Platt Perspective on Business and Technology

Strategic planning and the process of strategy 6: processes for managing change and the unexpected

Posted in strategy and planning by Timothy Platt on October 12, 2012

This is my sixth installment in a series on the strategic process and on strategic decision making per se (see Business Strategy and Operations – 2, postings 314 and loosely following for parts 1-5.) I began a discussion of strategy in the face of change in Part 4: planning for and through the unexpected and I am going to return to that general topic area in this installment too, here looking at those issues in terms of specific processes deployed, and in terms of the approach discussed in Part 5: contingency and scenario planning as a strategy methodology. And I begin this discussion with an observation that I made in passing toward the end of Part 5: that “you might not know which scenario if any is actually going to become your reality until you and your business are substantially into it with its outcomes and its challenges and opportunities.”

Strategic planning would be very different in practice for most businesses, and much simpler if it could always be carried out with clear and unequivocal understanding of where the organization is now and of what it will be facing moving forward. But strategy, by definition, is always developed and carried through upon in the face of uncertainty and both for the organization’s specific context and needs that will have to be accounted for, and for precisely where adjustments might be needed within its systems in doing this.

• Your business has a long-term and productive relationship with a supply chain partner and your current planning is largely built out with an implicit and unexamined assumption in place that they will continue to be there and available. Then they have a fire in their main production facility and are going to be off-line and unavailable until they get their own operations working again. This is obviously going to impact on your operations and you operational planning, but it also has longer-term strategic significance.
• An unexpected and unplanned for challenge like this can highlight functional parameters that need to be strategically accounted for and managed that might have been taken for granted – up to now.
• Strategically, should your business look for new supply chain partner options and develop greater flexibility for adjusting its supply chain systems?
• Does it need to reconsider terms of contract with its current supply chain partners?
• Are there business areas that it should reconsider bringing in-house that might be outsourced to supply chain partners now?
• What questions should you now be asking, that might not have been considered up to now, and stepping away from long term considerations for the moment and back to immediate needs what should you be doing today to ensure cost-effective continuity of your operations? That is both an operational and a strategic question and if you only look at this operationally and with a short-term, here and now focus, you risk losing opportunity on longer and ongoing time-frames.

I recently wrote of operationally fragile and robust systems (see Operational Failure Rates, Feedback and Remediation, and Risk Remediation Processes 2. Long term operational fragility and robustness are strategy-driven, and when operational systems and processes prove to be fragile in practice, this more than anything indicates gaps in strategic planning.

• In the real world and in actual functioning businesses, there are always going to be gaps and potential gaps in overall strategy – contingencies and types of contingency that have not been identified and planned for.
• They can be long-term and reflect what amount to ongoing blind spot assumptions, or they can emerge unnoticed with change, and in the marketplace or from change in the competitive environment.
• So strategy should be dynamic and it should always allow for flexibility, and be built with an awareness that this may have to include capacity to effectively change in unexpected directions. A “we’ve always done this and in this way” approach is a position that has in effect formed the epitaph for many now failed businesses, blindsided by the necessities of change that they could not or would not accommodate.
• In a fundamental sense, a mature industry can be defined as one in which essentially all participants are hemmed in by such assumptions and industry maturity correlates directly and precisely with accumulation of operational and strategic fragility, as discussed here; that is why these businesses are so vulnerable to any real threat of disruptive change.

I stress here in this context that:

• While industry maturity and the level of dynamic change taking place in an industry are usually measured in terms of the products and services offered and in how they vary as sources of competitive strength,
• A business’ fragility in the face of challenge when settled into a fully mature market is as deeply rooted in its operational processes and strategy and in their robustness or fragility.

I am going to continue this discussion in my next series installment, to discuss keeping a business strategically young and agile in the face of pressures towards regimentation and stasis, and the mature industry trap. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.) And I also discuss strategy and how it point-by-point connects to operations at Startups and Early Stage Businesses too.

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