Can You Respond to Change? How To Build Agility Into Your Strategy Process
Traditional approaches to strategic planning fail to keep up with the rate of change in today’s business environment, meaning that many strategic plans rapidly become obsolete and lose relevance. Limitations of traditional strategic planning processes include:
· Lack of continuous review and update
· Cumbersome and verbose, not easily maintained or updated
· Plans not communicable in simple form, difficult to cascade
· Single point in time, based on current assumptions about the future
· Can be overly prescriptive, stifling ongoing innovation if applied literally
The reality is that for most organizations, instead of being a continuous activity, strategic review only occurs around specific events or triggers, such as a change in CEO or Board Chair, or due to shocks in the business environment such as technology changes, commodity prices, or competition. Unfortunately, these catalysts are not generally positive events, and when it comes to resetting the strategy the company is generally starting well behind their competitors.
Companies is highly competitive and fast-moving industries out of necessity are adopting agile methodologies through their organizations, especially in the areas of product management and development. This is a result of the realisation that products based on long term development cycles can become obsolete well before the product comes to market, and consumer and market expectations are for more regular and frequent updates and releases. The same challenges apply to strategic planning.
Strategic obsolescence is where the strategy is no longer reflects reality, or stakeholders no longer look to the strategy as the direction to follow. Main causes include:
· Loss of strategic relevance – the strategy no longer makes sense in terms of the longer-term outlook.
· Loss of operational relevance – the day to day activities no longer directly align to and support the strategic plan.
· Supercedence – where other documents such as annual operating plans and budgets take precedence in setting direction.
In most organizations, we find that it is rare to go beyond 18 months before we start seeing noticeable divergence from the strategy. The annual budget process one of the main drivers of this and is where this divergence becomes formalized. What rapidly happens is that we begin to have operating tensions between short and longer-term objectives and a lack of strategic clarity and accountability throughout the organization.
Agile strategy mimics the key aspects of agile methodologies and adopts the concepts of scrums and sprint. Think of scrums as periodic reviews, looking back over the last period to what can be learnt, and then looking forward to where you need to be focussing and prioritizing. The questions during a strategic sprint include:
Is the future state still relevant, optimal and desired?
Is the future state still feasible based on the current roadmap and where we are today?
If so is there an opportunity to optimize or improve the roadmap?
In most business environments, the future state definitions don’t change substantially between sprints. If they do, it’s more likely an issue of lack of team alignment and agreement rather than business factors mandating change. Where the focus usually lies is around optimizing the roadmap and allocation of resources and capital in support of the longer-term objectives.
The sprint is effectively the strategic priorities to be actioned in order to stay accountable to your longer-term goals. For most organizations who adopt agile strategy, a 6-month sprint cycle is generally preferred as it provides sufficient time to deliver tangible progress around these activities, as well as the ability to align to your annual operating and budgeting processes. Great organizations know how to balance the immediate needs of the business while also remaining future focused.
One of the common misconceptions around agile strategy is that it results in constant changes and pivots and becomes disruptive to the company operations performance. Contrary to this belief, agile strategies improve longer term performance as they not only ensure the ongoing relevance and viability of your strategy, they build focus and accountability around delivery of the activities necessary to ensure your long-term success.