The average lifespan of companies continues to decline. 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 now. Staying ahead of the competition is becoming increasingly difficult. The increasing speed of technological developments, local and global interdependencies, changes and crises, and the effects of climate change are creating a world that is increasingly risky, volatile, uncertain, complex and ambiguous. Securing one's competitive advantage, and thus sustained competitiveness and profitable growth, is thus one of the greatest challenges facing managers. Companies in the 21st century must be able to continuously adapt their business model and their competitive advantages to new changes by means of suitable strategic initiatives.
88% of strategy leaders confirm that implementing strategic initiatives is important or very important to their companies' competitiveness, yet 50-90% of all strategic initiatives fail!
The Economist Intelligence Unit, 2013; Candido & Santos, Journal of Management & Organization, 2015.
Yet most strategic initiatives to renew the competitive position fail. This is 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 try to counteract this with agile project organization, this is not sufficient to also carry out strategic development. Here, agile is worked in the system, but not on the system. This leads to numerous management problems such as:
- Too many projects without relevant impact
- Lack of or incorrect resource/budget allocation
- Missed opportunities and risks due to lack of agile decision-making capabilities
Agile strategy: strategic thinking instead of strategic planning
"Strategy, as we know it, is dead" claims management thinker Rita McGrath in her book "The end of competitive advantage". In fact, the change from strategic planning to an agile strategy process is overdue. Outdated models of strategic planning must be expanded to include new strategic approaches that take into account the requirements of the "new world".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 is required for the continuous development and implementation of new competitive advantages.
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 anywhere in the company.
Strategic planning was originally developed to provide managers and employees in organizations with a step-by-step plan to properly execute the conceived strategy. In dynamic environments, however, it is far more effective to align the organization to a vision or end point - and have the possible paths to get there defined at the point where the relevant information lies. This is the difference between strategic planning (analysis) and strategic thinking (synthesis) and links agile bottom-up processes with strategic top-down planning.
