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Should Strategy Be More Agile?

Posted: May 5, 2018 at 10:48 pm   /   by   /   comments (0)

G U E S T  A R T I C L E

T
he last few years we increasingly hear the claim that strategy should become more agile. The bottom-line of this claim is that strategy’s holy grail—the pursuit of sustained competitive advantage—is futile in today’s volatile, uncertain, complex and ambiguous (VUCA) world and should, therefore, be replaced by a continuous stream of short-term advantages. Along that line, we find pleas for a focus on ‘transient advantage’ ‘adaptability’, ‘temporary advantages’ and ‘agility’ in the scientific literature and popular business press.

This trend is not new. On the contrary, both with respect to the content and the process of strategy it has been around for more than three decades. With respect to the content of strategy, we find it back in one of the core discussions in the strategy literature, the discussion about what can be an organization’s internal sources of sustainable competitive advantage. In the 1990s, the focus was on resources. About a decade later, and realizing that resource-based advantages can only be temporary, the attention shifted to the processes by which the resource-base is built, organized and maintained: to dynamic capabilities. Arguing that also dynamic capabilities cannot provide an organization with a sustainable competitive advantage, the discussion has also taken us to core values as basis for sustainable competitive advantage—an idea popularized by Simon Sinek with his focus on the ‘Why’. In this light, the current trend towards further agility can be understood as surrender: as giving up the idea of any source of competitive advantage that can be sustainable.

With respect to the strategy process, we find a similar development. Initially, strategy was a synonym of planning—it was even called ‘business policy and planning’ and ‘long-range planning’. Based on military roots, the core idea was that planning provides a stable basis for an organization to rely on for the medium and long-term. However, as early as the 1970s the limitations and impossibility of long-term planning became clear as well. In response, we find pleas for more adaptive approaches to strategy that rely on trial-and-error and learning instead of planning. Without question, Henry Mintzberg is the core contributor to this idea. From his early writings in the 1970s to his recent work, Mintzberg has been and still is an active proponent of a more adaptive approach to strategy. Also in this light, the current trend towards more agility can be seen as surrender—as giving up the idea of a stable basis for strategy.

Making strategy more agile comes with benefits and risks. It has at least three benefits:

1

The most obvious benefit is that it makes strategy less rigid and thereby better aligned with the demands of a VUCA environment. In a volatile, uncertain, complex and ambiguous world, strategy simply cannot be as rigid anymore as it was in the past.

2

It can help more organizations abandoning the traditional linear, analysis and planning-based approach and moving towards more dynamic approaches to strategy. Even though the trend is going on for decades already, repeating this message and giving it an even more pronounced tone than before could help.

3

It can help reduce the gap between strategy generation and strategy execution because agile approaches to strategy are characterized by shorter cycle times in which thinking and doing interchange more quickly than in the traditional approach.

More agility is good when the point of reference is a rigid approach to strategy focusing on long-lasting advantages and long-term planning. There is a point, though, at which more agility becomes a risk. After several decades of arguing that strategy should become more agile, it seems to me that this point has been reached now. Proceeding further down the agility road may involve at least three risks:

1

More agility can easily lead to drifting organizations without any coherent course of action. It is for a reason that scholars such as Mintzberg emphasize that both stability (planning) and change (adaptation) are needed in organizations.

2

More focus on agility offers organizations—or their CEOs—an excuse for not making any hard but crucial choices anymore. Adapting to changing circumstances is okay, but it can lead to quite unpleasant surprises that could and should perhaps have been foreseen and prevented in less agile approaches.

3

The current focus on agility is based on the assumption that organizations can adapt. While this may apply to software companies, small firms, and the service-sector, the reality of many organizations is that strategic agility is hardly an option—or a very costly one. This is especially the case if big investments are necessary or if the organization is otherwise hard to transform.

The verdict: even though making strategy more agile sounds like a good idea, there are substantial risks if this is taken too far. Paradoxically, especially in volatile, uncertain, complex, and ambiguous (VUCA) environments, also stability is needed. The metaphor of a tree is useful here. On the one hand, a tree needs to be flexible and bend with the wind. On the other hand, it also needs firm roots that make sure that it does not get blown down through that same wind. The same applies to strategy. It needs to be flexible so that it can respond to changing circumstances. However, like a tree, it also needs to be firmly grounded so that it serves as a reliable foundation for building and growing the organization.

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About the author:

Dr. Jeroen Kraaijenbrink

Dr. Jeroen Kraaijenbrink is Co-founder and Chief Strategy Officer at New Strategy Group, working in the Netherlands and in the United States. http://www.newstrategygroup.com  He is also  the Author of the Strategy Handbook. http://www.thestrategyhandbook.com and Adjunct Associate Professor at the University of Amsterdam.

For more information on Jeroen Kraaijenbrink, please see his profile on LinkedIn.

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