How to Reimagine Strategy Planning to Embrace the Unpredictable
If the pandemic and the ensuing few years have taught us nothing else, it is the fact that we are in a world of terminal turmoil. Change comes fast and often. Black swans lurk around every corner. Yet many companies are still executing their strategic planning like it’s 1985. The new unpredictable normal calls for a different approach.
Historically, strategy creation was a long, linear process with a singular plan to win. This method worked well when product lifecycles were lengthy and technology-fueled disruptions were infrequent. The challenge with that now is that when conditions change—and they inevitably will—an organization wed to a singular plan is left paralyzed without an alternative. Or they overcompensate by trying many different things, reacting in the moment. On either extreme, a few things happen that rapidly derail growth and progress.
Some companies march toward their long-term plan ignoring signals that it’s time to shift—like lemmings off a cliff, they are unable to save themselves. Polaroid, Blockbuster, and Blackberry are unfortunate examples.
Then there are the companies that adopt a rapid reactive mode, trying to quickly pivot, without a future-focused view as their North Star. These organizations suffer from shiny ball syndrome, chasing something new with every market signal. They can’t gain any solid ground and they exhaust themselves in the process.
Walking the line requires “both/and” leadership: 3 ways to make it real
The middle and most optimal course is to hold on to the tension of creating energy and excitement in setting a compelling long-term vision while also working with all the teams to figure out how to realize that goal. The “how” is the hard task and will require leaders—and their teams—to do their best thinking and most challenging work.
Here is what to do differently to bring those two tensions together.
1. Deliberately broaden your approach and strategic aperture. When thinking through strategy, the best organizations look beyond the common or expected path, seeking not just to rely on a given Total Addressable Market or on packaged industry trends created by an in-house strategy team. To be sure, market size is important, but deliberately embracing strategy development in a different way can help teams break the common pattern of merely extrapolating current trends into the future. The best ideas and new perspectives truly come from everywhere, so engaging leaders (and the organization more broadly) to think bigger can help people break out of their current rivers of thinking, allowing them to view the business of today and the potential business of the future in fundamentally different ways.
2. Create discrete possibilities to focus thinking. With a wide runway for strategy creation, people (and leaders) can easily produce a list of strategic alternatives a mile long, to a point that they become quickly overwhelmed. This result is driven by the same logic that makes someone lose their way in the cereal aisle, paralyzed by having so many choices. After starting with a wide approach to explore strategic possibilities outside of a given industry or against known competitors, the best organizations then intentionally narrow the list to frame a few discrete and mutually exclusive options for the leadership team to consider. Evaluating a few potential options allows leaders to better access longer-term strategic thinking.
Take, for example, the experience of a fast-growing founder-led software company that had just gone public. Shortly after their IPO, the senior managers told Wall Street they would reach $1 billion in revenue in three years. Unfortunately, there was internal disagreement over which direction to take to achieve that target, creating unrest and confusion throughout the organization. We started by helping the senior managers gain clarity about which approaches to pursue and to define three mutually exclusive strategic plans. We then helped the executive team to better understand current state realities, to determine potential risks, and to solidify the ideal execution plan. We did that in part by leveraging the power of a quantitative model of their business to help them see the challenges and opportunities within each of the three strategic options.
1. Extend scenario planning beyond the C-suite. Stress-testing various scenarios and pre-planning responses is a well-honed tactic for traditional strategy development. Much of the power of scenario planning is that it creates space for debate and discussion, and for placing concerns on the table in a productive way. It also builds confidence and a sense of ownership in the planning group tied to the belief that their best thinking has been considered and applied. And it leads to more resilient and adaptive strategy execution. Rather than trying to cascade and communicate a linear plan throughout the company, the most adaptive organizations define the overall direction and use scenario planning to engage employees to work together on a solution. Here’s an example.
A company in a highly regulated industry was facing a slew of new carbon regulations being debated in the state legislature. Eager to prepare a response to whatever emerged from the legislature, the executive leadership team looked to their functional and business unit leaders for a deeper understanding of the technical and business implications of the full range of likely outcomes. We helped the functional leaders assess the potential regulatory paths, use scenario planning to explain the implications of each path for the company’s business, and scope out the likely responses of competitors to all of the possible changes. The cross-section of this data was then used to identify no-regret decisions that the company would make for each of the outcomes. The use of scenario planning allowed the functional leaders to suggest a menu of strategic options to the C-suite—and then provide the opportunity to continue down the various paths and “experience” the technical and business problems they would likely encounter. Overall, the approach exposed the functional leaders to the core strategic trade-offs of each decision and created a strong sense of ownership of the problem.
The fact is that while the world is no longer predictable, companies still approach developing their strategies as if markets are consistent and reliable. This is one of the 3 biggest reasons why companies fail to execute on great strategies (check out this white paper to find out more about the other two.) Actionable strategy is about engaging the organization in an integrated process of defining the future state, making that future believable and real to the touch, enabling people to change to make the organization ready for its changes, and creating the environment to assess and pivot along the way. Our work and research have shown that people can and will change—happily—and it’s our role as leaders to provide the conditions for their success. Start by embracing the unpredictable and make strategy development your organization’s super power. You’ll be well on your way to making your strategy actionable.
