ICG-Capability

Strategy nowadays must more than ever before enable organizations to deal with uncertainty and rapid changes. Globalization and digitalization are on everyone’s lips. The changes and challenges they entail are, in many organizations, not merely discussion topics anymore, but often very present in the daily business. Time to ask: What does strategy mean in these times – and, moreover, what is a good strategy?

To us, the answer to both questions is: A good strategy gives orientation. Strategy is future-oriented communication. It is not so much about extensive analysis, big concepts with a large amount of SMART-defined strategic targets and extensive action plans. That are means for development and deployment of the strategy and, indeed, sometimes very useful. But if these means become more important than the content itself or even have rigid effects, they obviously do not serve the purpose.

In a VUCA world a good strategy – or rather good strategic work – needs to be agile. VUCA stands for a world that is changing on many levels with increasing speed and is more and more characterized by uncertainty about the current situation and the future. Within this world, important factors influence each other and are causing increasing complexity. This results in the fact that clarity is becoming rare and a lot keeps getting more ambiguous.

A traditional approach to strategy, which e.g. focuses only on product-market questions or product portfolios has long since ceased to be state-of-the-art. Classic strategy work, understood as methodologically clean concept work from analysis to the formulation of objectives and measures, has only limited effects. It is becoming obsolete because it simply takes too long in the fast-paced VUCA world, and therefore does not always reflect the relevant topics. Hence, it is time to look for new approaches, but also to rediscover well-known models. For example, the one from Mintzberg, who early on allowed flexibility and openness, without becoming arbitrary. He described that leaving strategic goals and directions deliberately or add new strategic goals to existing strategic programs is a useful strategic mode to take advantage of opportunities in a rapidly changing digital world.

Digitization is driving innovation and change, for example when it comes to business models or processes. IoT (Internet of Things) or Industry 4.0, to give two examples, are characterized by increasing interconnectivity and the abolition of existing limits. For example, core processes are no longer limited to one’s own organization, but are applied to the whole value-added process: Customers, suppliers and partners become part of the value chain in a new way. What we observe as well is that entire value-added stages or intermediates become obsolete. The way in which added value develops in different industries partially changes considerably. This also requires a new understanding of the boundaries of the organization. This is true for the own boundaries as well as those of relevant partners. Understanding of the own boundaries affords a deep understanding of the own organization’s identity and a clear mission and values. Defining, re-defining, sharpening and discussing these aspects is a necessary element of a good strategy. So, we are again where we started: strategy is communication. In addition, there are even some more aspects that underline the essential role of communication in a strategy process:

• The ability to use collective intelligence in the strategy process. That doesn´t mean to achieve dilution by average, but to achieve better results by collectively processing many, complex, ambiguous signals. This also includes the use of technical possibilities – from digital communication tools, in order to think and work together, as well as swarm intelligence and big data.
• This is also true if strategy work is seen as strategic dialogue with an appropriate involvement of stakeholders, customers and other partners – this offers more perspectives and ensure a sound and vivid picture of the world, and, last but not least, support the implementation of the strategy.
• As already mentioned, strategy work is more than working on products or services. It should be understood as work on change and organizational culture. In concrete terms, this means taking into account the “cultural compatibility” when examining the implementation requirements – otherwise the new strategy may not be effective (“Culture eats strategy for breakfast”). Freely adapted from Porter’s Bonmot, “strategy must be recognizable in the processes” it´s actually rather “strategy must manifest itself in the behavior of the key persons.”

In order for strategy to be manifested in the behavior of the key people – and as a consequence throughout the organization – communication is an essential prerequisite. This means paying particular attention to dialogue and feedback when developing and regularly updating the strategy, especially between those persons who are responsible for the strategic orientation and development of the organization.

Strategy, defined as future-oriented communication, or even better, “strategizing” is based on some key elements.

1. A strong ambition, also “aspiration” or “big goals”, which formulate the basic direction. For example, “We focus on growth.”
2. Guiding principles, decision-making and action principles, which are understood and shared in such a way that very concrete operational objectives and action guidelines for orientation are no longer necessary.
3. Core- or meta-competencies: special, not (fast) imitable and sustainable abilities of an organization that can be conferred into new markets, business models and challenges. They allow to use the opportunities offered by the VUCA world – without a priori being able to define which those skills are.
4. Core: the identity, the values, the mission – something that defines the core of the organization.
5. Last, but not least: Strategic priorities or directions which directly contribute to the ambition. Ideally, they focus on output- or impact-oriented results (objectives) which are measurable, or, at least, observable, and backed by strategic measures. Taken together, this constitutes the strategic working program.

Equally important, although, is the understanding that strategy work is a central task and not only a time-limited strategy development project: It is a distinct task that cannot be delegated to a strategy project team or strategy consultants.

Authors: Georg Brandner, Eva Grieshuber, Stefan Posch