Shifting Horizons: Validity of Strategic Planning in Fast-Moving Markets
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Shifting Horizons: Validity of Strategic Planning in Fast-Moving Markets

  Jamal A. Said | Partner

  25th January, 2018

Welcome! Take a seat. Make sure to hang on tight. By the time you finish reading this article (let us assume about 30 minutes), hundreds of notable events and incidents that in the past used to happen over the course of weeks or months, would’ve taken place. You may remain blissfully unaware of the majority of those events; some you would’ve witnessed, heard of, WhatsApped, Tweeted / re-Tweeted, and Snapchatted. Am I exaggerating? Not really. The fast pace of things and the amount of change around us has become a common concern among many who wonder how to keep up with it all, and how to cope with the pressure that comes along with this new reality.

Corporations and organizations of various shapes and sizes are experiencing similar concerns. Think of it: If you were a business owner or managing director, and you had just mapped out a new vision, mission and strategy for the next 3 years only to find out that your work has already missed the mark, how would you feel? My guess, not so well. I can empathize with that.

Before joining Meirc, I had the opportunity to work for a number of leading multi-nationals namely PepsiCo, Sun Microsystems (now part of Oracle), and Cisco Systems. All of them had their share of dealing with some very powerful and fast paced market shifts. At PepsiCo the re-entry of Coke to the Middle East market after a 23 years boycott by the Arab League (1968-1991) forced, literally, a daily battle to protect market share. Overnight, PepsiCo had to ferociously defend against Coke’s aggressive sales and marketing tactics, and tirelessly work to maintain its number one position in the region. Sun Microsystems, an industry leader in open source and internet services, and the company that gave us the Java Programming Language and many other technological innovations, was never able to recover from the dot com crash (2000-2002). Management tried to recover while keeping up with the pace of market shifts, until it was acquired by Oracle in 2010; this, despite having huge R&D budgets and employing some of the best brains in the IT industry.

Cisco, on the other hand, managed to survive the ups and downs of technology boom-and-bust cycles as well as the aggressive inroads into the networking space by the likes of HP, Juniper, IBM and Huawei. When it came to cloud computing, though, the feeling of being left out from a future where cloud computing data centers are rapidly evolving, helped refocus their efforts and research capabilities to bring to the market the Unified Computing Systems (UCS), and reposition Cisco as a key player in data center solutions, products and services.

I have indeed seen my share of market shifts. While many open doors to new horizons, others could be quite disastrous and the damages they cause could be insurmountable1. Recent history is rife with stories of iconic companies that lost their relevance and market position despite years of market dominance. Such a trend is expected to continue and a number of businesses are at risk of becoming irrelevant in increasingly shorter periods of time. Just think of the following statistic: the average life span of companies listed on the S&P dropped from 67 years in the 1920’s to 15 years today2. This average is expected to drop further in the coming years.

As economies and businesses experience unprecedented market turbulence and transformation, is it still worthwhile to spend time, effort and energy articulating visions, missions and values? Wouldn’t it be more prudent to simply react to market conditions, and to become more spontaneous than strategic?

Strategic thinking and planning represents around 5 % to 10 % of the total strategic effort of an organization with the remainder going toward strategic execution. And when it comes to cost, the strategic thinking and planning phase represents a negligible percentage of what is incurred during the implementation and operational phases. The impact of the strategic thinking and planning phase on the rest of the strategic planning process however is huge. You get the strategic planning phase wrong, and you could kiss the company goodbye, or as we usually witness in the news and public announcements, the CEO steps down or is asked to leave because the gap between what has been promised and the delivered results is simply too big to ignore.

Strategic thinking and planning has traditionally been considered as a key competency of executive leadership. However, with the future becoming less predictable many executives have started questioning the entire strategic planning process of the companies they preside over. Market volatility has forced many executives to adopt conservative approaches focusing on the operational matters and short-term strategies. One can remember that in the late nineties and early 2000’s it was a prerequisite for every leader to deliver visions, missions, and values, publish them on corporate websites, bulletin boards, and showcase them across many corridors. In this article I will argue that a more rigorous strategic planning process and a more systematic review of existing visions, missions and values should return as top priorities of the executive teams.

“Companies, regardless of size, industry sector, or consumer segment, need to adapt to evolving market realities and demands.”

Two questions must remain top of mind: what can leaders, top executives, business owners, and entrepreneurs do to better prepare for shifts in horizons when they occur? And how can they continue transforming their businesses to ensure their companies remain competitive, profitable, and fit for purpose?

Companies, regardless of size, industry sector, or consumer segment, need to adapt to evolving market realities and demands. The approach I recommend to tackle such a challenge is to focus on four key strategic planning areas which in many organizations have been relegated to play a marginal role. These areas are: Vision, Mission, Culture and Marketplace as shown in Figure 1. In a less volatile business environment executives may wish to ignore these areas. With the pace of transformation being on the rise, however, these areas are again being thrust to the forefront with heightened intensity and their relevance as key business drivers is gaining momentum.