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This article was originally publish on Rotman Management
IN OUR CONSULTING WORK with teams at all levels—especially senior leadership—my colleagues and I have noticed teams grappling with an insidious challenge: a lack of effective prioritization. When everything is labeled a priority, nothing truly is. Employees feel crushed under the weight of competing demands and the relentless urgency to deliver on multiple fronts. Requests for prioritization stem from both a lack of focused direction and the challenge of efficiently fulfilling an overwhelming volume of work. Over time, this creates a toxic cycle of burnout, inefficiency and dissatisfaction.
The instinctive response to this issue is to streamline, reduce the number of initiatives, and focus. While this is a step in the right direction, it doesn’t fully address the problem. Prioritization isn’t just about whittling down a to-do list or ranking activities by importance and urgency on an Eisenhower Decision Matrix; it also requires reshaping how we approach work more productively.
In our work, we have found that three critical factors lie at the heart of solving prioritization challenges: tasks, tracking and trust. Addressing these dimensions holistically can start to address the root causes of feeling overwhelmed and lay the foundation for sustainable productivity. Let’s take a closer look at each.
You’re buckling in for an overseas flight in a brand-new Boeing 777. The pilot comes on the PA: “Ah, ladies and gentlemen, our flight time today will be six and a half hours at a cruising altitude of 33,000 feet. And I should mention that this is the first time I have ever flown a 777. Wish me luck.”
Before setting foot in the real world, pilots, military personnel and disaster response teams use intense simulations to learn how to respond to high-intensity challenges.Why should we place corporate leaders and their teams in situations without first giving them a chance to try things out? The risks are huge — new strategy investments can run into the hundreds of millions of dollars. BTS offers a better way to turn strategy into action: customized business simulations.
‘Now I Know What it’s Like to be CEO’
A customized business simulation of your enterprise, business unit or process, using real-world competitive dynamics, places leaders in a context where they step out of their normal day-to-day roles and gain exposure to the big picture. Participants make decisions in a risk-free environment, allowing them to experience critical interdependencies, execution best practices and the levers they can use to optimize their company’s key performance indicators. It takes the concept of a strategy and makes it personal, giving each individual the chance to see the direct impacts of their actions and the role they play in strategy execution.
Leading corporations are increasingly turning to business simulations to help build strategic alignment and execution capability when faced with the following business challenges:
- Key performance objective and new strategy implementation.
- Accelerating strategy execution and innovation.
- Improving business acumen and financial decision making.
- Transforming sales programs into business results accelerators.
- Leadership development focused on front-line execution.
- Implementing culture change as tied to strategy alignment.
- Modeling complex value chains for collaborative cost elimination.
- Merger integration.
Within minutes of being placed in a business simulation, users are grappling with issues and decisions that they must make — now. A year gets compressed into a day or less. Competition among teams spurs engagement, invention and discovery.
The Business Simulation Continuum: Customize to Fit Your Needs
Simulations have a broad range of applications, from building deep strategic alignment to developing execution capability. The more customized the simulation, the more experience participants can bring back to the job in execution and results. Think about it: why design a learning experience around generic competency models or broad definitions of success when the point is to improve within your business context? When you instead simulate what “great” looks like for your organization, you exponentially increase the efficacy of your program.
10 Elements of Highly Effective Business Simulations
With 30 years of experience building and implementing highly customized simulations for Fortune 500 companies, BTS has developed the 10 critical elements of an effective business simulation:
- Highly realistic with points of realism targeted to drive experiential learning.
- Dynamically competitive with decisions and results impacted by peers’ decisions in an intense, yet fun, environment.
- Illustrative, not prescriptive or deterministic, with a focus on new ways of thinking.
- Catalyzes discussion of critical issues with learning coming from discussion within teams and among individuals.
- Business-relevant feedback, a mechanism to relate the simulation experience directly back to the company’s business and key strategic priorities.
- Delivered with excellence : High levels of quality and inclusion of such design elements as group discussion, humor, coaching and competition that make the experience highly interactive, intriguing, emotional, fun, and satisfying.
- User driven: Progress through the business simulation experience is controlled by participants and accommodates a variety of learning and work styles.
- Designed for a specific target audience, level and business need.
- Outcome focused , so that changes in mindset lead to concrete actions.
- Enables and builds community: Interpersonal networks are created and extended through chat rooms, threaded discussions and issue-focused e-mail groups; participants support and share with peers.
Better Results, Faster
Well-designed business simulations are proven to significantly accelerate the time to value of corporate initiatives. A new strategy can be delivered to a global workforce and execution capability can be developed quickly, consistently and cost-effectively. It’s made personal, so that back on the job, participants own the new strategy and share their enthusiasm and commitment. This in turn yields tangible results; according to a research report conducted by the Economist Intelligence Unit and sponsored by BTS, titled “Mindsets: Gaining Buy-In to Strategy,” the majority of firms struggle to achieve buy-in to strategy, but those that personalize strategy throughout their organization significantly outperform their peers in terms of profitability, revenue growth and market share.
