When is it worth updating the strategy? — 1.02
Markus Westerlund
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The company management or the entrepreneur doesn’t necessarily realize that its chosen strategy can cause a bad result. It is also possible that the company is making an ok yearly result. However, if the output is only ok, then it means there is tons of improvement. You want a winning outcome. Not having a winning result is, for practical purposes, an undesirable outcome. Everything depends on your chosen strategy. Let’s talk about updating the strategy.
I have facilitated strategy processes in over a hundred companies over the years. My experiences have allowed me to identify, together with my colleagues’ various situations when companies choose to update their strategy. We have categorized these situations into three groups. Each group indicates an appropriate time to update the strategy.
When is the time to update the strategy?
The first group consists of force majeure situations. Some things must get done because there is no other way. According to the yearly clock, it might also be the right time to do it.
The second group consists of situations in which the company lacks focus. When the company operations are ongoing, the staff start to take on even more activities. Activities expand to the point that there are too many activities. When that happens, the management must bundle everything back together, and the staff needs a reminder of the core of the company’s activities. It is, of course, possible that the heart of the business develops over time, which also ends up affecting the various activities the staff engages in.
The third group includes situations in which the strategy is considered good, but implementation does not occur. Delays happen time and time again for various reasons.
Mergers & Acquisitions
In situations where a company’s ownership changes, a fusion happens, or a company gets bought, the company leadership should create a new strategy.
A new CEO is always the one who will leave no stone unturned. Their job is to renew the company. A new organization is always the essential tool in strategy implementation. In practice, organizing happens intuitively. After that, the strategy gets crystallized with the new members of the staff. The plan is intuitively known, which means organizing happens first and strategy creation after that.
If the company owners wish to sell the company, they tend to desire to maximize its value. The investors ought to receive a presentation of a well-thought-out strategy.
Market changes
A force majeure situation might also occur if the market changes dramatically. Competition might overtake us and steal our market share. Not good. In other instances, regulations (laws) may vary. If this happens, the company gets forced to think about how to proceed quickly (immediately for all practical purposes).
Finance and routines
The company can make a loss, which means the numbers are negative. If this happens, it means the company is looking at a turnaround case. If nothing gets done, money will eventually run out. Some typical solutions include downsizing and cutting down on expenses, which for many means layovers. Of course, that is not the only way, but it is a typical outcome when companies make a loss.
It’s also possible to be in a situation where the company has too much money in the bank. It needs to be invested in something or handed out to the owners as dividends, for example. Companies don’t have a purpose of being piggy banks. The money is either invested or put into better use somewhere else.
Then there is the very typical “Its spring, and it’s time to think!” -case. I’m very much against this routine-like way of operating, where last year’s slides and images get used all over again. Get a new grip! Forget last year’s presentation slides; come on!
A force majeure situation is clear. Everyone knows to stop and think.
Better competitiveness.
These are situations in which bloat has taken place and competitiveness has decreased. It would help if you did weeding, which allows the most vigorous and most desirable plants to thrive. Not all plants are equally desirable to have, but they take up valuable resources until we uproot them.
In some instances, there are many goals, and because of that, they have not gotten prioritized. In these situations, strong prioritizing is a good tool. Prioritizing is a central part of strategic planning.
The company’s strategic direction may have been in people’s heads for years. Even so, it is a strategy, and it can be brilliant and very agile. When the company grows, there comes the point where there are so many people, it is impossible to control the direction the company is heading. At this point, you need to write down your strategy.
More growth
More growth is needed when people aren’t satisfied with the situation. The growth isn’t sufficient enough. Why doesn’t the company offering please the customers? Houston, we have a problem.
Perhaps the company delivers too high-quality products and services. Operations work well, but for some reason, the competition, small start-ups, surpass with massive growth while the larger company stays in place. Too high quality can be a reason to update the strategy.
It is also possible that a new option arises. Perhaps it is decided that this new road is the one to follow. You never know what happens tomorrow; therefore, one must have the agility to update the strategy when necessary.
More excitement
Energy is something that might be lacking from the operation. The operation’s primary mission might be unclear, or we are too bureaucratic, and improvement just isn’t happening.
The atmosphere can be such that people no longer believe in the operation. Success is the biggest motivator, but if there is no success, a suspicion might arise that the business isn’t as good as people initially thought. That, of course, is the time to update the strategy.
In the third group, the strategy itself is good, but there are problems with the implementation.
The gap in the strategy
Somehow a gap between the strategy and implementation has formed so that the strategy isn’t concrete.
It might be that the strategy has unrealistic goals, and people give up. It’s a great talent to balance goals on the right level of ambition. If the organization has a clear purpose, it helps boost people’s morale.
Of course, the company may have the wrong people for the situation. The market has changed, and now we need a new and a fresh way of thinking, new beliefs about how the business runs. When water runs through sand, it creates a gorge. The more we have poured “water” through our operation, the more we have started to believe in our victorious concept. And then, we end up losing.
Perhaps something changes; usually, it’s technology. New technology enables a new way of operating. That’s when a gap between the strategy and implementation exists. The strategy can be made as good as possible, but if the implementation gets done the old way, it doesn’t succeed; it doesn’t take flight! We must update our way of thinking.
Slow Renewal
Renewal may not happen sufficiently fast. We should gain an understanding of the future. The current way of selling and marketing is problematic. Digital marketing is not familiar, and people are skeptical. The reason might be about attitudes, the water gorge. People don’t dare to try and climb over the fence.
Most people feel that their comfort zone is safe. I belong to the school of thought, according to which only consistent, agile learning is safe. Still, water is dangerous! Interestingly, people think they’re safe in their comfort zone. They’re only lying to themselves; it’s the exact opposite. Few things are as dangerous as staying put. Opinions strengthen over time. People being to believe their bullshit.
Customer-oriented approach
Implementation might be a problem because the customer-oriented approach isn’t in order. We all agree to be customer-oriented, but we don’t think about the customers during meetings; instead, we think about internal issues. Therefore, a customer-oriented approach is not in the culture. Even if it were on paper, it’s not enough.
One must be able to offer the customers something new. The new thing must be something the pioneers would accept. If you ask conservative customers what they want and begin implementing their wishes, you might as well stick your feet in cement shoes. One should ask the pioneering customers. If they think this new thing is good, the rest of the gang will follow later.
However, one doesn’t need to be dumb and sell something too new. One needs to have something for the more conservative, something that has already gotten proven to a certain extent. Some may say that customers are traditional. That’s why the most conservative part of a company is sales because it converses with conservative customers. It doesn’t have to be like that! We’ve seen it many times.
It can be that the digital aspect is lacking. It is pretty challenging. I have studied it for ten years and invested a lot of money in trying to understand it. I’m very intrigued by what digital technology has to offer us.
Let’s wrap things up: When is the time to update the strategy?
When in a hurry and a force majeure situation. Such a situation is among the easiest to work from because everyone understands it’s about the strategy.
An update should occur once operations have broken into too many directions. What is the core focus today? That’s worthy of considering.
A strategy is good only if implementation takes place. It doesn’t take a lot for implementation efforts to stop. Is it possible for the strategy to have a bug? Perhaps it’s time to look at the whole execution with new eyes.
Ignite your strategy by updating it at the right moment! Read more.🔥
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