Vision, Mission, Culture and Marketplace can manifest themselves either positively or negatively depending on how they are being applied or utilized. I hope to provide some new insight into these areas, and show how to exploit them well and develop them strategically and judiciously. More importantly, rarely have I seen companies use these areas collectively. I therefore also aim to highlight the working relationship among them in order to help executives achieve the exceptional outcomes they seek. When these areas work individually the payoff is short-term; when they work collectively the payoff becomes quite rewarding in the long term.

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Dreaming the Vision

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There are numerous examples of breakthrough visions that dramatically changed the world around us, creating powerful business models, introducing new consumer behaviors, and replacing existing industries. Amazon.com, a company founded by Jeff Bezos in 1994, is one of these examples. Today Amazon.com (AMZN), one of the largest online shopping retailers, is considered the main disruptor of the retail industry. The consequences of Amazon’s actions are hurting all the players in the industry and beyond, due to their wide-reaching effect and broad spectrum. In addition, Amazon can be credited (or blamed) for having almost singlehandedly caused a monumental shift in the purchasing habits of consumers worldwide.

Basically, businesses big and small, including those sharing the same online space as Amazon, are being impacted by the direction Jeff Bezos is taking his company towards. Mom and pop stores, supermarkets, retail chain stores, department stores, shopping malls, restaurants, major multi-national retail and wholesale corporations like Walmart3 and Costco, are all targets of Amazon’s growth strategy. Even major international cities that have built their reputations as regional shopping and bargain centers for local and international shoppers alike, are no longer immune to Amazon’s accelerated push to become the largest global retailer and one of the most successful evolving companies in the world.

So, was Jeff Bezos only thinking short-term while growing Amazon? Was he only focusing on Amazon’s daily operations during his past 24 years as Amazon’s CEO and president? Of course not! Did he see his share of failures and doubts from investors? Did he experience enough turbulent times to put Amazon at risk of obsolescence? Of course yes! Mr. Bezos is considered one the longest serving CEOs, and he did not get Amazon to where it is today by pure luck, or by guessing his way through situations. At the heart of what Jeff Bezos has accomplished so far, and what he plans to achieve in the future, is a very powerful and exciting vision or dream:

"Our vision is to be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online."

Bold dreams are extremely important for achieving exceptional results. Settling for anything less, timidly pursuing the dream or deciding to abandon it all lead to mediocre results, invite complacency in the workplace and embolden competition. Bold dreams set us apart, and alter our understanding of who we are and who we want to become. Look at the bold dream His Highness Sheikh Mohammed Bin Rashed Al Maktoum, ruler of Dubai and prime minister of the UAE, put for Dubai in the mid 1990’s, when Dubai was still a little town. He set out to make Dubai “…one of the leading business and tourist locations in the world”. Since that time, this powerful dream has served as the foundation for many exciting visions, inspirational missions, and brave strategic decisions propelling the city of Dubai to its outstanding position in the world today.

“Bold dreams set us apart, and alter our understanding of who we are and who we want to become.”

Somewhere, somehow, every company starts with a big dream. Dreams impel us to take action and fuel us with the courage to take the first step. We should salute all those big dreamers, all 100% of them. Of course we also salute the 10% who succeed in establishing their businesses. But most of all we must tip our hat to the 0.5% - 2% who achieve market leadership and who, in many ways dictate the pace or the future of an industry, consumer behavior, or market segment.

Dreams, as we know so well, cannot materialize on their own; other key components are needed to make dreams achievable and successful. This is where employee involvement as a mission comes into play.

Employee Involvement as a Mission

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Whenever I give a course on strategy, I remind my participants that the mission is what gets us to the vision, or our dream, because the mission takes into account an organization’s assets, talent and resources and describes how to use them to turn the dream into a reality. When the mission is successfully implemented through an involved organization, the sense of achievement is unmatched because everyone, in their own way, had a stake in its success.

Many leaders and managers are cautious when it comes to involving employees in business activities, particularly in the areas of decision making, problem solving or sharing new ideas. They may justify their hesitation from an employee readiness perspective or the nature of their business, when in reality making the organization ready should be the top priority regardless of the type of business they run. To achieve exceptional results, high performance levels, low employee turnover, high customer satisfaction, high quality products and services, employee involvement should become a top priority. Involving the organization, by its own definition, means among other things, listening to others, asking for their opinions, sharing decisions, and delegating authority. This may run contradictory to the leadership or management styles where everything is centralized; this is where the difficulty in involving employees may reside, and this where the change in mindset has to start.

