23.09.2020Blog

Strategies’ direst straits – steps to resilient and adaptive strategy

An adaptive approach takes customers’ everyday lives and phenomena to the core of strategy. In order to be resilient, continuous iteration and experimentation are a must. In this blog we describe three steps to creating more resilient and adaptive strategies.

2020 has seen a surge in new dog owners as people looking for company at home have turned to our four legged friends. What appears as a permanent change in demand for pets might quickly turn south, as new pet owners realise that having a dog means more than they expected. This phenomenon is already present in some markets. Is this a case example of the erratic nature of us humans? Not really, it’s just a case in point that we don’t always conform to ideas such as reliability and linearity.

The past year has tested our resilience to the fullest. As we people are rebuilding our daily routines, companies not only need to adapt to the current reality, but also need to re-evaluate their strategies for the future. This is the ultimate challenge: how to make strategy thrive through the continuously changing world.

The solution is to build a strategy process that teaches resilience to the organisation. Resilience is literally “the ability to withstand or recover quickly from difficult conditions”. Adaptability is a key element in resilience and is built into strategy when we:

  1. go beyond behaviour to phenomena,
  2. experiment and iterate strategy in real life, and
  3. embrace the wholly digital world.

Go beyond customer behaviour to phenomena that move people

Behaviour can indeed change quickly – as shown by the pet market example – but society with its human networks, deeper values and meanings all change slower. We need to collect data not just about how people behave, but also about the phenomena behind the behaviour. What really matters is not what is present in our decisions but between us in the social world.

Because of this, customer behaviour can only be understood through, and as a part of, the context and human ecosystem it is embedded in. This self-evident truth is often forgotten when building strategy.

To gain insights from the complex human reality, strategy needs multiple perspectives. One often overlooked perspective is the use of ethnographic data. Ethnographic data is gained by engaging deeply in the lives of customers, observing the everyday habits and its contexts. This so-called ‘thick data’ should be combined with ‘wide’ data that looks into trends and phenomena and with ‘big’ data on customers and markets. Only then can we grasp the whole reality of what customers do, why they do it, and what different practices and products mean for them.

Together thick, big and wide data give strategy more ground to stay tuned to the winds of change.

Going along with our dog example: We should of course observe and discuss with people that are buying a dog. But we also need to understand the shifting cultural context of owning a pet in general and how this affects pet stores. Beside this, we can’t make the assumption that dog buyers during covid-19 are just the same old customers that can be offered the same services and products.

This potentially new segment has emerged in the market and might have a quite different relationship with their pet’s and their personal needs, as pet owners might differ too. Looking at “pet-life” from this perspective helps us to see beyond the sales figures to the realities of new dog owners. This newly-formed perspective will challenge our thinking and help new relevant business opportunities.

Experiment strategy for real

Strategy is essentially a point of view, a statement on how we see the world. Typically, initiated with strong business and customer analysis, it starts to live a life on its own, apart from the messy human reality. Assumptions become beliefs, beliefs become truths and truths become conventions.

In times that now seem stable (they weren’t), this might have gone through, and a three-year cycle was enough to keep strategies afloat. The covid-19 pandemic has woken us up to the hard fact that the world isn’t that simple. We have to regularly check our course and question our assumptions. We also need mechanisms in place that wake us up when necessary.

We are accustomed to doing experiments and testing products and services with customers. Working with strategy is no different. Customer and business insights require constant attention. Strategy hypotheses need to be experimented, tested and iterated out there, not on paper.

Coming back to our pet project: building on the insight that their new customers are not that accustomed to the life of their dog, a pet store might envision a targeted offering: courses and info packages, starter sets, or maybe hosting meet and greet sessions to build pet owner communities. This strategic move should not be directly rolled out. Instead, maybe it should be experimented in a store or two located in an area with high numbers of newly registered dogs.

The digital is not a separate realm

Our everyday existence is immersed in the world of digital devices. They are beside us when we wake up, and even when we sleep. No strategy can really miss this. We should truly understand the possibilities and pitfalls of technological opportunities, and recognise what capabilities they take.

This said, it is also true that there is no separate digital world, but the digital world is thoroughly social and our social world is digital. Even the most exciting tech innovations need to be understood through the real lives of customers and companies.

Hence, tech or digital are not standalone strategy themes, but instead they are present throughout. Digital strategy should be merged with a company-wide strategy and its deep understanding of organisations’ and customers’ lives. Otherwise it runs a high risk of drifting apart and causing delayed and costly re-adjustments.

Resilient strategy embraces the opportunities that the digital provides. It has a built-in understanding of these opportunities in the real world and just as crucially, does not miss what they mean for the core IT systems.

Paths to resilience

We have just shown the first steps towards strategic resilience. In reality, adaptability and resilience need to be built into the strategy process and organisation. To get more insight into building adaptive strategies, read our Designed strategies white paper.

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