Strategy management – the new normal (1)

Our last blog defined strategy and ended on a wish that: you all should be able to define strategy.

This blog focuses on the shifting strategy management paradigm – the Effectiveness lab calls it ‘the new normal‘. Strategy theorists like Henry Mintzberg  have written about the fallacies of strategic planning and the fact that orthodox strategy management practices are no longer viable

Strategy making no longer a mechanical exercise

Strategy management approaches have changed, especially in the last twenty-five years. Albeit forced on the managers and leaders, the world has witnessed a changed paradigm to strategy management. Managers and leaders didn’t have a choice but to go change’s way!

The strategy paradigm of old run siloed departments that blindly followed the diktats of the planning department.  The strategists in the planning department spent most of their time analysing, forecasting trends and passing predictions and orders to departments at the organisations. Strategy gurus were gods at organisations. The gurus and those around them believed they had supernatural powers to foretell future business trends.

The likelihood of strategy guru forecast trends holding was a foregone conclusion. With reasonable accuracy, strategists predicted and planned five to ten years into the future.  They predicted the shape the business environment would take and tailored the product/ services offer, business processes and human capital investments accordingly. Mind you, if a business got its forecasting right, it was in for good business.

The above explains why strategists were ‘gods’. The planning units exuded so much followership and power that unintended, their ‘followers’ goaded them on to even more trend analysis.

Because they were ‘first among equals’ across company departmental silos, strategists had become too insular that even as business environments became more harsh, fast, and complicated, they kept doing the same thing. Their response to increasing complexity was more number crunching, long-term trending and strategy tweaks.  It was like walking along the same path, only this time, a little faster

The increasing complexity created a situation where the trends and therefore strategies, weren’t holding true. The harsh and complex business environment was undermining forecast trends to the extent that such wholesale belief in strategy guru foretellers started to wane.

Panicked, the strategists did not allow the units to think plus implement strategy. They did the thinking on their behalf, and before the plan on the table was implemented entirely, a new strategy had emerged from the planning unit conveyor belt.

It was around this time that some organisations reduced strategy cycles from five to three or even two years. We recall many INGO’s doing the latter. Annual or mid-term strategy reviews became more common. Individual organisations abandoned strategy making altogether and to their surprise realised they were doing okay with the off-the-cuff management style.

In hindsight, strategy gurus should have instead shortened forecasting, planning, and strategy cycles as a response to a much more complex and less predictable business outlook. They should have walked a different path altogether, instead of merely increasing the pace on the same route. It’s surprising that the well-resourced and powerful planning units at organisations failed to forecast the emerging paradigm in strategy management and many were caught unprepared. No wonder, planners were among the first ones to be made redundant. Many ended up on the international consulting circuit, and we suspect, doing the same stuff – talking at people

Fast forward …. 2017:

Things aren’t getting any better – it’s an even more complicated situation. It’s not far fetched to write on this blog that globally, the business environment has changed for the worst. There is a new normal. Companies can no longer confidently predict situations plus go on to create systems and resource coordination mechanisms needed to get the best productivity patterns from businesses value chains. If doing the latter is difficult, it also follows that sustaining value creation or impact for INGO’s, is equally tough.

The conventional linear approach to strategic planning is no more. Linear methods like the four-step approach below pioneered by the likes of PriceWaterhouseCoopers can no longer stand the test of time:

1. Where are we now?
2. Where do we want to get to?
3. How are we going to get there?
4. How will we know when we have got there?

The new normal:

Business environments whether in Africa, Asia, Europe, or the America’s have become extremely unpredictable and complex. It is not only hard predicting the future, but even something as close as tomorrow.

Even Charities or INGO’s as they are famously called in this part of the world, are struggling to predict the future. Why INGO’s? INGO’s deal with a phenomenon that is a near constant, especially in Africa South of the Sahara – poverty.  However, even in this persistent product/service (read poverty) situation, INGO’s have failed in their efforts to predict what needs to be done to adequately address poverty.

INGO’s continue to score low on the poverty eradication efficacy-scale.  We aren’t even sure that they understand well the various and intertwined manifestations of poverty.  INGO’s have come short not because they aren’t trying hard enough; but because the poverty-management market has become a global phenomenon, interconnected, with cause and effect dynamics that even the best forecasting models would struggle making sense of

This is not only an INGO enigma.  It’s a new normal for all.  The last twenty-five years have proven extremely turbulent for global businesses. What was only complicated and somehow manageable, has become complex and challenging to understand. Yes, companies dealt ably with complicated business environments. While complicated, such environments were linear and only required proper rational thought processes. Solutions to problems were still within reach.

Today, every facet of society is affected by the new normal.  Machinery as complex as national governments, supranational frameworks like the European Union, African Union, Economic Community Of West African States are all struggling with the new normal.  Individuals and families have not been spared the agony as what is not dealt with by the business, national government, and supranational entities comes back to haunt the individual citizen

How should we deal with the new normal? See you next week

 

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2 replies

  1. As an organization, we had a 3 year strategic plan that run 2014 to 2017. It has expired. Senior leadership has sat and agreed for 2018, we shall maintain status quo. We could not predict another 3 years ahead simply because, the ending 3 yr plan performance was far from the targets set. Meaning, the predictions were far from the truth. We lost business and attracted less new business. I guess the issue is with strategists using killer assumptions to base their predictions. For example, who new Trump would be president of USA 3 years ago? The new normal, going back to annual plans is easily achievable. Indeed… i can’t wait for next week blog!

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    • Kairu – thanks for reading the blog! Good and practical examples as ever. Muuna, we have to fault strategists in your case – Trump has been on the USA political radar for over five years and the fact that your planners missed it, says a lot about their analysis and forecasting. I don’t blame them at all, though. Look at how bad/wrong election polling in the Western world has gotten in the last two years – it is a complex world we are dealing with, and orthodox models can’t pass the test. We will share some good examples in next week’s blog

      A very Happy Fathers day to you Kairu!

      Like

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