Traditionally, the allocation of power within companies follows a particular hierarchy. However, the fast pace of things, and the need to become responsive, versatile and agile, require the involvement of employees particularly those on the frontlines. When done right, employee involvement translates to faster reaction to business events and situations; it also means being proactive rather than waiting for decisions to go up the ladder for approval and to come back down for action.

“From a practical point of view, employee involvement entails moving much of the operational decision making to the front line teams, and equipping them with the ability and authority to solve business problems, concerns, and issues.”

From a practical point of view, employee involvement entails moving much of the operational decision making to the frontline teams and empowering them to solve business problems, concerns, and issues. Let us look at Southwest airlines, a company highly regarded as one of the top organizations when it comes to employee engagement and involvement. They have managed to retain their ranking among the top engaged organizations for many years. As the company founder, Herb Kelleher, points out: “Competitors can’t simply adopt the levels of engagement and commitment found in the company - it takes a special kind of employee and company culture.” Here are some examples of what employee involvement and engagement looks like at Southwest airlines:

“The company allowed employees from any department to apply to collaborate on new uniform designs, with results really reflecting personality and company culture in a way that wouldn’t have been achieved had employees not been given a say. Employees were responsive to this, describing it as an “unforgettable experience.”

Southwest airlines encourages employees to stay inspired to do things differently. The viral video of one flight attendant rapping the safety information goes to show the kind of attitude the company has towards keeping things fun and unique, creating a great experience for customers and employees alike, and giving a great company image.

Recognizing those employees who really go the extra mile is another key factor of Southwest’s engagement practices. Each week, the CEO gives a “shout out,” publicly praising employees who have gone above and beyond at work. There’s also a monthly recognition in Southwest’s magazine, featuring an employee who shined that month.”

This kind of recognition in the workplace keeps employees aware that they’re valued and their hard work and commitment are noticed. Employee involvement in conjunction with proper praise and constructive feedback helps them feel appreciated and motivated, and going that extra mile when needed.

It is important to keep in mind that employee involvement and engagement also unlocks the channels to report on strategic trends and demands quicker, and to transmit strategic marketplace intelligence as it happens.

Empowerment as a Culture

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Empowerment is a relatively new term or concept to management. It is more than setting goals and objectives and giving employees the space to achieve them. Empowerment is about bringing out the entrepreneurial capabilities in employees when it comes to solving problems, responding to customers’ concerns, or seizing market opportunities and developing them.

One of the key benefits of empowerment when practiced in leading and highly successful organizations is enabling employees to share ideas and innovate. Innovation does not always translate to ground breaking ideas; sometimes relaunching products and services with little to moderate innovation can make quite a difference from a consumer perspective, especially when it comes to creating a buzz on today’s social media platforms like Facebook, Twitter or Instagram.

Many companies are established based on a vision rooted in an innovative idea, either product or service. As the demand for the product or service grows, entrepreneurial initiatives slow down, or in some cases screech to a halt as operational initiatives take over. What actually propelled the company to prominence suddenly takes a lesser priority, and this is understandable in light of the need to get things up and running. However, once things are operational, shouldn’t the entrepreneurial engine get restarted? Unfortunately, in majority of the cases it is not, and this is one of the strategic planning mistakes many companies, even industries, commit, leading eventually to complacency and irrelevance. This is where empowerment comes in as an enabler to reignite the innovative genius and help companies big and small stay competitive and relevant as markets shift and demands change.

Unprecedented advancement in technology is accelerating the entry of thousands of innovative products and services into the market each year. This is causing a continuous change in consumer demands, which significantly raises the need for a faster response, thus making empowerment a strategic prerogative and a corner stone of today’s business agenda.

Think of the IKEA business model and how in recent years, its empowering culture has kept the company quite relevant and attractive across different consumer segments. IKEA is mainly a household items and furniture company. They have some of the most sophisticated industrial operations worldwide, backed by some of the most technologically advanced tools and programs (e.g. 3-D printing, data mining, high performance computing, automated manufacturing, robotics, virtual reality, on-line business, etc.) enabling IKEA to launch 2000 products annually, and maintain a 12,000 products catalogue vibrant, attractive and exciting. Yet, IKEA rarely ventures into any technologically advanced product. They focus on product simplicity more than anything else. This means they expend major efforts in keeping thousands of designers across the world empowered to ensure every product they design has simplicity and affordability built into it. This is not easy; rather it is quite challenging.

“Strategic retreats are a great forum to measure the progress toward the big vision, whether it is still valid and serving the company well.”

Innovation has become part of the IKEA story and it has served them quite well. In many ways, the journey to revitalize the innovation mechanism starts by empowering the organization and its culture, and regularly asking the tough questions: Does the existing culture and its value system specifically empower everyone to speak their thoughts and ideas safely and confidently? Does the existing culture encourage taking initiatives? Does it tolerate making mistakes? The main thing is for management and employees to stay committed to the culture of empowerment and apply it throughout, and insist it stays on all the time.

