The Business World is Transforming
  • By 2025 the worth of the Internet of Things will be $6.2 trillion.
  • The sharing economy will reach $330 billion by 2025.
  • For people starting their education, 65% will enter the workforce into jobs that don’t exist today.
  • The average tenure on the S&P 500 is dropping. Only 25% of the companies in 2012 will remain by 2023.
  • Automation and robotic usage will grow 2,000% from 2015-2030 amounting to $190 Billion market.
  • 86% of global CEO’s are championing digital transformation of their companies.
  • By 2025, half of world’s companies with revenues exceeding $1 billion will be headquartered in today’s emerging markets.
  • By 2018, the data created by the Internet of Things will reach 403 zettabytes a year.
  • By 2030 the population will be over 8 billion people and 50% of Global GDP growth will come 440 cities in emerging markets.
  • By 2030 more than 30% of workforce will be older than 55 in developed countries.

Strategic Planning in a Dancing Landscape

Strategic Planning in a Dancing Landscape
08/01/2017, David Lee , in MSSBTI, Strategic Transformation

“In preparing for battle, I have always found that plans are useless but planning is indispensable.” – Dwight D. Eisenhower


When you start a new business, it is like climbing a mountain. You have a goal in mind and generally understand what you need to achieve. Develop the idea, raise the money, and launch the business. Things remain fairly simple during the first years as well. Grow the business, add the people, build the client base and reach a breakeven point. Whew! It’s not easy, in fact it is one of the most difficult things to do successfully, but the challenge is simple to understand.

 

As your business grows and you look at the next set of opportunities, the situation changes. The landscape is no longer a single point to reach but a range of hills, and you are looking for the one that gives you the best view. Suddenly, there are many options with associated challenges and choosing between them becomes complicated. So, you do your analysis, you create a strategy to reach your optimum point, and you execute it. This requires a different set of talents and a different approach. You value analytics, organization, and project management. The meetings get longer and you discuss decisions more, but you feel good because you have made rational choices.

Then your world starts to get more complex and diversified. The landscape changes again. To this point, you relied on rational thinking and analysis. All you had to pay attention to was perhaps a few competitors and partnerships, and your market was fairly stable. Now you have many products across multiple markets and numerous partners and when you make a decision your competitors are countering. Forces you have no control over and seem far away are having major impacts on your business while opportunities you may never have considered are coming your way. Meanwhile, there may also be disruptors you cannot see or predict creating new types of competition. Perhaps they are using a new technology or are in another part of the world.

In this universe, by the time your team can develop a strategic plan and communicate it, the environment has changed and the assumptions you made are no longer true. Rather than resembling a mountain range, your landscape is more like a sea with moving crests of waves, incoming tides and nothing to anchor to. Rather than climbing, you have to tread water and swim constantly.  There seems to be an infinite number of potential futures, and you cannot see far enough to make choices. This is what some call a dancing landscape (a term I first heard from Professor Scott E. Page at the University of Michigan), and it makes developing and executing a strategic plan seem almost impossible because the future is not just unknown, it is unknowable.

The reason strategic planning is so difficult is that the way we think of it has become obsolete. The idea of the five year plan for which we have a staged implementation simply does not work for a complex organization. In most cases, three years is enough for the landscape to have changed entirely and in many industries a plan that is twelve months old is ancient history.

Consider a company that had an international expansion plan in 2012. Inevitably, this plan would have been anchored by one or all of the markets of Brazil, Russia, China or India. By 2013, Brazil and India were both suspect. In 2014, Russia collapsed due to oil prices and sanctions, and in 2015, China no longer looked like a strong bet. Oh, and by the way, here in 2016, Forbes is running articles promoting India as the growth market again while Russia and China are further in the tank.

Does this mean that strategic planning is useless for a complex organization? No, it is just the opposite.

 

Strategic planning is more essential, but leadership has to consider it differently using a Complexity Lens.

First, leadership creates alignment by defining the organization’s purpose. Next, leadership establishes a different concept of the planning time horizon. In the midst of complexity, it is helpful to think of strategy as a process of continuous review among a growing bandwidth for visionary change. This is very similar to the three horizon approach to strategy with some key differences. What is considered near term, mid-term and longer term is reduced significantly. The idea that strategic thinking occurs on 1 year, 3 year, or even 5 year horizons is collapsed to much shorter 3 month, 6 month, and 12 months (or perhaps shorter) with maybe a 2 year view in the misty distance.

The objective of leadership now becomes creating an organization that is capable of continuous change, where opportunities are examined as a matter of course, where communication and feedback are constant, and where diversity is encouraged. The organization seeks to create a balance between exploration and exploitation of found opportunities. This means trying many things, seeing how they work and incorporating those that show the most promise.

This approach expands the opportunity to create change throughout the organization and to the external environment including customers, partners, and even potential competitors. No longer is change a centralized, top-down process, but it is enabled at the local levels which have been seeded with leaders who possess adaptive behaviors and where interconnectedness is stimulated.

The size of the exploration efforts becomes relatively smaller. Rather than taking on one major new initiative that takes years to implement, the organization explores many simultaneous efforts. Feedback is received and those changes that are most viable locally are given the investment and resources to advance to a larger scale. In the medium term, changes are further explored still with the idea that some will fail. Those that succeed are advanced further across the organization.

The concept of retrievability becomes pervasive to the point that failure is seen to be as valuable as validation because it closes open questions. Only a few localized changes may finally result from this process, but they infiltrate the organization and accumulate as change is now everywhere, not just centrally driven. By the time the longer term horizon is reached, these cumulative changes are fully incorporated, and within a few cycles the organization can adapt to the point of reinvention.

Consider this then. On this horizon, change is happening everywhere, all the time, and interconnectedness enables it to permeate the organization all on a time line of 12 months or less. The concept of Strategic Planning changes in complexity from developing long term, stable objectives to enabling adaptation toward a purpose, interconnectedness, and emergent behaviors. Leadership keeps the organization aligned to the purpose and nurtures the building blocks of adaptation enabling sustainability and allowing the organization to float across the dancing landscape.

David Lee

Executive Director,  MSS Business Transformation Institute

David is a global executive with experience developing business relationships in Asia, Latin America, Europe, and the Middle East, with over 20 years of executive management experience in Fortune 500, mid-sized companies and start-ups. David is a highly regarded facilitator, writer, and public speaker on topics including Business Transformation, Managing Complexity, Disruptive Innovation, and Organizational Change Management.  ASAP™

 

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