Nearly every time I talk with CEOs about their strategic planning process, I hear the same story: things are changing faster than ever before…it’s getting harder to predict what the world will look like…and it’s becoming more challenging to respond. With shifting business models, disruptive technologies, and ever-changing customer needs, this may in fact be true. What’s far more important than figuring out how to make accurate predictions amidst all the change, though, is aligning your leadership team on a view of the full range of possible futures, and based on that, having the courage and agility to shift direction when the environment changes.
Over the years, I have come to realize that strategy is a team sport and that success requires the entire team to be on board and aligned not only on what you’d like the future to look like, but also on what disruptions may come your way. Here are some guidelines high-performing leadership teams follow as they build strategy, grapple with uncertainty and seize opportunities faster.
1. Imagine all the possible disruptions – good and bad, likely and unlikely
At the start of every strategic planning process, set aside the typical inputs like product roadmaps, last year’s budget, and customer journey studies. Instead, focus on future scenarios that provoke the imagination and provide a more comprehensive view of what your business may confront down the road. And be comprehensive. In today’s complex environment, your business could face disruption from anywhere – political unrest, natural disasters, economic issues, technological changes, even third-party vendor breaches. Some are more likely than others but all represent significant risk (think data breaches like Equifax) that could shut a business down, or opportunities (think sharing economy) that could spawn new industries.
The process of developing multiple scenarios grounds leaders in the reality that they must be nimble enough to make decisions in light of the true uncertainty they face and gives them a shared understanding and vocabulary for doing that.
2. Challenge the “official future”
Your company has an inherent belief about how your customers, industry, competition, and technology will evolve. Every leadership team makes big decisions based on these assumed futures. But rarely is this implicit belief system stated, debated, or challenged. Back in the early 2000s I unsuccessfully suggested to executives at Kodak that their official future, which still included film cameras and photo processing, might need an upgrade. Their attachment to an official future that was wrong, caused the company to die. What are the official futures at today’s ride hailing companies, retailers, and unprofitable consumer technology companies? How often are the assumptions underlying their biggest investments challenged? Experience (and the stock market’s treatment of Uber and Lyft) says not enough. A sober view of the official future opens a leadership team up to a better understanding of their shared assumptions.
3. Incorporate diverse perspectives
To effectively consider a full range of scenarios and to challenge your official future, you need a diverse team on board – people that think differently from one another. That’s partially why progressive states like California have mandated female representation on public boards. When everyone in leadership and/or on the board represents the same demographic, it is difficult to credibly suggest that you’ve considered multiple voices. Look to advisory boards, parallel industries, and external points of view to help bring fresh and challenging ideas into the fold.
4. Conduct intentional experiments and strategic hedges
Moonshot or very lofty goals aimed at low probability outcomes can rally a team, but they are not a replacement for achievable strategies that prepare your company for the complexities of the future. Companies tend not to do strategic 180s based on some emerging market or contextual uncertainty, because doing so would put too much at risk, and cripple the team. Yet, strategy sessions often turn into moonshot conversations to respond to unclear market signals. Rather than creating daunting, seemingly unattainable, goals to hedge against disruptive futures (good or bad), consider the small steps your organization can take to be ready for what’s to come. Constellation Brands, Anheuser-Busch InBev, and Altria, for example, have all made investments in cannabis stocks – rather than building the businesses themselves. As the regulatory dust on cannabis settles, the true market becomes known, and the economics of the industry become favorable, these companies will be well prepared to capitalize on the opportunity. And, they don’t need to over-invest to have that strategic option available to them.
Here in the land of visionary Silicon Valley CEOs, companies boldly and ambitiously believe they have special insight into the next great thing, but we have learned recently that some of these bold proclamations don’t come true as planned. Leaders who intentionally consider multiple futures are better prepared when the context for the big bet shifts. And it’s the leadership teams that blaze these trails together with a shared peripheral vision that have the best chance of sustainable success. Does your leadership team have a shared understanding not only of what they want to see in the future, but also of what disruptions may come?Back to TriumIQ