As economies reopen after lockdown many organizations are finding the competitive landscape has shifted beneath their feet. ...
Across many developed economies business activity is booming after a protracted slowdown caused by coronavirus. But many organizations are now finding the competitive landscape has shifted beneath their feet, forcing them to consider the relevance of their strategy for a changed post-COVID world.  Â
This was the focus of a recent Leading in Turbulent Times webinar led by Patrick Reinmoeller, Professor of Strategy and Innovation at IMD. Â
The pandemic has among other things accelerated a technology revolution around the globe and heightened awareness of climate change and the pressure for business leaders to take positive action. Â
Amid global tectonic shifts, even if traditional corporate strategies are still successful today in terms of driving competitive advantage, they do not guarantee relevance tomorrow. Â
“You may have the highest profit in the industry, but if people realize you are harming the environment, or you exploit your workforce, suddenly a new perspective cuts the relevance of your competitive advantage,” says Reinmoeller. Â
Many business leaders are now looking beyond short-term financial performance and focusing on sustainable value creation. He cites the example of carmakers that have pledged to stop selling combustion engine vehicles in the near future and become fully electric. Petrol and diesel models have been cash machines but executives at these companies are responding to the market. Â
“That is unbelievable, that takes an enormous amount of courage to say we have to stop doing what made us great, we have to move on,” says Reinmoeller. “I think relevance is a quality that leaders have long overlooked,” he adds. Â
So how do we prepare a strategy that ensures relevance in a future that we cannot predict? Reinmoeller outlines a four-step framework for strategy rejuvenation. Â
Relevance is a quality that leaders have long overlooked
The first step is staying connected with stakeholders. This is vital to gather external perspectives and avoid naval gazing. “When companies become large, most of the executives’ time is spent on internal meetings, so it’s harder to be in touch with the world,” Reinmoeller says.
Innovation and inspiration are what keep stakeholders connected to organizations, he says. “Once you have had one big innovation, the temptation is to refine it. Incremental innovations are very powerful and we need to continue to do this. But we shouldn’t stop there.” Â
The strength of the talent pool is important in this context, along with investing in learning and development. Innovation also requires organizational agility and resilience, the ability to bounce back from setbacks and embrace continuous change. “We need to be able to cope with this as leaders,” says Reinmoeller. Â
Also critical is being conscious and ensuring appropriate conduct in relation to stakeholders. “What we communicate may be more or less appropriate to different stakeholder groups,” says Reinmoeller. “We cannot stay connected by sending one message to all; we need to be conscious about how to really create a meaningful relationship with stakeholders.” Â
Understanding the customer needs is vital in this context. And for that, digital technology is absolutely pivotal, he says. “If you’re in contact with your customers through smartphone apps, for example, that is so much richer in terms of data that you have access to than what we had in the past.” Â
Another vital part of relevance is creating value for stakeholders. He cites, as an example, how organizations stayed in close contact with their suppliers during Covid to offer support such as a price rebate as they faced challenges like currency fluctuations. Â
“If your company is resilient, one of the best things that you can do is share that resilience with others,” Reinmoeller says, adding that creating a stakeholder centric organization is a big part of maintaining relevance and driving competitive advantage. Â
The key to this is asking open questions that do not give the implicit answer in the prompt. “Closed questions are more of a mirror for our own beliefs,” he says. Â
Closed questions are more of a mirror for our own beliefs
The fourth crucial component of relevance is being conspicuous or clearly visible to stakeholders, but without overdoing it. “Sometimes big corporates jump on every single issue that they can find in order to maintain relevance without seeing that they consciously or unconsciously undermine their credibility,” says Reinmoeller. Â
“So we need to consciously choose the way we stay connected through contributions to our stakeholders. And then we need to adjust the level of visibility of the actions.” Â
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