Transformation: Do your teams need a strategy?

With growing uncertainty, the call to become lean or agile instead of implementing a strategy is getting louder. But a strategy is still needed for your teams. Read why!
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4 mins read

With growing uncertainty, the call to become lean or agile instead of implementing a strategy is getting louder. It looks like strategy has gone out of fashion, is no longer needed, or is too complex to be developed.

Granted, strategy projects have rarely been completed within a few days. Teams and consultants often collect extensive evidence to prepare the strategic decision. They are looking for an explainable, defensible, and robust answer as to how the company gets from A to B with minimum risk and cost. Not infrequently, the result is above all reflected in a new org chart, but not in an understanding of how the company wants to create customer value in the future.

Often there are many unknown influences or events that nobody really expects (see Corona). Setting up and planning scenarios for all possible combinations can - although helpful - take on a very large scale.

Strategy activities are therefore often lengthy and hinder simultaneous market activities and progress if major decisions are postponed during strategy development.

You might ask yourself: Why develop a strategy when you can already learn from the market?

Studies have shown that only a small part of strategic goals is ever achieved. There are many reasons for this, such as the missing link between strategy development and its implementation, lack of responsibility, an overload of the company with several simultaneous strategic initiatives, lack of customer understanding, or lack of processes or skills.

You might ask yourself: Why develop a strategy when there is a high probability of missing goals?

When uncertainty causes stress and fear, our human brain tends to narrow the focus: "Let's do what others do, only better". We, humans, try to avoid the risks associated with taking a certain position. It feels safer to follow the example of others who have already proven that the way works.

Also, many people prefer to jump into activities to make the mind feel like "accomplishing something”.

You might ask yourself: Why develop a strategy when you can be "productive" without?

All these points could motivate managers to focus on "business as usual" or to become lean or agile. They could throw themselves into experiments and iterations, ignoring the design and execution of strategies.


Why your teams need a strategy


Try "business as usual" and ignore the changing needs of customers or other stakeholders or changes in the environment. Or try the simplest strategy: "make money". How long will this be a wise choice?

In this case, values and priorities are unclear. Nobody in your company knows what to do. Conflicts of interest and goals arise everywhere. All in all, the challenges pile up. In the best case, you keep up with the Joneses. At some point, you will receive a call for a direction or strategy. Or you will have to focus the company on the core that will hopefully still be profitable.

Are there such signs in your company?

Now imagine the other extreme. Every employee can answer the following questions with confidence:

  • What is the company's aspiration to create customer value?
  • In which fields does it want to play?
  • How does it want to win in these fields?
  • What skills, processes, systems, and partners does it need to achieve this?
  • How can the individual employee best contribute?

With this clarity many advantages for your teams are created:

  • You avoid conflicting priorities and stick to established values,
  • You facilitate the coordination between different functions in the company,
  • You increase commitment when teams design and execute their sub-strategies in support of the corporate strategy,
  • You know what you will not do,
  • You can mobilize the right resources,
  • You know which steps are to be observed by customers or competitors,
  • You can make the path to the future as easy as possible by setting a focus,
  • You strengthen the connection of the company with its identity and brand. This gives meaning and incentive to the people involved.

To give you an example, think of Philip Morris. In 2016, the company announced a new goal: to create a smoke-free future. It focuses resources on the development, scientific substantiation, and responsible marketing of smoke-free products that are less harmful than smoking. All with the aim of replacing cigarettes completely as soon as possible [1].


The company intends to discontinue its old core business, the manufacture and sale of traditional cigarettes. They concentrate their strategy on smokeless products, such as electrically heated tobacco.

Although this is a tough call for all employees in this company, it should be clear where the organization is heading. It is combining all its strengths.

With this decision came many uncertainties at all levels of the company. The new product will be sold directly, not just through retailers. The consumer must make an initial investment in the device. This represents a small new hurdle to buy into the system. The device may require occasional maintenance or may break. In the past, the company has rarely seen cigarettes complained of malfunctioning.  The new product must be verified. It requires the support of many stakeholders.

However, there is a plan that has been stable for years. Everyone knows where they will go. And they have made progress. Despite the declining demand for traditional cigarettes, the company has managed to stabilize revenues with the new products.

Knowing how the company intends to create value for customers in the future is a great advantage. Being agile and lean does not answer this question, but it can be part of the plan.

[1] https://www.pmi.com/integrated-report-2019/pmi%27s-statement-of-purpose

Innovation

I work with clients who have the courage to grow.

Dr. Holger Laabs

founder and CEO
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