Introduction: the sky is the limit
The limit where one industry ends and the other one starts has become increasingly blurred.
It is no longer possible to say that Apple is just making computers and phones when it is in the process of producing software on wheels – and not just cars with software. Or that Amazon is only a marketplace when its portfolio includes products such as Amazon Prime – an audiovisual content platform – or Amazon Web Services – which includes hosting services and much more.
Industries are changing fast and it is no longer enough to keep an eye on nearby competitors to understand where the next innovation will come from.
Let’s take a look at some cases, just to get the picture:
- Upwork: In little more than a decade, an unexpected actor, outside of the recruitment business, completely changed the game of selection.
- Tesla: Elon Musk’s innovative company has incorporated into the automotive industry concepts such as eliminating a link in the chain – car dealers – and technology, which includes software updates that disrupt the traditional idea of “model” according to the year of manufacturing. How to compete when traditionally-made cars depreciate year by year while Tesla offers a permanent upgrade to its systems?
Change is no anymore a decision of each organization. If you don’t change in time, unthinkable players will introduce concepts into the industry that will transform it and force you to change…or become obsolete.
You need to define a strategy before this happens.
The emergent strategy – what it is and why define it
Henry Mintzberg created the concept of emergent strategy as opposed to deliberate strategy.
The deliberate strategy
In a deliberate strategy, there is a focus and a plan that involves:
- knowing the current context and projecting it into the future
- knowing why you want to achieve a certain final objective
- understanding the steps needed to achieve the goal
But what happens when the context changes entirely? When a pandemic like COVID-19 strikes or a disruptive actor enters a foreign industry and transforms the business? Ever-changing environments require more flexibility.
The emergent strategy
The emergent strategy, on the other hand, defines a course but has much greater consideration for uncertainty and understands the need to learn along the way.
This process is based on:
- Experimentation: Permanent learning and adaptation are the keys to being able to respond to constant changes.
- Co-creation of the strategy: Collaboration and teamwork – I mean, co-creation with other organizations – will help detect changes and learn from them.
- Defining a course and a flexible path: The course will guide the organization; experimentation and co-creation will allow us to respond to unforeseen events and opportunities that may appear along the way.
Keys to building an emergent strategy
1. Analize the ecosystem
The first thing to do, in order to define an emergent strategy, is to broaden your point of view. You must keep an eye not only on the industry you belong to but beyond it.
What is happening in the ecosystem?
And when I speak of an ecosystem, I am not referring to a network or the value chain; I mean the set of organizations that interact, create, and take value from others even if it is not in an obvious way.
It is worth distinguishing four fundamental areas of analysis:
- Innovation: Where is innovation happening? In what industries? How is it happening?
- Client: How are our client’s habits changing? What is changing them? And what about those who are not our clients today? What social and cultural transformations are taking place?
- Technology: What new technological breakthroughs exist and why are they considered so? What value do they add to people?
- Talent/employees: How are workers being transformed? What new competencies will you need in the future and therefore should be developed in the organization?
2. Expand the concept of stakeholders
The development of a strategy must have as its final objective – always – to add value to someone. And this someone is not just the customer. You must also consider other key stakeholders: collaborators, suppliers, society…
On the other hand, it is essential to understand that adding value is a dynamic process.
What excites our client or employee today will not necessarily do tomorrow.
For this reason, it is critical to understand each stakeholder from its own point of view. And for this you must avoid the following conceptual mistakes:
- Using pre-defined segmentations: Instead of using your own pre-established parameters, group clients or employees into archetypes, considering the way they perceive, think, decide and act.
- Forgetting the customer journey: Seek to understand both your customer and your employee throughout their entire experience – even before they meet your organization and after they are no longer a customer or employee.
3. Focus on culture
“Culture eats strategy for breakfast”Peter Drucker
Do you remember the case of Nick Leeson? The trader bankrupted the Baring Bank in the ’90s with his fraudulent operations. After a brief period in jail, he wrote several books, and today he gives talks in which he explains the true cause that led to an event like this: “the people.”
It was the organization’s culture – a culture in which risks were not controlled even though control processes were in place – which determined the failure of an organization with years of experience.
Understanding the culture of your organization involves asking yourself the following questions:
- What processes exist in your organization? What deviations occur?
- Why do people do what they do and the way they do it?
- What cultural characteristics could become obstacles to achieving strategic objectives?
- What does the organization do to change these characteristics so that they are aligned with the strategy?
4. Learn to learn as a team
A short time ago, the news of a teacher who could not solve the exam that he prepared for his students went viral.
The mistake is thinking that a teacher should have all the answers. If we expect whoever asks the questions to know all the answers to them, we will have stopped learning. We will only be informing ourselves.
I would like to share two cases of companies that I consider to be learning:
- Starbucks: The chain has a research center that seeks to understand, with the help of technology, what its customers want and find ways to help its employees respond to them better.
- Lego: The company holds contests in which it invites its customers to submit their creations and share the potential emerging business with them.
5. Design employee experiences
Did you know that, according to Gallup, companies with motivated employees are 21% more productive than companies with low employee motivation? Designing a good employee experience is essential to achieve better results.
But how do you create a good employee experience?
Google and Mercado Libre are very successful companies with outstanding work environments. However, they use very different practices toward their collaborators. In the first, you can find ping-pong tables and entertainment in their offices, while in the second one you won’t find anything like it.
There is no single formula for creating experiences. You must find the one that works in your organization, and with your culture. It is inconsistent to speak of identifying one’s own archetypes of customers and employees and then responding with practices copied from “successful companies.”
- How do your personal purposes coincide with those of the organization?
- What do your employees look for, want, and need?
- What obstacles do they experience day by day?
- How can you help them with their daily challenges?
Bonus tip! Be consistent. Treat your employees like you treat your customers. Mirror the customer experience and the employee experience. Add value to both.
Conclusion: have strategic ambition
There is a belief that “in uncertainty, you cannot have a strategy”. I strongly disagree. The worst thing you can do in uncertainty is to lack strategy because you will react based on where the other actors take you, like a weather vane.
Creating an emergent strategy is defining a course. It is working for your own future. Being able to read what is happening in the environment and respond to it with one hand in the wheel – having decided beforehand the direction you want to take.
The starting point is, of course, to measure how much uncertainty exists in the business.
And then, designing a strategy for uncertainty. This strategy must be ambitious and, at the same time, painful.
- Ambitious: The more ambitious the goal, the greater the efforts to achieve it.
- Painful: Because it should force us to reconsider if we are on the right path or if it is time to review our strategy.
I wish you a strategic 2023.