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Leading in turbulent times

corporate culture

Rejuvenate corporate strategy for the post-COVID world

17 September 2021 ‚ÄĘ by Patrick Reinmoeller in Leading in turbulent times

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.   

This was the focus of a recent Leading in Turbulent Times webinar led by Patrick Reinmoeller, Professor of Strategy and Innovation at IMD.  

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.  

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.  

‚ÄúYou 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,‚ÄĚ says¬†Reinmoeller.¬†¬†

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.  

‚ÄúThat 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,‚ÄĚ says¬†Reinmoeller.¬†‚ÄúI think relevance is a quality that¬†leaders¬†have long overlooked,‚ÄĚ he adds.¬†¬†

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.  

Relevance is a quality that leaders have long overlooked

Stakeholder collaboration  

The first step is staying connected with stakeholders. This is vital to gather external perspectives and avoid naval gazing. ‚ÄúWhen companies become large, most of the executives‚Äô time is spent on internal meetings, so it‚Äôs harder to be in touch with the world,‚ÄĚ Reinmoeller says.

Innovation and inspiration¬†are¬†what keep stakeholders connected to organizations, he says.¬†‚ÄúOnce 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‚Äôt¬†stop there.‚Ä̬†¬†

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. ‚ÄúWe need to be able to cope with this as leaders,‚ÄĚ says Reinmoeller. ¬†

Conscious communication  

Also critical is being¬†conscious¬†and ensuring¬†appropriate¬†conduct in relation to stakeholders.¬†‚ÄúWhat we communicate may be more or less appropriate to¬†different¬†stakeholder groups,‚Ä̬†says¬†Reinmoeller. ‚ÄúWe cannot stay connected by sending one¬†message to all; we need to be¬†conscious¬†about how to really create a meaningful relationship with stakeholders.‚Ä̬†¬†

Understanding¬†the customer needs¬†is vital in this context.¬†And for that, digital technology is¬†absolutely pivotal, he says.¬†‚ÄúIf you‚Äôre 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.‚Ä̬†¬†

Sustainable value creation  

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.  

‚ÄúIf your company is resilient, one of the best things that you can do is share that resilience with others,‚Ä̬†Reinmoeller¬†says, adding that¬†creating a¬†stakeholder¬†centric organization is a big part of maintaining relevance and driving competitive advantage.¬†¬†

The key to this is asking¬†open¬†questions¬†that do not¬†give the implicit answer in the prompt.¬†‚ÄúClosed questions are more of a mirror¬†for our own¬†beliefs,‚ÄĚ he says.¬†¬†

Closed questions are more of a mirror for our own beliefs

Conspicuous action  

The fourth¬†crucial component of relevance is¬†being conspicuous or clearly visible to stakeholders,¬†but without overdoing it.¬†‚ÄúSometimes 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,‚Ä̬†says¬†Reinmoeller.¬†¬†

‚ÄúSo¬†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.‚Ä̬†¬†

Authors

Patrick Reinmoeller - IMD Professor

Patrick Reinmoeller

Professor of Strategy and Innovation at IMD

Patrick Reinmoeller has led public programs on breakthrough strategic thinking and strategic leadership for senior executives, and custom programs for leading multinationals in fast moving consumer goods, telecommunications, pharmaceuticals, healthcare, and energy on developing strategic priorities, implementing strategic initiatives, and managing change. More recently, his work has focused on helping senior executives and company leaders to build capabilities to set and drive strategic priorities.

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