Perhaps the greatest challenge business leaders face today is how to stay competitive amid constant disruption.
Any company that has made it past the start-up stage is optimised for efficiency rather than for strategic agility – the ability to capitalise on opportunities and dodge threats. I could give you 100 examples of companies that recognised the need for a big strategic move but couldn’t pull themselves together to make it and ended up sitting by as nimbler competitors ate their lunch.
We can’t keep up with the pace of change, let alone get ahead of it. At the same time, the stakes – financial, environmental, political – are rising. The hierarchical structures and organisational processes we have used for decades to run and improve our enterprises are no longer up to the task of winning in this faster-moving world. In fact, they can actually thwart attempts to compete in a marketplace where discontinuities are more frequent. Companies used to reconsider their strategies only rarely. Today any company that isn’t rethinking its direction at least every few years and then quickly making significant operational changes is putting itself at risk.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
The existing structures and processes that together form an organisation’s operating system need an additional element to address the challenges produced by mounting complexity and rapid change. The solution is a second operating system, devoted to the design and implementation of strategy, that uses an agile, network-like structure and a very different set of processes. The new operating system continually assesses the business and the organisation, and reacts with greater speed and creativity than the existing one. It complements rather than overburdens the traditional hierarchy, thus freeing the latter to do what it’s optimised to do. This is not an “either or” idea. It’s “both and.” I’m proposing two systems that operate in concert.
The new strategy system expands on the eight-step method I first documented 15 years ago (in Leading Change), while studying successful large-scale change: establishing a sense of urgency, creating a guiding coalition, developing a change vision, communicating the vision for buy-in, empowering broad-based action, generating short-term wins, never letting up, and incorporating changes into the culture.
There are three main differences between those eight steps and the eight “accelerators” on which the strategy system runs: (1) The steps are often used in rigid, finite and sequential ways, in effecting or responding to episodic change, whereas the accelerators are concurrent and always at work. (2) The steps are usually driven by a small, powerful core group, whereas the accelerators pull in as many people as possible from throughout the organisation to form a “volunteer army.” (3) The steps are designed to function within a traditional hierarchy, whereas the accelerators require the flexibility and agility of a network.
For a long time companies could invest all their resources in doing one new thing very well: they might spend two years setting up a large information technology project that required many changes and then, after a long pause, spend five years developing a propensity for risk-taking in the product development function. They could put the eight-step process to work and then pack it away until it was needed again. But that methodology has a hard time producing excellent results in a faster-changing world.
Today companies must constantly seek competitive advantage without disrupting daily operations. The whole notion of “strategy” – a word that is now used loosely to cover sporadic planning around what businesses to be in and important policies concerning how to compete in those businesses – has to evolve. Strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on them and completes those initiatives swiftly and efficiently. I think of that force as an ongoing process of “searching, doing, learning and modifying,” and of the eight accelerators as the activities that inform strategy and bring it to life.
Mounting complexity and rapid change create strategic challenges that even a souped-up hierarchy can’t handle. That’s why the dual operating system – a management-driven hierarchy working in concert with a strategy network – works so remarkably well.