Organisational strategy in a dynamic worldPosted on: September 2, 2021
The global business environment is changing. The Fourth Industrial Revolution, together with the COVID-19 pandemic and unpredictable worldwide economic activity, mean that a new world paradigm is unfolding. Experts also predict that trillions of pounds in consumer spending are ready to be injected back into the global economy.
To remain at the forefront in this dynamic world, or to capitalise on opportunities in its developing business environment, senior leaders must understand and interpret the rapidly evolving underlying trends in their industries. In all areas – from leadership and technology, to talent and shifting societal demands – strategic management and smart decision making are key to emerging as one of the winners.
Keith Youens, a digital advisory transformation and leadership specialist, explains that businesses face three main scenarios: they don’t survive this period; they survive the “hibernation” stage and attempt to return to business as it was pre-crisis; or they think ahead and reinvent themselves for the new paradigm.
Only the agile survive
IBM recently surveyed 3,000 CEOs – from nearly 50 countries and 26 industries – to explore how businesses can thrive in a post-pandemic reality. According to their research:
- 56% emphasised the need to “aggressively pursue” operational agility and flexibility over the next two to three years
- 85% of outperforming organisations (those in the top 20% for revenue growth of those surveyed) cite leadership as critical to business performance
- 97% more outperformers than underperformers support employee wellbeing, even if it hurts profitability
- Outperforming business leaders are prioritising talent, technology and partnerships
The requirement for organisational agility and strategy is evident; leaders are defining next-level competitive advantage in relation to their customers, products and operations. Many are actively planning ahead in order to future proof and, therefore, remain resilient, sustainable, relevant and competitive in this changing landscape. As a result, many recognise this may call for transformation within their businesses.
As is evident from the research, thriving businesses are also keen to support their staff in this rapidly changing world and workplace.
Dr David J. Teece is a co-founder and leader of Berkeley Research Group. A renowned economist, he is an authority on industrial organisation, technological change and innovation, and recognised by Accenture as one of the world’s top 50 business intellectuals.
Teece, together with Gary Pisano and Amy Shuen, established the theory of dynamic capability. They define dynamic capability as a firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments. Distinct from operational capabilities, these focus on an organisation’s capacity to adapt its resource base. As a framework, dynamic capabilities suggest that core competencies should modify short-term competitive positions in order to establish long-term competitive advantage.
According to the framework, an organisation needs the corporate agility and capacity to:
- Sense and shape opportunities and threats
- Seize opportunities
- Maintain competitiveness through enhancing, combining, protecting or configuring its tangible and intangible assets
Clearly, many of the outperforming CEOs in the IBM study are thinking along these lines.
Dynamic capability also recommends that a business ‘learns’ about its in-house routines and dependencies, and behaviours, coordinates, transforms and co-specialises its new and existing strategic assets, and practises asset orchestration.
Identifying an organisational strategy
As discussed, a dynamic world necessitates a dynamic strategy. Any effective planning process should be underpinned by an understanding of the market in which the business or enterprise operates. So, how is this achieved?
There are a multitude of ways in which a business strategy or business model can be adapted to keep up with new and changing demands – and they depend on what the aim is. Is the business seeking to increase its market share or open another business unit? Is it failing to meet its metrics and seeking to address this? Does it need to pivot its offerings to respond to changing consumer needs?
Harvard Business Review developed a tool to help companies manage their innovation portfolio: the Innovation Ambition Matrix. The Matrix outlines the various approaches a company could take depending on whether they aim to make:
- Core innovation initiatives, which involves making incremental changes to existing products and incremental inroads in new markets
- Transformational initiatives, which involves creating new offers or areas of business to serve new markets and customer needs
- Adjacent innovations, which involves leveraging something the business already does well into a new space
Using the Matrix, senior leaders can assess all available initiatives, identify the most viable overall ambition, and devise appropriate methodology and project management framework to meet these ends.
Adaptability and adaptation
You don’t have to look far to find a case study of a business which has made adaptations after identifying opportunities in the sector or addressing issues in their current model.
There are a variety of instances where change is required, for example:
- Changes in technology could mean there are more efficient ways of conducting business – e.g. the move to digital banking in an increasingly cashless society, or using social media platforms to connect with consumers
- Consumer trends and lifestyle changes could mean that a business emerges to plug a service or product gap – e.g. the increased demand for fast-food ordering and delivery services or a restaurant adding more plant-based options to their menus to attract a wider customer base or increase sustainability efforts
- New routes to market may be needed to stay competitive and broaden reach – e.g. retailers move online to harness e-commerce opportunities or start offering a home-delivery service during the COVID-19 pandemic
- Products and services may become obsolete – e.g. advances in technology mean the Internet and search engines replace the need to look up a phone number in a physical phonebook or mobile phones replace traditional landlines
There is often crossover between various developments and requirements, and a business may find that practising adaptability in one area can solve other adjacent business problems. By forecasting emerging trends and technologies, organisations can bring new, original ideas to the table or adapt existing products, services and ideas to meet future needs.
Vice presidents, CEOS and other senior leaders must focus on value creation – using their resources and ideas to create something useful and desirable to users. Strategy implementation can take time, and can require buy-in from major stakeholders. Through performance management of products, services and current operations, the ability to clearly identify future opportunities can be key.
Face the business challenges of a dynamic world head-on
Do you have the ambition and energy to guide a business through an uncertain climate? Are you eager to upskill yourself in change management?
Prepare yourself for the dynamic, rapidly changing world of business – in which innovation and an entrepreneurial mindset can set you apart – with Keele University’s online MBA programme.
Through this flexible programme, you will gain the skills to navigate a changing organisational environment that is connected across national and international boundaries.