Strategy vs. survival: embracing both mindsets
Count on chaos and plan how to capitalize in a world of accelerating change
As we embark upon a new year in 2023, people are solidifying plans for the future
Formulating sound strategies is more complex in today’s world of rapid changes
When a crisis inevitably occurs, plans go out the window, and we become reactive
Planned strategies are hard to implement because people settle for the status quo
By contrast, significant changes occur quickly in a crisis when survival is at stake
Smart organizations capitalize on chaos and “never let a good crisis go to waste”
The process of creating most strategies is broken
With the beginning of 2023 and a new calendar year, many people are returning to the workplace and reassessing their goals and objectives. As part of this process, it is common to revisit high-level strategies that have been put in place to guide your organization forward. Strategic planning has been part of the fabric of most firms for decades, reaching a high point in the mid-1960s following a shift from military planning during World War II to corporate boardrooms. The strategic planning process has been, and remains, quite challenging, as this classic Harvard Business Review article from 1994 highlights. In the piece, author Henry Mintzberg focuses on the art of formulating strategy and asserts that the role of planning is to support the execution of the strategy, not to dictate its direction. Strategy and innovation are inexorably tied together: this dynamic is the topic focus of Forestview this month.
In this HBR article, Mintzberg distinguishes between analysis - the realm of planning - and synthesis - the domain of strategic thinking. He states:
The outcome of strategic thinking is an integrated view of the enterprise, a not-too-precisely articulated vision of direction…Such strategies cannot be developed on schedule or immaculately conceived. They must be free to appear at any time and at any place in the organization, typically through messy processes of informal learning…” (emphasis added)
In my years of experience, the characteristics Mintzberg describes as vital in developing effective strategies are seriously lacking in most firms, large and small. There is generally a standard timeframe and process that occurs, often annually. There are lots of meetings and drafts of slide decks and well-choreographed talking points that hew narrowly to a tight narrative almost exclusively inwardly focused. Rarely are outside trends, competitive forces, or external threats recognized and discussed in detail; they are often acknowledged but seldom explored in depth by a diverse team.
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Bring in outsiders to avoid strategic blind spots
You’ve likely heard of the adage, “people don’t plan to fail; they simply fail to plan.” This saying possesses wisdom, but it leaves out that a poor plan can sometimes be worse than no plan. Things generally go off the rails whenever these events occur:
A poor strategy is executed, and results differ from what was expected
A sound strategy is poorly executed, and results differ from what was expected
One or more crises occur, throwing off plans and survival “gut” instincts kick in
In today’s unpredictable world marked by accelerating change, you can count on #3 occurring; in other words, plan for the unexpected to happen. A great way to see this visually is by looking graphically at the major Google Trends in 2022. While these headlines may or may not have caused your plans to change, I’m sure you experienced your own “headlines” that caused chaos and confusion in your personal and professional life. Humans typically bypass rational thought when stressed and go with their core instincts. This is the reason that professional athletes and military members, among others, train so much: the routines they practice constantly will become so ingrained that they are “instinctive” when facing an unexpected challenge.
While none of us can predict the future with perfect accuracy, we can attempt to anticipate and respond to disruptions better. One way to do so is by bringing in outside perspectives to avoid groupthink and strategic blind spots. This often takes the form of external consultants, but it doesn’t have to be: customers, suppliers, providers, key partners, and even internal focus groups can widen the aperture of your strategic lens. The more outside perspectives you bring, the more Mintzberg’s “messy process of informal learning” can occur to refine your strategic thinking. By doing so, your organization may be better positioned to anticipate a “crisis” and have a plan in place to respond before it hits the headlines. This is also where the nexus with innovation efforts occurs. Innovation teams are explicitly tasked with ideation, designing experiments, and “thinking outside the box” to challenge conventional wisdom.
Go beyond survival; seek to thrive after a crisis
One of the biggest challenges with effectively executing your strategy is overcoming humans' built-in inertia towards staying with the status quo. Unless there is a “burning platform,” people find comfort in familiar routines. Manufacturing a crisis internally is tricky. I’ve been part of successful organizations that mapped out ambitious plans for change because “we want to stay ahead of the competition.” Unfortunately, these initiatives often drag out and lose momentum because people do not fully embrace the need for changes. A typical mindset is “this too shall pass,” and this way of thinking is not necessarily wrong. Organizations often see wave after wave of leaders seeking to affect change, only to be replaced before much change actually occurs. Unless survival is at stake, it is hard to motivate bold action. Winston Churchill famously said to “never let a good crisis go to waste” when advocating for the creation of the United Nations. Albert Einstein stated that “there is no challenge without a crisis.”
The problem with switching to a reactive mode and waiting in anticipation of chaos is that, in these moments, well-manicured strategies and plans go right out of the window. Instincts kick in, and leaders go with their gut. A better approach is to prepare for the unexpected and be ready to act boldly. A McKinsey study in 2013 following the Great Financial Crisis found that most firms, counterintuitively, did not make many changes in their operations - despite the economic calamity and greater appetite for new approaches. Furthermore, the authors found that firms surveyed who made what they describe as “high levels of resource reallocation” performed more than 2x better than firms with low levels of resource reallocation as measured by total return to shareholders. They conclude that “resource reallocation is a muscle that requires exercising in good times and even more in bad times.” In particular, as many firms experienced in 2022, as new sources of capital dry up, organizations must move even more decisively to avoid calamity and seek to capitalize on the crisis.
The bottom line: it takes both a strategic mindset and a survival mindset to develop a clear direction for your organization that charts a course forward while also anticipating the unexpected, which can present opportunities to speed up needed changes and separate yourself from the competition. When a crisis does occur, as it did for Southwest Airlines in 2021 when it had to cancel many more flights than its competitors due to severe winter weather, it is better to seize that moment to make necessary adjustments in technology and processes to avoid a similar crisis in 2022.
I wish you health, happiness, and continued success in 2023! Please consider subscribing to Forestview if you haven’t already and share with friends and colleagues who may find this content valuable.