Strategic Planning in the New Age
December 3, 2020
Traditionally, strategic planning has been an exercise where business formulates a long-term plan, typically spanning 3 to 5-years. This long-term plan may get reviewed and updated annually. However, in the past, the strategic plan more or less remained static, and the business organized its resources and activities in line with this ‘static’ plan. However, with the modern trends relating to technological advancements, digitization and innovation coupled with extreme events such as the ongoing covid-19 pandemic and the global financial crisis which we experienced in the recent past, the traditional approach to strategic planning has become obsolete. Businesses have realized the need to adopt a more dynamic approach to their strategic planning process.
Since the business environment has become disruptive and turbulent, we have to take into account its dynamic nature and adopt an approach that incorporates learning through feedback and a strategic plan that adapts and evolves with the environment. Whilst certain businesses may have to adapt their action plans within an overall strategy that may remain relatively stable over a period, there may be certain businesses, particularly startups, that may have to even adapt their strategies and see their business models evolving over time in response to the dynamically changing environment. In order to formulate an effective and robust strategy, which the business can adapt in response to the changing environment, some helpful tips and techniques are outlined below:
Use the Business Model Canvas effectively;
The Business Model Canvas, which as introduced and popularized by Alexander Osterwalder, has nine components:
1. Key partners
2. Key activities
3. Value proposition
4. Customer relationships
5. Customer segments
6. Key resources
8. Cost structure
9. Revenue streams
We can map the business into the above components of the business model and identify how exposed and sensitive each of the components to various factors such as demand shifts, competition, business cycle, economic factors, technological trends, digitization etc. are The resource commitment behind the most sensitive components should be minimized and the company should devise a nimble strategy where it can easily adapt these components if required when circumstances change. Further, in order to have robust business model, it is important for the business to have a few key strengths in terms of these business model components, and the organization should commit its resources behind them. However, these components should be robust enough to remain strong during times of turbulence.
Set up a system to scan the environment and obtain feedback
The organization should regularly monitor the environment in terms of the latest developments and trends as well as competitor activity. This will help to identify whether any component of the business model is impacted or exposed (the Business Model Canvas can be used for this purpose), and the organization will in a better position proactively respond by fine tuning different components of the strategy.
Use an adaptive planning process;
An adaptive planning process, where the entire strategic plan is revisited regularly and proactively changed, as and when necessary, with the changing environment is more relevant in today’s world as against the traditional process. Whilst this last step ensures that the business looks at the overall strategy at regular intervals, the initial step provides an overall framework for a dynamic strategic planning process in the form of the Business Model Canvas, whereas the second step ensures there is continuous monitoring of the environment with proactive strategic responses.