conditions might have changed or your assumptions were wrong. So in both cases have KPIs and reviews in place.
10 Approaches to strategy
There are many schools and approaches out there. For your comprehension, I tried to list the 10 that might be useful now. The list neither aims to be complete nor ranked. The list focuses on approaches that help to reinvent the organization. Approaches like, do nothing, boost productivity, strengthen brand perception and visibility or improving purpose orientation, or customer focus are therefore not covered. They might be still needed if you choose an approach from the list.
The approach that works best for your organization depends on the situation.
Here it comes:
Patronized by a major consultancy finding new growth comes down to place big bets on 5 levers. They are contributing individually but will work great when orchestrated. You will need to know, where you want to go, before you can apply the levers.
Having a strategic direction in place, you might use many small bets. The rationale is that you don’t know the winners at the beginning. And if your activities compare to a portfolio of an early-stage investor, the odds are not any better.
Blue ocean seeks a position in the market with low competition. Especially, if preferences have shifted and you can combine formerly opposing value drivers (e.g. budget and design), you might create a new place for your organization.
Running a corporate startup is a complementing approach to the business model generation. It focuses on crafting an innovation thesis, to introduce innovation management and mastering innovation practices. In effect, it is like running many small bets until a major opportunity emerges.
Effectuation is the only method in this list, you can do immediately and under high uncertainty. Starting with a rough idea in mind you get into motion by using your available resources. You risk a small amount of money and time to learn along the way and to give coincidence a chance to emerge. It lacks a little sound strategic direction, but it is a very good opportunity to pursue until the strategic direction emerges.
This approach tries to formulate the current mess and the ideal future. From that future, planning starts backward. It tries to be very systematic. The rationale is, that you cannot stick to your agenda if your idealized future is not thoroughly described. Events along the way will divert your attention. So idealized design helps to become pigheaded to pursue the goal.
Leaping might mean for your organization to harness a new capability or knowledge base. If the core knowledge of your organization is available to others than competition is widespread. By harnessing new knowledge you gain an advantage that you can use to address market needs.
Playing to win means to make choices on a set of questions. It is somehow like the idealized design, but might be focusing more on competing in the market.
This concept starts with a choice as well. How do you frame your arena in which you operate? By taking a broad scope on the arena, you may discover new opportunities. Then you engage in learning. By listening to customers or to the edges of the organization, you recognize the weak signals that will direct your activities into the future.
This is the leadership and culture approach. You bring the need for innovation into focus and run top-down and bottom-up initiatives. The rationale is that without the right culture, no strategy has a chance to survive.
Now you have an overview of different approaches. If you need support to choose your approach, please let me know + 49 176 471 88 250 email@example.com.