How to prepare for the unpredictable
We are currently in the thick of things with the COVID-19 pandemic. Many businesses have had to shut down to reduce the spread of the virus. Others have had to modify their approaches – such as increasing/adding take out or delivery services. And a few (medical supplies and equipment) are scrambling to ramp up production. Everyone is reacting as best they can to this crisis.
But, what happens when the crisis is over? Do we expect that the business world will be the same? Or do we expect dramatic changes in consumer needs, supply chains and regulatory requirements? Perhaps there will be a blend of both. But it’s critical that businesses start now to think about how they can quickly adapt to a very different business environment.
An Adaptive Approach to Strategy
Over the past several years, there have been many challenges to the traditional approaches of strategic planning. In many ways, the complex and dynamic nature of business has made these long term plans too rigid for many types of industries. However, many believe there is still a place for traditional approaches to strategy. The bottom line is that there are many different ways to develop strategy, and it should be aligned with a purpose. In this case, the purpose is to prepare for a highly unpredictable future.
While there may be some industries that remain essentially the same in the post pandemic world, I think we can expect changes in others. For example, I have heard debates on how isolation and quarantine will have long term impacts on consumers. As we rely now on online ordering and virtual connections – will we continue to use those services more going forward? Or will we revert the other way – back to more face-to-face interactions? Or perhaps there will be different extremes across industries, products and services?
What can businesses do to prepare?
As I mentioned, some businesses have been able to adapt instantly to a new demand. For example – small distilleries were the first to start producing much needed hand sanitizer by using their distilling equipment and knowledge to produce alcohol in suitable concentrations. In Canada, manufacturers are now being asked to take on production of essential medical equipment and supplies. And the demand for online ordering and delivery of groceries and medications is off the charts!
So what enables some business to quickly ramp up for a new opportunity? First – it’s apparent that they need to have a clear understanding of their core competencies. What are they really good at, and how could that be applied to a completely different product, or even industry? Take the distilleries for example. They had the knowledge and equipment for distilling alcohol, and could thus immediately adapt their process to create hand sanitizer grade alcohol.
The other critical questions are:
- How can businesses be prepared to take advantage of new opportunities as the world gets back to “normal”? And can we do that quicker, better, more efficiently than our competitors?
- How can businesses prepare for and mitigate risks of changes in consumer demand, interrupted or depleted supply chains and other changes outside of our control?
5 Steps to Create a More Adaptive Strategy
While I don’t necessarily agree with some of the “pure” adaptive strategy approaches, the concept is a very important one for this turbulent, unprecedented environment that we will emerge in. Without a crystal ball, we can’t truly know the opportunities and risks – although we can certainly identify some possibilities. But we can and SHOULD know our core competencies, and what we can bring to the table in this new world. So here’s my approach to creating an adaptive strategy that will prepare you to act quickly.
Define your core competencies
You need to be very clear on what you have to offer. What assets, processes and knowledge do you have that might be leveraged for other products, services or partnerships? Surprisingly, I have found that most organizations are not at all clear on their core competencies. They may think it’s their “state of the art” equipment when in fact, it’s the knowledge of the employees operating it, or their high quality supplies they can uniquely source. It may take some digging, but it’s essential to truly understand your unique strengths.
Identify potential opportunities in the emerging environment
As I mentioned above, you need to think about what might change around you. What new needs might customers have? Will there be new markets? Collaborations that could be beneficial? Here, you can get your employees involved in some brainstorming.
Identify potential threats in the emerging environment
As above, you now need to consider how changes around you might have a negative impact. Changes to customer needs and wants, interruptions to supply chain, cash flow problems. Again, be thorough in considering all perspectives.
Based on the above analysis, consider how you can use your core competencies to both leverage opportunities and reduce/mitigate threats. Try to come up with a range of possible scenarios, and consider how you would actually implement them when the need arises. This will ensure you are prepared to act quickly.
Implement, Assess, Improve
While the above processes are aligned with (but more simplified than) traditional approaches to strategy, this is where they really diverge. Rather than selecting a scenario and charting a long term course, this approach involves regular assessment and continuous improvement. Set performance measures, assess them often and adapt as you go.
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