Business Simulations: Even More Powerful in Combination
Comprehensive deployment of business simulation and experiential learning programs combines live and online experiences. The deepest alignment, mindset shift and capability building takes place over time through a series of well-designed activities. Maximize impact by linking engagement and skill building to organizational objectives and by involving leadership throughout the process.
Putting Business Simulations to Work
Simulations drive strategic alignment, sales force transformation, and business acumen, financial acumen and leadership development, among other areas. A successful experiential learning program cements strategic alignment and builds execution capability across the entire organization, turning strategy into action. Results can be measured in team effectiveness, company alignment, revenue growth and share price.
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I recently read an HBR article discussing why the traditional approach to leadership development doesn’t always work.
It stated that instead of traditional methods, the best way to identify, grow and retain leaders to meet today’s demands is to “Let them innovate, let them improvise and let them actually lead.”
Over the past 30 years, as we’ve partnered with clients facing a vast range of challenges, we’ve seen the truth behind this – that people learn best by actually doing. That’s why business simulations are such a powerful tool: they allow people to do and lead within a risk-free environment, and condense years of on-the-job learning experience into a few days, or even hours.
We also know that learning is not just a “one and done” situation – it is a continuous experience. In many cases, a learning journey, which blends a variety of learning methodologies and tools over time, is the most powerful means of shifting mindsets, building capabilities and driving sustained, effective results.What a learning journey looks like depends entirely on the context of your organization. What challenges are you addressing? What results are you driving for? What does great leadership look like for your organization?
To bring this to life, imagine the following approach to a blended learning journey for aligning and developing leaders – in this scenario, within a financial services firm: Financial technology has “transformed the way money is managed. It affects almost every financial activity, from banking to payments to wealth management. Startups are re-imagining financial services processes, while incumbent financial services firms are following suit with new products of their own.”
For a leading financial services company, this disruption has led to a massive technology transformation. With tens of thousands of employees in the current technology and operations group, the company will be making massive reductions to headcount over the next five years as a result of automation, robotics and other technology advances.
This personnel reduction and increased use of technology is both a massive shift for the business as well as a huge change in the scope of responsibility that the remaining leaders are being asked to take on moving forward. As such, the CEO of the business unit recognizes the need to align 175 senior leaders in the unit to the strategy and the future direction of the business, and give them the capabilities that they need to effectively execute moving forward.
To achieve these goals, BTS would build an innovative design for this initiative: a six-month blended experience, incorporating in-person events, individual and cohort-based coaching sessions, virtual assessments and more. Throughout the journey, data would be captured and analyzed to provide top leadership with information about the participants’ progress – and skill gaps – on both an individual and cohort level, thus setting up future development initiatives for optimal success.
The journey would begin with a two-day live conference event for the 175 person target audience, incorporating leader-led presentations about the strategy. The event would not just be talking heads and PowerPoint slides, but rather would leverage the BTS Pulse digital event technology to increase engagement and create a two-way, interactive dialogue that captures the participants’ ideas and suggestions. Participants also would use the technology to experience a moments-based leadership simulation that develops critical communications, innovation and change leadership capabilities, among other skills.
romAfter the event, participants would return to the job to apply their new learnings. On the job, each participant would continue their journey with four one-on-one performance coaching sessions, in addition to a series of peer coaching sessions shared with four to five colleagues. They also would use 60-90 minute virtual Practice with an Expert sessions to develop specific skill areas in short learning bursts, and then practice those skills with a live virtual coach. Throughout the journey, participants would access online, self-paced modules that contain “go-do activities” to reinforce and encourage application of the innovation leadership and other skills learned during the program.
As a capstone, six months after the journey has begun, every participant would go through a live, virtual assessment conducted via the BTS Pulse platform. In three to four hours, these virtual assessments allow live assessors to evaluate each leader’s learnings from the overall journey and identify any remaining skill gaps. The individual and cohort assessment data would then lead to and govern the design of future learning interventions that would continue to ensure the leaders are capable of implementing the strategy.
As you can see, this journey design leverages a range of tools and learning methodologies to create a holistic, impactful solution. It’s not just a standalone event – each step of the journey ties into the one before, and the data gathered throughout can be used well into the future in order to shape the next initiative .
Great journeys or experiences like this can take many forms. In addition to live classroom and virtual experiences, there is an ecosystem of activities, such as performance coaching, peer coaching, practice with an expert, go-dos, self-paced learning modules, and more, that truly engage leaders and ensure that the learnings are being reinforced, built upon, practiced and implemented back on the job. We find that these types of experience rarely look the same for every client. There are many factors that determine which configuration and progression will make the most sense. There is one common theme that we have found throughout these highly contextual experiences, however – that the participant feedback is outstanding and the business impact is profound.