Marketplace Alignment

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If Angry Birds, the video game, were to be launched 25 to 30 years ago, it would’ve lasted a lot longer than it did since its inception in 2009. It’s a great game, and still enjoys a strong base of faithful followers. However, the fast growth and shrinkage of Angry Birds is just another example of how products and services lifecycles are being crunched to very short intervals.

Many executives find themselves in a catch-up mode as they attempt to continuously respond to new ideas, products and services, coming to the market. Other executives find themselves rapidly outdated and seriously vulnerable. Aligning the organization with a changing marketplace has become an increasingly vital competency. Top executives need to keep their organizations agile; it is like steering a power boat when you actually have an oil tanker. You can imagine the difficulty associated with such an undertaking.

To establish stronger alignment with the marketplace, certain operational excellence components need to come to the fore. One in particular is strategic retreats, since they offer executive leadership the opportunity to revisit business priorities; they also allow for some great strategic decisions, especially when they are run in a candid, transparent, and blame free environment.

Strategic retreats are a great forum to measure the progress toward the big vision, whether it is still valid and serving the company well. More importantly, strategic retreats stoke the fire behind the vision, revive employees’ involvement and passion in the mission, and strengthen their commitment to their culture, particularly an empowering and engaging one.

During strategic retreats, ideas are brought to the executive team’s attention along with supporting data, facts, and trends analysis. This is where the interaction between department heads and the executive team helps realign expectations for growth, revenues and profits, with those of the stakeholders and the market, and gives rise to new and brave ideas to face increasingly unpredictable times.

L’Oréal is an interesting company to consider when it comes to market alignment, especially when it comes to their social listening strategy. L’Oréal has sensitized its market radars to such a high level that listening to their customers is actually an integral part of their innovation strategy4. According to Adrienne Rostaing, Market Insights & Data Manager at L’Oréal, the social listening strategy has allowed L’Oréal to refocus its actions on the present strategy, adapt in real time, and continuously improve the bond with its consumers5.

This social listening strategy has also allowed for the integration of key social data into various departments providing for maximum agility and response to market and consumer needs. This strategy gives departments the opportunity to provide senior executives a live pulse of the market and the opportunity to respond to trends and consumers demands through their strategic reviews with R&D ideas and products at speeds that very few could match.

Bringing Things Together

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In an age when horizons are shifting rapidly, innovations are relentlessly pushing new frontiers, and customers are becoming more demanding, it is vital to interact successfully and expeditiously with the urgencies brought by these new realities. Figure 2 brings together the four strategic planning elements previously discussed. It provides a preliminary framework through which these areas can interact effectively while maintaining a high degree of agility and sustainability.

Powerful visions excite the organizations, however, visions alone won’t go too far. Companies achieve their visions when employees are truly involved in championing the company mission. Subsequently, missions that enjoy the support and involvement of every employee will deliver the desired results; this happens when a culture of empowerment is at the foundation of companies and organizations. The more empowered employees feel, the more they share their innovative ideas and participate in the success of their visions and missions. Empowering cultures are quick to respond to market demands, helping companies to rapidly align themselves with new market realities. Marketplace alignments help visions evolve, providing the fuel to continue the journey of distinction, success and growth.

My recommendation to leaders, managers, entrepreneurs, strategists, etc. is to explore and work with these four strategic planning areas I highlighted. They provide an excellent approach to remain exciting, relevant and competitive in a market place where horizons are rapidly shifting.

Jamal A. Said is a Partner with Meirc Training & Consulting. He is a subject matter expert on leadership, management, change management, sales, operations, strategy and business planning. Before joining Meirc, he also served in different managerial and leadership capacities at PepsiCo, Sun Microsystems and Cisco.

1 GE shifts strategy, financial targets for digital business after missteps (Reuters – August 28, 2017)
2 Where Do Firms Go When They Die? (Theatlantic.com – Bourree Lam - April 12, 2015) The article makes reference to Richard Foster, a lecturer at the Yale School of Management, who has found that the average lifespan of an S&P company dropped from 67 years in the 1920s to 15 years today.
3 Google and Walmart Partner With Eye on Amazon (WSJ – August 23, 2107) – “Google and Walmart are testing the notion that an enemy’s enemy is a friend.” This is in reference to Amazon’s dominance in the online shopping.
4 L’Oréal’s Strategy for Social Listening Success - By Priya W. - April 7th, 2015 (http://www.incite-group.com/customer-experience/loreals-strategy-social-listening-success)
5 Interview: Agility, Innovation and Using Social Data at L’Oréal - Interview By Mélanie Corolleur On March 23rd 2017 (http://www.brandwatch.com)