6 minute read 5 Nov 2018
Business people using adhesive notes in office

Five steps toward a more dynamic enterprise strategy

By

Jim Doucette

EY Americas Advisory Strategy Leader

Business strategist. Consumer behavior professional. Passionate about helping clients, developing people and building teams.

6 minute read 5 Nov 2018

Show resources

Organizations are grappling with the pressure of a fast-evolving environment that's reshaping the way they must formulate business strategy.

Today’s relentless pace and scale of disruption is transforming our world and challenging the assumptions that have been the building blocks of business strategy for many years. Operating and growing in these highly dynamic conditions requires a whole new approach to developing enterprise strategy.

Three fundamental questions anchor successful strategy:

  1. Where should we play?
  2. How should we play?
  3. What will it take to win?

Those core questions haven’t changed, but the lifespan of their answers has. It used to be that company leaders could develop a five- or even seven-year business strategy based on how they answered these questions. But that long shelf life is simply no longer viable in a world where disruption is reshaping business, and the answers to those questions, every day.

Mastering the dominant change drivers

Understanding what is driving change can help decision-makers to adjust their strategic planning. Three dominant forces are compelling companies to refresh their strategies more frequently:

1. Rising customer expectations

Among the biggest shifts is the rising demand for better, more convenient and more personalized customer experiences. Today’s powerful analytics tools can help pinpoint essential customer insights — but the length of time that customers will wait for a company to catch up to their needs is rapidly shrinking.

2. Changing competitive landscape

Bold new entrants are toppling incumbents’ comfortable hold on their customers and markets. Meanwhile, convergence is blurring the lines between sectors as companies seek to deliver targeted, seamless service to customers, encompassing everything from e-commerce retailers that now offer credit terms at point of sale to ride-sharing programs that incorporate retail delivery service — and many more.

3. Pace and scale of technological change

No facet of modern business is untouched by today’s digital evolution: back office administration, manufacturing, sales channels and distribution. Artificial intelligence (AI), machine learning, robotic process automation and augmented reality are transforming the way companies work, and the way they address rising customer demands and changing competition. Companies are becoming data-driven businesses that serve digital natives inside and outside the organization: in banks that use automation to manage credit risk, telcos that use chatbots to field first-tier customer interactions, and manufacturers that use smart glasses on the factory floor to improve workflow.

And at the current pace of change, organizations can’t afford to wait to figure out which technologies to adopt and where to build new capabilities.

A major children’s clothing retailer activated valuable data on the size and preferences of customers’ previous purchases to inform a new way of anticipating their needs. Using the data, they launched a subscription model to deliver the next set of children’s clothing right to subscribers’ doors — just in time for season changes and junior’s next growth spurt.

Dynamic enterprise strategy: anchored in purpose and agility

Amid these perpetually shifting conditions, organizations must move faster to anticipate risks to their business models and adapt quickly to emerging opportunities within disruption. That takes a more fluid approach to strategic planning; just as water naturally adjusts course to circumvent a boulder, companies should make sure they're flexible enough to shift directions when obstacles or new paths appear.

Enterprise strategy is best powered by your priorities, knowledge and the assumptions underpinning your business. But these are all in perpetual evolution, so your strategy must evolve just as quickly.
Jim Doucette
EY Americas Advisory Strategy Leader

By frequently revisiting the plan and piloting concepts in response to new insights, the organization can adjust the route it takes to fulfill that purpose. But this flexible, iterative approach to enterprise strategy requires a degree of organizational resilience that few companies exhibit — yet.

Five steps toward a more dynamic enterprise strategy

In working with EY clients in every sector and every market, we’ve identified five steps that can fuel the necessary shift to a more dynamic and resilient enterprise strategy.

1. Articulate your purpose

Successful strategy starts with a clear sense of purpose. That’s not new, but the importance of deciding what you are —and just as importantly, what you are NOT— has never been greater. Embedding purpose in strategy guides clear decision-making and helps maintain the organization’s North Star. And articulating it clearly to employees, investors, customers and throughout the entire supply chain keeps the field of vision focused on opportunity.

2. Cultivate a culture of continuous change

The C-Suite must be aligned to this new world where strategy is a living-and-breathing, dynamic process. Consistent leadership and clear communications are essential in ensuring the organization is ready to embrace an enterprise-wide commitment to faster implementation and an internal culture of change management and process design that is fundamentally different from what it has experienced before.

3. Broaden inspiration and experimentation

Organizations still struggling to embed a culture of innovation throughout their operations should seek out new sources of inspiration, looking beyond traditional eco-system and competitors to learn from other industries and companies. And they need to be prepared to experiment courageously; failing fast, learning quickly and moving even faster to scale up those experiments that succeed and discarding those that don’t. To avoid the “theater of innovation” —in which experimentation is divorced from enterprise-wide purpose and goals —leaders within the company will need to think differently about who they hire and how they reward innovation in order to activate the multidisciplinary thinking which fuels new ideas and rapid sprints.

4. Deploy analytics for rapid transformation

Today’s powerful data sciences and technologies are essential building blocks of organizational agility. Harnessed effectively, they can equip the organization to better understand changing market conditions and customer needs, and they can enable rapid change across the entire value and supply chain. In particular, companies will want to foster the virtuous cycle that data can enable, in which analytics reveal how to build products that improve and differentiate the customer experience, which in turn grows the customer base, which yields yet more valuable data and insights for future innovations.

5. Accelerate the cadence of strategic review

No matter which sector and business models characterize their operations, companies that have successfully embraced a dynamic enterprise strategy share a rigorous commitment to frequent strategy and portfolio review. They reject the outdated “set it and forget it” approach, refreshing and redirecting organizational initiatives regularly to stay true to that North Star. This requires a frank assessment of the portfolio, looking across various horizons to assess short-, medium- and long-term bets and how those intersect with the conditions and opportunities that are unfolding ahead.

In a recent EY survey, 67% of institutional investors want companies to undertake potentially disruptive innovation projects even if they are risky and may not deliver short-term returns

In a world where disruptive forces are constantly rewriting the assumptions on which business strategy of the past has been constructed, today’s leaders need a more flexible framework with which they can convert disruptions into opportunities — one that evolves just as fast as the conditions in which they operate do. Embracing a company-wide mindset of resilient, responsive and dynamic strategy — and the necessary willingness to assess and reassess positioning more frequently than ever before ― will equip their organizations to thrive comfortably in an uncomfortable world.

Summary

Organizations that thrive amid today’s rapid change possess a company-wide mindset of resilient, responsive and dynamic strategy — and the willingness to reassess positioning more frequently than ever before.

About this article

By

Jim Doucette

EY Americas Advisory Strategy Leader

Business strategist. Consumer behavior professional. Passionate about helping clients, developing people and building teams.