Strategic Agility: Adapting to Now & Next

“It is not the strongest of the species that survives, nor the most intelligent; it is the one that is most adaptable to change.  ~ Charles Darwin

via flickr.com CC by Corrado Dearca

Is strategic planning losing its seat at the table due to the need for speed?  There’s ample evidence that, no matter how much analysis and planning , strategic planning is inherently flawed, quickly out of date, and rendered ineffective due to slow and incomplete execution. 

A phrase that is gaining traction is strategic agility. For context, consider Wall Street Journal writers Joann Lublin and Dana Mattioli reports that current, recession-based business forecasts did not hold true.  Executives learned that strategic planning was more limited in effectiveness than before.

Office Depot, for example, began updating its annual budget every month, starting in early 2009. Other companies started to factor more extreme scenarios into their thinking. A few even set up “situation rooms,” where staffers glued to computer screens monitored developments affecting sales and finances.

The article also mentions Spartan Motors Inc., a Charlotte, Michigan manufacturer of specialty vehicles, who used to draft a one-year strategic plan and a three-year financial plan and then review each one every quarter. The chief executive John Sztykiel says that relatively inflexible method bears some of the blame for Spartan’s sharp drop in sales and gross profit during the first nine months of 2009 as the company did not respond quickly enough to shifting demand.

The same article reports a close-the-plant “trigger point” story by a McKinsey consulting client firm.  Learning how to adjust strategy and flex tactics in an agile manner is now critical.  Organizational agility is defined as the capacity to identify and capture opportunities more quickly than rivals do, citing a recent McKinsey survey which found that 9 out of 10 executives ranked organizational agility both as critical to business success and as growing in importance over time.

Google shows 64,700 for three keywords: strategic, agility and competency.  Google also shows 107,000 results for phrase “strategic agility“

What is Strategic Agility? According to strategicagility.com it is:

The ability to continuously adjust and adapt strategic direction in core business, as a function of strategic ambitions and changing circumstances, and create not just new product and services, but also new business models and innovative ways to create value for a company.

Three books and authors highlight the changes happening in the management consulting field.  In Fast Strategy, (Wharton School Publishing, 2008) authors Doz and Kosonen suggests three key enabling capabilities:

1. Strategic Sensitivity: both the sharpness of perception and the intensity of awareness and attention,
2. Resource Fluidity: the internal capability to reconfigure business systems and redeploy resources rapidly,
3. Collective Commitment e.g. Leadership Unity: the ability of the top team to make bold decisions –fast, without being bogged in “win-lose” politics at the top.

Michael Treacy, author of Double-Digit Growth (Portfolio Trade, 2005) and champion of relentless performance improvement, and core value disciplines, highlights the challenges of execution.  Treacy argues suggests a holistic approach for even the most traditional and stagnant industries. 

He recommends:

• a portfolio of ever-changing initiatives that direct you toward a vision, diversified by type, timeframe, and risk. 
• a more agile, disciplined approach to growth management can be developed by any team. 
• incorporating both strategy and execution into one step.
• shorter and smaller commitments you plan and execute
• the more initiatives you have, the greater likelihood you’re going to progress toward your objective.

The idea is to have initiatives-those things that can advance you toward the vision-that are small enough that they’re executable in a reasonably short period of time.

You don’t just advance toward the vision, but you actually go up a learning curve at the same time; you get smarter with each step. 

Reviewer  Simon London, of the Financial Times of London offers:

Double Digit Growth offers only a quick crib on each of its main themes. Thus the five growth disciplines are followed by the five paths to perdition, three value disciplines, a four-point methodology, three chief principles and so on.  

This is a shame. While the formula makes for easy reading, it contributes to a management-by-numbers approach that we all know is doomed to failure. Besides, there is plenty more to say. What, for example, of innovation? It seems strange to ignore this fertile path to growth.

For a read that includes details and execution, consider Strategy Moves (Prentice Hall, 2005) using perspectives on strategy that are based on combat models, including tactical implementations.

Author Jorge Alberto Souza De Vasconcellos outlines 14 strategies for competitive advantage – 6 attacks and 8 defenses.  Success depends on mastering the rules of:

• timing (when to perform each type of strategy),
• method (how to implement it), and
• alliances (whether to do it alone or in alliance).

Vasconcellos includes and exhaustive list of over 300 international business examples in the text including a case study on how Japanese auto firms conquered the US market using a combination of various moves.

Highlights:
Chapter 1 – You can win with ten or lose with a hundred: two examples from the field of war
Chapter 2 – The reason for victory and defeat – and the lessons for business
Chapter 3 – Attack: the six strategic movements
Chapter 4 – Defense: the eight strategic movements

As an example of chapter material, eight defensive strategies are described:  1. Signaling, 2. Creating entry barriers (fixed and mobile), 3. Global service, 4. Pre-emptive strike,  5. Blocking,  6. Counter-attack,  7. Holding the ground, and 8. Withdrawal.

As an example of pre-emptive strike, consider the two major characteristics:

• There is entry into new market, which differentiates it from defenses where no movement is involved
• The movement occurs before the competitor’s move

An example of this involves eBay France, reacting to an unexpectedly powerful local threatin the copying of a new rapid prototyping business model by start-up business leboncoin.fr based on using local ads from sellers, a significant local competitor, as described here.  Ebay’s response is based on significantly large customer preferences to physically see and try items before buying.

According to Sun Tzu, “victory goes to he who knows when to fight and when not to.”

Chapter 5 – When to follow each strategic movement
Chapter 6 – Organizational alliances
Chapter 7 – Case study: lessons from the Japanese car industry in a global age

And finally, Chapter 8 – Conclusion: the eight rules to follow to deserve success:

1. Defense is stronger than attack
2. Four Criteria that must be satisfied before attacking
3. A  natural sequence in choosing a defense
4. A natural sequence for choosing an attack
5. Success depends not only on how well a strategic move (for defense or attack) was selected, but also on how well it is implemented.
6. Strategic moves can be performed in isolation or in alliances
7. Internationalization is the most difficult form of attack
8. Success depends on mastering the rules of timing (when to perform each type of strategy); method (how to implement it); and alliances (whether to do it alone or in alliance)

Overall, organizational ability to learn and improve strategy and execution (flexing tactics) will succeed, even with initial poor strategy & execution, over organizations with great initial strategy and execution but poor ability to learn and improve.

To build Strategic Agility, it is necessary to build a participative organization.  Coming next month, more about participative organizations and what is needed to sustain them.

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