The average lifespan of companies is decreasing. For companies in the S&P 500 index, for example, it has fallen from more than 30 years in the 1970s to 15-20 years today. Maintaining a competitive edge is becoming increasingly difficult. The increasing speed of technological developments, local and global dependencies, changes and crises, and the effects of climate change are creating a world that is becoming increasingly risky, volatile, uncertain, complex, and ambiguous. Securing one's own competitive advantages, and thus long-term competitiveness and profitable growth, is therefore one of the greatest challenges facing managers. In the 21st century, companies must be able to continuously adapt their business model and competitive advantages to new changes through appropriate strategic initiatives.
88% of those responsible for strategy confirm that the implementation of strategic initiatives is important or very important for the competitiveness of their companies, yet 50-90% of all strategic initiatives fail!
The Economist Intelligence Unit, 2013; Candido & Santos, Journal of Management & Organization, 2015
However, most strategic initiatives to renew competitive positioning fail because classic strategy processes no longer meet the requirements of today's increasingly complex and uncertain environment. They typically run in elaborate 1- to 5-year cycles with annual budget planning. While companies are trying to counteract this with agile project organization, this is not enough to also drive strategic development. Here, agile methods are used within the system, but not on the system itself. This leads to numerous management problems such as:
- Too many projects without relevant impact
- Missing or incorrect resource / budget allocation
- Missed opportunities and risks due to a lack of agile decision-making capabilities
Agile Strategy: Strategic Thinking Instead of Strategic Planning
"Strategy, as we know it, is dead," claims management thought leader Rita McGrath in her book "The End of Competitive Advantage." In fact, the shift from strategic planning to an agile strategy process is overdue. Obsolete models of strategic planning must be expanded to include new strategic approaches that take into account the requirements of the "new world." To be successful today, an agile strategy process for the continuous development and implementation of new competitive advantages is required.
Source: venture.idea
This can only succeed if strategy is no longer understood merely as analytical planning, but as a creative synthesis that can take place throughout the company.
Strategic planning was originally developed to provide managers and employees in companies with a step-by-step plan to correctly execute the conceived strategy. In dynamic environments, however, it is far more effective to align the organization with a vision or endpoint - and to have the possible paths to it defined where the relevant information lies. This is the difference between strategic planning (analysis) and strategic thinking (synthesis) and combines agile bottom-up processes with strategic top-down planning.
