In my last post I discussed how strategic agility is necessary to quickly assess and respond to threats or opportunities that suddenly emerge with little warning. Managing in that kind of dynamic environment can lead some executives to believe that trying to anticipate the future and creating a multi-year strategic plan is a waste of their time. Who needs to plan that far in advance when the organization has developed an amazing ‘reactionary response reflex’ competency? Perhaps this is what they mean by ‘just-in-time’ management.
Longer-range planning is typically based on specific assumptions and beliefs about the future, which in turn helps identify what needs to be considered and started now. While the future can be difficult to predict with precision, strategy development must nevertheless take that uncertainty into account. To offset the risks of this uncertainty, it is necessary to incorporate some degree of flexibility into your strategies.
Strategic uncertainty increases the further-out you look. It is relatively easy to predict what will be happening with your business in the near-term. In all likelihood, your major markets and competitors will look and act the same tomorrow, or next week, or even within a month or two. In the short-term there are very few (probably only one) potential scenarios to consider. As much as we may think that major industry-changing challenges will surely emerge daily; the reality is that there is only a slim chance something that drastic will unexpectedly explode on the scene.
However, once you start looking three or more years out, the number of plausible scenarios increase. That said, even though you may think there are an infinite number of possible futures, it is far more likely that there are boundaries to what is truly possible or even plausible. Flexibility requires that you identify the appropriate strategic responses or options for each of those potential future scenarios. Having multiple strategic options will allow you to quickly execute what is needed as your market or industry evolves.
When looking at those strategic options, it is likely you will find that each strategy can be decomposed into a set of basic elements (such as: technology solutions, certain system enhancements, new market channels, new products or operational capabilities, enhanced pricing models, etc.). Elements that are common across most strategic options should be pursued without reservation due to the relative small strategic risk. In other words, you would be working on the right things no matter what scenarios emerge down the road.
As your business environment evolves and various events occur, the probabilities of certain scenarios might need to be updated. In addition, some of those previously defined strategic options might need to be exercised, while others are preserved or abandoned. As time moves on, there may be new future scenarios to consider. Thus making the case for a continuous and flexible planning process. While your executive team might be conditioned and fairly effective at rapid responses to unexpected threats or opportunities; the goal should be to more proactively anticipate and prepare for the future.