Companies that seemed to be doing well before the pandemic are gasping for air while those lucky enough to have made their digital transformation before Covid-19 have been prospering. In 2021, things could be completely different -- especially if the world can get Covid-19 under control.
The current pandemic is the most dramatic and powerful shift in the business environment. Others -- such as rapidly emerging technological innovations, the growing power of social media to influence customer behavior, and the rapid flow of private capital into aggressive upstarts -- all require business leaders to adapt very quickly.
The traditional approach to business strategy -- the choices a leader makes about where and how to compete in order to achieve a company's goals -- is not well suited to this accelerated pace of change.
How so? Here are three key elements of traditional strategic planning that are simply too ponderous and bureaucratic to generate valuable, actionable insights quickly enough to get results:
- Business strategy is developed though interdisciplinary business unit teams working with outside consultants that spend months gathering research and assembling formal presentations.
- Steering committees of corporate executives review interim presentations, provide feedback, and send the business unit teams back to rework their presentations.
- Excessive quantification of unknown future outcomes often leads to strategic discussions that center on debating financial assumptions, which delays strategic decisions.
To help your business adapt more effectively as the pace of change accelerates, here are five ways business strategy will be different in 2025.
1. Envision the most powerful external forces that could upend your business.
Forces outside of your company's control are changing rapidly. Some could benefit your business, some could slash its revenue. Some could be irrelevant.
Leaders should operate a systematic approach to forecasting which of these evolving forces demand a change in strategy. Simply put, this process will help you reposition your company so that powerful external forces become tailwinds, rather than headwinds. By 2025, business strategy will start with such a process.
But what would it look like? As I described in Hungry Start-Up Strategy, the way to do this is through a process I called "boundaryless company development." Here, leaders set up listening posts throughout their value networks -- the chains of companies between raw materials and consumers. Leaders pick up weak signals, separate the signals from the noise, and consider options for how best to respond to the strongest signals.
2. Understand how current and potential customers' priorities are changing.
Current and potential customers are generally the most important places to listen for meaningful signals of change. Business strategists should engage these customers in a dialogue regarding their most significant concerns as they look to the future and how external changes could rejigger customer priorities.
These changing customer priorities could set up a scramble for how your company should respond. Do you need to develop new products to meet those new customer needs? Can you get products to market quickly that will satisfy customer needs more effectively than your competitors?
By 2025, business strategy will be well-equipped to enable your company to answer such questions.
3. Generate deep insights into incumbent and fast-growing upstart CEOs' strategic mindsets.
Your company will most likely face competition in seizing these growth opportunities. You will need to size up your competition quickly and accurately.
My soon-to-be-published book, Goliath Strikes Back, describes three strategic mindsets or ways that CEOs identify and solve problems. Two such mindsets -- "create the future" and "fast follower" -- are likely to challenge your ability to capture the growth. The customers of the other one -- "head in the sand" -- could be yours for the taking.
By 2025, business strategists will be experienced at analyzing which competitors have which strategic mindsets -- and will be able to position themselves appropriately.
4. Reimagine your business strategy to turn headwinds into tailwinds while winning on emerging customer priorities.
Having gained useful insights about emerging external forces, evolving customer needs, and the strategic mindset of competitors, business leaders will need to make key choices to reposition their company to capture the opportunities and defend against the threats.
These strategic choices -- such as which customer groups to serve, which customer needs to serve, what products to offer, and how to perform key activities such as product development, manufacturing, and sales -- will be made using traditional tools of business strategy.
5. Empower your people to set performance metrics tied to the reimagined strategy and hold them accountable.
What will be different in 2025 is that CEOs will treat their people like entrepreneurs, giving them the power to gather these insights, make strategic choices, and set their own key performance indicators. By 2025, CEOs will provide the resources people need and hold them accountable for achieving the goals.
These five changes will accelerate the competition for market share. Don't get left behind.