Lead Through Volatility With Adaptive Strategy

Strategy developed via traditional calendar-based processes largely depends on certainty, so it often becomes outdated quickly and is slow to respond to change. As executive leaders seek to drive growth in today’s volatile business conditions, they need  an adaptive, event-driven strategy approach instead.

“An adaptive approach to long-term strategy is more fitting for a world in which business models are transforming more frequently, and often more radically,” says Ian Cox, Senior Director Analyst at Gartner. “The faster the rate of change, the more adaptability becomes a key imperative.”

Also See: Build a Better Strategic Plan for Your Function

Executives trying to make their organization’s strategy adaptive should:

• Determine existing strategy challenges, such as extensive creation time and slow response to changes

• Identify the most relevant adaptive strategy practices to overcome those challenges, such as starting strategy execution as early as possible

• Select and implement the relevant building blocks, such as real-time insights, to support the priority adaptive practices

Gartner has identified four practices that an organization needs to develop an adaptive strategy.  While a truly adaptive approach will be based on all four, enterprises often focus first on the one or two practices that address their immediate strategy challenges.

Strategy defines the long-term choices and actions the enterprise must take to create, deliver and capture value as envisaged in the business model. But the more time spent creating a plan, the less time there is to execute it, increasing the risk that the world has moved on and the plan is out of date.

Implementing promptly also helps to surface the plan’s flaws and identify where to improve. Adaptive strategy doesn’t require perfect or complete information to execute; it uses available information to identify the most immediate actions required to be successful.

Given today’s highly disrupted conditions, few enterprises can afford to wait a year to review strategy as was typical when business context moved slowly and disruption happened infrequently, if at all. Some now review their strategy on a quarterly or even a monthly basis, but a truly adaptive enterprise monitors its business context on an ongoing basis, initiating a strategy review whenever new information is available to reframe the context. 

The vision that guides an adaptive strategy can still be long-term and bold — but should be continually extended (not changed completely once every few years) to push the boundaries of what the enterprise must do to succeed.

Uncertainty creates opportunity, so although it inevitably involves accepting a level of risk in some areas, enterprises that embrace risk and respond quickly to events as they happen are more likely to succeed in an uncertain world. Adaptive strategy in business helps them accomplish this and mitigate risk.

A top-down strategy process involves a select few individuals, while an adaptive process is inclusive, engaging and collaborative, with ideas and insights contributed from anyone within or outside the organization. This approach increases the enterprise’s ability to create, update and implement strategy and improves the quality of the output.

Our research has surfaced nine building blocks that help establish these four practices (though more are likely to emerge over time).

Most traditional enterprises will initially focus on the subset of building blocks that will help them establish the two or so core practices on which they’re focusing first. They use these building blocks to tackle specific issues and alongside a more traditional strategy process to add elements of an adaptive approach. Companies that were born digital often use many more building blocks.

Building blocks fall into three categories:

• Inputs. How ideas, insights and information relevant to strategy are generated, obtained or captured. The blocks are real-time insights, crowdsourcing and continually scanning.

• Process. The way in which strategy is created, reviewed, maintained and updated. Blocks: Distributed decisions, strategy sprints, continual process. 

• Outputs. The format, content or structure of strategy. Blocks: Option-based strategies, experiment-based strategies and minimum viable strategy.

Ian Cox is Senior Director Analyst with Gartner’s CIO research team. Mr. Cox’s coverage areas include strategic planning, IT operating models, board communication and the Office of the CIO. Prior to joining Gartner, Mr. Cox worked as an independent advisor to boards and executives across a range of industries covering such subjects as strategy, digital transformation and the role of the CIO and IT.