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Rejuvenate corporate strategy for the post-COVID world
As economies reopen after lockdown many organizations are finding the competitive landscape has shifted beneath their feet. ...
AcrossĀ manyĀ developed economies business activity is booming after a protracted slowdown caused by coronavirus.Ā But manyĀ organizations are now findingĀ the competitive landscape has shifted beneath their feet, forcing them to consider the relevance of their strategyĀ for a changed post-COVID world.Ā Ā Ā
This was the focus ofĀ aĀ recentĀ Leading inĀ TurbulentĀ Times webinar led by Patrick Reinmoeller, Professor of Strategy and Innovation at IMD.Ā Ā
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. Ā
AmidĀ global tectonic shifts,Ā even if traditional corporate strategies are still successful today in terms of driving competitive advantage,Ā they doĀ not guarantee relevance tomorrow.Ā Ā
āYou may have the highest profit in the industry,Ā butĀ ifĀ people realize you are harming the environment, or you exploit your workforce,Ā suddenlyĀ a newĀ perspective cuts the relevance ofĀ yourĀ competitive advantage,ā saysĀ Reinmoeller.Ā Ā
Many business leaders are now looking beyond short-term financial performance and focusing onĀ sustainable value creation.Ā He cites the exampleĀ of carmakersĀ that have pledged to stop selling combustion engineĀ vehiclesĀ in the near futureĀ and become fully electric.Ā Petrol andĀ dieselĀ models have been cash machinesĀ butĀ executivesĀ at these companiesĀ are responding toĀ the market.Ā Ā
āThat is unbelievable, that takes an enormous amount of courageĀ to say we have to stop doing what made us great, we have to move on,ā saysĀ Reinmoeller.Ā āI think relevance is a quality thatĀ leadersĀ have long overlooked,ā he adds.Ā Ā
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. Ā
Relevance is a quality thatĀ leadersĀ have long overlooked
Stakeholder collaborationĀ Ā
The first step is staying connected with stakeholders. This is vital to gather external perspectives and avoid naval gazing. āWhen companies become large, most of the executivesā time is spent on internal meetings, so itās harder to be in touch with the world,ā Reinmoeller says.
Innovation and inspirationĀ areĀ what keep stakeholders connected to organizations, he says.Ā āOnce you have had one big innovation, the temptation is to refineĀ it. Incremental innovations are veryĀ powerfulĀ and we need to continue to do this. But we shouldnātĀ stop there.āĀ Ā
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. āWe need to be able to cope with this as leaders,ā says Reinmoeller. Ā
ConsciousĀ communicationĀ Ā
Also critical is beingĀ consciousĀ and ensuringĀ appropriateĀ conduct in relation to stakeholders.Ā āWhat we communicate may be more or less appropriate toĀ differentĀ stakeholder groups,āĀ saysĀ Reinmoeller. āWe cannot stay connected by sending oneĀ message to all; we need to beĀ consciousĀ about how to really create a meaningful relationship with stakeholders.āĀ Ā
UnderstandingĀ the customer needsĀ is vital in this context.Ā And for that, digital technology isĀ absolutely pivotal, he says.Ā āIf youāre in contact with your customers throughĀ smartphone apps,Ā for example,Ā that is so much richer in terms of data that you have access to than what we had in the past.āĀ Ā
Sustainable value creationĀ Ā
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. Ā
āIf your company is resilient, one of the best things that you can do is share that resilience with others,āĀ ReinmoellerĀ says, adding thatĀ creating aĀ stakeholderĀ centric organization is a big part of maintaining relevance and driving competitive advantage.Ā Ā
The key to this is askingĀ openĀ questionsĀ that do notĀ give the implicit answer in the prompt.Ā āClosed questions are more of a mirrorĀ for our ownĀ beliefs,ā he says.Ā Ā
Closed questions are more of a mirrorĀ for our ownĀ beliefs
ConspicuousĀ actionĀ Ā
The fourthĀ crucial component of relevance isĀ being conspicuous or clearly visible to stakeholders,Ā but without overdoing it.Ā āSometimes 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,āĀ saysĀ Reinmoeller.Ā Ā
āSoĀ we need to consciously choose the way we stay connected through contributions to our stakeholders.Ā And then we need toĀ adjust the level of visibility of the actions.āĀ Ā
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