Why your twentieth century Strategy needs a Strategy in the 21st Century

October 10, 2022

Why your twentieth century Strategy needs a Strategy in the 21st Century

Due to the rapid technological advances and other forces/events (current and future) such as the fourth industrial revolution, fully connected factories/industry 4.0, digital disruption, disruptive innovation, disruptive pricing, shorter product life cycles, ever-changing consumer requirements and preferences, consumer demands for higher quality products/services at lower/diminishing prices, globalization, trends towards personalization and mass customization at affordable/low prices, just to name a few, traditional strategic planning which is a linear strategy may be in its death throes. Perhaps you may have a different perspective because linear strategy is planning action which is methodical, directed, and sequential. But in the age of increased volatility, uncertainty, complexity and ambiguity [VUCA] can such an inflexible, relatively biased/subjective, bureaucratic process be the plausible/viable strategy for your organization? It is apparent that economies and businesses worldwide have been experiencing increased volatility, uncertainties, complexities, and ambiguity in this 21^st century. Therefore the reliability of the premises as well as the implicit requirements of relative predictability of economic growth and business cycles on which much of strategic planning is grounded may is invalid and/or questionable. Further, concepts like economies of scale and mass production which have been sources of competitive advantage for many relatively large organizations would become less of a differentiator as personalization and mass customization go main stream thus enabling even SMEs to effectively compete with their larger rivals. Strategy could either be narrowly defined as creating/searching for new sources of competitive advantages or strategy could be broadly defined as the determination of the basic long term goals of an organization, the prudent choices of viable actions and the allocation of resources necessary for achieving these goas. So if one argues that linear strategy may be dead then which type(s) of strategies are optimal in the 21^st century for your forward looking company? The fundamental elements relevant to linear strategy are strategy formulation, strategy implementation, strategy evaluation and control. This traditional planning model has been pivotal to organizational strategy and it has worked just fine in the 20^th century and is still widely used today so why is it obsolete in the 21^st century you might ask? First, let’s revisit and explain/elaborate a bit more on what is meant by linear strategy and/or the traditional planning process being bureaucratic and relatively “biased/subjective”. Senior management exert significant control over the linear/traditional planning process, further, the decision making process in linear strategy involves internal analysis, external environmental analysis, determination of goals, strategic analysis and choice wherein alternative strategies which achieve the desired goals are generated/analyzed, weighed, selected and implemented. The relative high bias/subjectivity creeps into the decision making process when top managers selectively focus on future events and/or assumptions which favor their own perspectives and ignore those which are unfavorable. Moreover, since planning is forward looking assumptions and/or premises on which forecasts are made require the environment to be predictable and/or relatively stable. And in the 21^st century’s business environment stability and/or predictability may be wishful thinking. The Adaptive Strategy: What is adaptive strategy and why is it a superior strategy for the 21^st century organization? The proponents of adaptive strategy assert that due to the VUCA business environment of the 21^st century strategic surveillance must be a top consideration in developing strategy. The purpose of strategic surveillance is to monitor a broad range of events inside and outside the organization that are likely to influence the course of its strategy. The basic logic underpinning strategic surveillance is that important albeit unanticipated information may be uncovered by a general monitoring of multiple information sources. So what does all this mean in the context of adaptive strategy being superior to linear strategy? As it turns out adaptive strategy is concerned about creating/developing a viable match between the opportunities and threats in the external environment and the organization’s resources and capabilities for exploiting the opportunities.