Strategic Flexibility: Balancing Commitment and Adaptability
Strategy
Strategic flexibility can seem like a contradiction in terms. A good strategy provides clarity of direction so an organization can be “all in” related to resources, structures, and processes. Efficiencies occur through alignment across all the company’s important activities that reinforce strategy execution. The certainty of strategy enables a company to compete with a business model that offers a significant target customer base with a unique and valuable solution. However, companies often discover over time that they cannot defend their market position or that a significant target market finds their offerings less valuable and unique. When that happens, flexibility becomes a desired core competency. If organizations wait until the need arises, they are unlikely to make the required changes in a timely fashion.
Both strategic commitment and flexibility are needed, but it is important to recognize the cost of a dual focus and the need to optimize both aspects. In startup companies, we often hear about the importance of making quick pivots as they test their business model with real-world feedback. Their small size and lack of deeply ingrained systems and processes create the ideal environment to practice flexibility. Once they stabilize their business model, they start to build structures that allow them to scale. They discover those quick pivots come at a much greater cost.
Regardless of size or maturity, every organization needs to develop the mindset and systems that provide for real-time data collection and monitoring customer, economic, technology, and competitive trends. Measurements of the current strategy are indispensable to recognize not only the effectiveness of execution but also to highlight what external factors are driving variances. If organizations are reacting to change rather than anticipating it, chances are their responses will be too little too late.
Organizations that create a competency of flexibility establish a culture around continuous improvement. This encourages proactivity among those closest to the customers and emerging technologies and provides an early warning system. Additionally, this type of culture helps everyone hold more loosely to both successes and failures.
Scenario planning is a useful exercise to identify both potential drivers of change and the range of beneficial responses. It may also highlight gaps in the strategic monitoring and review processes. Scenario planning guides the organization to confidently position its core strategic commitments in the most beneficial markets and distribute its contingency commitments over a broader range of options.
Strategic decisions have a shelf life and knowing how close you are to the expiration date is a huge strategic advantage. As conditions change and strategic decisions begin to lose effectiveness, organizations must know how to sequence the change of strategic activities to reflect the new reality. The need to upgrade contingency commitments to core commitments highlights that strategic flexibility should always provide clarity on the organization’s current priorities. Flexibility doesn’t have to diminish strategic commitment if organizations can provide clarity on what matters most now while building systems and attitudes to enthusiastically embrace what comes next.