Last Updated Oct 27, 2010 11:34 AM EDT
In a nutshell, companies used to be able to get by with a multiyear strategic plan they maybe revisited annually. These days, that's no longer effective. Markets simply move too fast. A change in how we look at strategy is clearly indicated, and business leaders can learn how to do that from the way professional football has changed:
Long ago, teams had a general "game plan" for each opponent, a handful of plays in their playbook, and the quarterback would call one in the huddle and that's the play they'd run. Simple.
Then the game became more sophisticated. The playbook became more complex and varied, and coaches began calling plays from the sidelines. Sure, quarterbacks occasionally called "audibles," changing the play at the line of scrimmage after seeing how the defense lined up, but that was the exception, not the rule.
Now, playbooks are even more complex, and coaches are still calling plays from the sidelines, but now the quarterback has far more latitude to call variations or outright change the play at the line of scrimmage. Lots of teams barely even huddle anymore. The game has become far more fluid and dynamic. But keep in mind that teams still have their game plan and set playbooks.
Now let's talk about business.
Back in the day, companies had a "game plan," a multiyear strategic plan to guide the business. And they'd call "plays" based on customer needs and competitive products. But everything moved slower back then. There was time to react and executives could pretty much get by with that multiyear plan and a handful of plays in their playbook.
I don't need to tell you how much that's all changed. To say the business world and, indeed, most competitive markets, are fast-paced and dynamic is a gross understatement. Now, if you follow a strategic plan for a couple of years, you may wake up to find that you're losing share of a market you no longer recognize.
Just look at a few recent examples:
- It's hard to believe that Nokia, the world's largest wireless handset maker with a dominant share of a $100 billion market, suddenly finds itself in deep crap because it completely missed the global shift to smartphones. What's really startling is that the smartphone transition was led by Apple and Google, two companies that weren't even in the business a few years ago. Failing to react quickly enough to market dynamics got Nokia CEO Olli-Pekka Kallasvuo fired, and rightly so.
- Just yesterday, once fast-growing and high-flying social media site Digg announced a layoff of 37 percent of its staff and the departure of its publisher and chief revenue officer Chas Edwards. It wasn't that long ago that every media company on the planet was either trying to figure out how to copy Digg's model or trying to buy the company. But things changed, new competitors arrived, a major redesign failed, and long-time CEO Jay Adelson was out and former Amazon executive, Matt Williams, was in.
Companies still need a "game plan" and a fixed "playbook" because that type of planning makes it easier to adapt to market and competitive dynamics as they occur. But leaders can no-longer depend on multiyear strategic plans. Today, I think strategy should be planned annually and reviewed quarterly. And the most important aspect of that planning is monitoring the competitive market to allow for "audibles."
That said, a word of caution about taking the "dynamic" model too far. Frequent strategy changes are disruptive to an organization and, executed too frequently, will do far more harm than good. That's why it's still important to maintain a periodic planning process as the rule, with ad-hoc changes as the exception.
Image CC 2.0 courtesy Flickr user Ed Yourdon