We live, as the old proverb says, in interesting times. This can be exciting – especially if you are the disruptor, changing the industry you are in. It can also be frightening, and it can make good planning extremely difficult. When markets, regulations, the economy and technology all seem to be changing randomly and harmfully, there is sometimes a desire to avoid planning for the future. Of course, not planning for a scary future doesn’t mean the future won’t be scary. It just means you will be less prepared for the inevitable changes that are coming.
Some companies I’ve worked with are well suited to chaotic environments.
If you are used to wild fluctuations, it doesn’t matter if there are new, different wild fluctuations to deal with. For other companies, the future has been so rigidly prepared for, that any change can equal a death sentence. Most companies fall somewhere in between these extremes – and they have to contend with that middle ground. Chaos in your world can be harmful, and can upset your plans, but it won’t kill you.
This situation calls for good strategic planning.
Good strategy won’t eliminate the threats, but it will help us prepare to sidestep them or ride them out. In the Simplified Strategic Planning seminar, we teach that assumption errors are the Achilles’ heel of the planning process. Furthermore, we teach the key techniques for mitigating the impact of assumption errors.
At the end of the day, you will still have assumption errors, and the surprises that come with them.
A good strategy will leave you some flexibility to weather those surprises. This is not always the most efficient course, nor is it the one that leads to the highest growth. It is, however, the most survivable. If your company is public, this may be the hardest fight you face in strategic planning. After all, survive-ability is not exactly a metric that people can track and optimize in evaluating your stock. Privately held and family businesses tend to have a more healthy view of creating survive-ability in their strategies. They may even sacrifice growth and profit. It still behooves everyone to seriously consider the things that may happen if your key assumptions are incorrect. Then take some steps to create a defensible fallback position.
What can we learn from companies who have successfully navigated through uncertainty to survive and even succeed?
I hesitate to give examples here, because today’s success can easily be tomorrow’s failure. Consider the companies highlighted in such classic business books as In Search of Excellence and Good to Great. Many of them are far less successful today, and quite a few are no more. Still, here are some lessons we can take from those that continue to prosper today.
First, always have something on the back burner.
What does this mean? It means have a vision of who you are that is broader than your technology, product, or market. This is difficult to do while remaining focused. Applying your strategic competency in different places and different ways can go a long way towards maintaining that focus while increasing flexibility.
Second, build flexibility into your strategic competency – and the ways you use it.
If your competency allows you to dominate a niche, that’s great. One of the downsides of a niche, however, is that it can be obliterated quickly. Think of the fact that 80% of the endangered species in the U.S. are on the Hawaiian island of Kauai. They are endangered because their niche (for most of them, a high altitude, tropical swamp), is small, contained and sometimes threatened by environmental changes around it. Adapting your competency to work in a different ecosystem could be the difference between life and death for your company.
Third, seek to be the threat rather than defend against it.
Ultimately, there are some threats that you know are coming, and will wreck many fine players in your industry. Microcomputers wrecked many minicomputer enterprises. Streaming video wrecked the video rental industry. Some companies I’ve worked with have correctly thrown their weight into the wrecking and emerged as leading players. What would it take for your company to do this?
These three approaches are impossible without good strategic planning.
If your strategic planning isn’t pushing you to think about these approaches, check out the Simplified Strategic Planning process and use it to assess where you are going in this chaotic world.
If you’d like to discuss how we can help your strategic planning in uncertain times, consider holding a one-day workshop on Simplified Strategic Planning.
M. Dana Baldwin is Senior Strategist with Center for Simplified Strategic Planning, Inc. He can be reached by email at: email@example.com