Strategic success is not easy, it requires planning, creative problem solving, a company vision and a deep knowledge of your industry and target audience. There are a few recognised ways to create and execute a strategy, each legitimate, but some bring success more than others. In this article I’ll explain the pros and cons of planned, emergent and active strategy.
The traditional and most commonly used approach. An expected and rigid strategy that is formed as part of the traditional business planning process, usually at the beginning of the company financial year. It sets targets typically for the next 12 months based on the previous year’s performance offset with corporate objectives. That could be to maintain market share or gain new ground in new sectors. It is the intended strategy that a business hopes to execute to achieve its objectives.
Whilst it’s always good to keep your long-term business objectives in clear view, the disadvantage of a planned strategy is that it’s stuck to rigidly despite external market and internal company changes. And that sometimes means being slow to respond to said changes or they’re simply ignored in blind pursuit of an objective that might no longer result in business success. Planned strategy only ever works on a linear path to get you from A to B in a world that never changes. But, as 2020 showed us, the world is unpredictable.
As John Kim, Goizueta Business School and IEDP Author, states,
“It’s hard to have consistency of vision and leadership when there is such a movement in the C-suite with someone moving in and someone moving out every 5-6 months. So it’s not a surprise that a lot of strategies either don’t follow through or there are too many cooks in the kitchen, and strategy gets a little bit muddled as a result. Secondly, when the strategy does eventually make it to the ground-floor and needs to be executed, things have often moved on, and the market responses are rarely the ones you expect."
A reactive strategy that emerges as part of a response to market changes without a set goal or objective. Canadian academic and author on business and management, Henry Minzberg, describes it as,
“A pattern of action that develops over time in an organisation in the absence of a specific mission and goals, or despite a mission and goals.”
Emergent strategy is on the rise, particularly in markets that are volatile and change often. It requires the organisation to bring new trends, technology and market changes to update, adjust and accommodate a changing reality. It often involves strategic and tactical changes and is not restricted by formal planning tools and methods. Your business must be free from bureaucracy, your team must be willing to take risks and accept failure, and your leadership teams needs to be brave, aligned and unwavering to succeed with an emergent strategy.
A blend of planned and emergent strategy – active strategy (also known as ‘realised strategy’) allows you to plan ahead with clear business objectives in mind but be flexible and dynamic enough to respond quickly to market changes.
It’s a mindset that allows you to plan for and deliver long-term business goals by reviewing every 90 days to allow for challenges and opportunities that arise from market changes. External factors or an internal restructure might mean that the business’ long-term objective isn’t feasible after all. By reviewing your plan every 90 days, you’ll be quick to spot challenges and opportunities and address both to your advantage as soon as they happen.
Active strategy is the approach we adopt here at Distinction, both when working with our clients and internally as a business. It means we’re agile, quick to act and achieve unreasonable progress every day.
Often the most successful strategies emerge from a series of management decisions in response to a changing environment rather than by slavishly following the original planned strategy. If 2020 proved anything, it’s that brands must adapt or die. Most businesses will have had to adapt the planned strategy they had in place at the start of 2020. We were all forced to look at what we wanted to get out of 2020 and quickly revise that. Of course there were ‘winners’ of the pandemic, but the vast majority needed to adjust, change or even pivot completely to stay afloat. However, it isn’t a new trend, some of the most well-known brands were born out of this mindset as the table below shows.
Source: Mastering Strategic Management, 2011.
Planned or intended strategy often fails as Robert Hargove, Director of the Harvard Leadership Research Project and Co-founder of Venture Capitalist Partners, Author, notes,
“Whenever I mention the distinction between intended strategies and emergent strategies to a CEO, CMO or Head of Strategy and Corporate Development, it’s as if a light bulb goes off in their head, because it makes so much intuitive sense.
They intuitively understand that their intended strategy either is not going to happen for various reasons or that it is going to get them in trouble if they stick to it given the emergence of game-changing forces and factors.”
Brands cannot afford to stand still, and planned strategy often takes too long to change, too long to realise (if it’s ever truly realised at all) and is, at best, an educated guess for how the market will look in 12 months. Even in established sectors that can no longer be seen as the sensible way to operate. As new demographics come into the market (such as our first completely digital native generation – Gen Z), new technology for consuming content, and shifting shopping habits become mainstream, brands have no choice but to adapt or die.
An active strategy gives you the best chance of winning. Keep that clear vision and long-term goal in mind but review your tactics every 90 days. Then you’ll be agile enough to move with the times, seize opportunities, head off challenges and identify when priorities need to be reordered to deal with an unpredictable world.
To find out more about how active strategy can benefit you, download our Active Strategy guide.