Unclear playing field
This lack of clarity is having a profound impact on the effectiveness of traditional strategies. Most strategy professors (myself included) describe strategy as a cascade of choices around where to play and how to win. Good strategy is based on using solid data and analysis to build an understanding of your current position, figure out a desired future position, and then design a plan to get from here to there (see Figure 1). I firmly believe that this model works. Or, at least it worked.
Figure 1: The traditional view of strategy
Today, I am no longer so sure…for a very simple reason: the business world is changing so quickly that predicting what the marketplace will look like in the future is becoming increasingly difficult. How many taxi companies incorporated the rise of Uber into their strategic planning processes? And why is it taking VW so long to react to its emissions crisis? In a constantly changing world, a long-term strategy can easily become an anchor that locks a company onto a path that is no longer relevant.
The key elements for success today are not plans and aspirations, but agility and capabilities. Capabilities (or access to capabilities) are required to compete effectively in a given position, and agility is required to make shifts in that position in response to a changing environment (see Figure 2).
Figure 2: Emerging view of strategy
Coming back to our athlete: Mo Farah succeeds not only because he is fast, but also because he adapts to the cadence of a race. He is a master of positioning, and he sets himself up for a winning finish. Sometimes he wins from the front, but more often than not, he comes from behind to take the lead in the final lap.
Farah has phenomenal capabilities but limited agility. He may be able to adapt to the changing dynamics of a race, but he would be completely lost if he had to compete in the high jump, on a bicycle, or on a tennis court. A more extreme form of agility is required by organizations as they move to the center of the digital vortex, an environment characterized by high market turbulence and shifting industry boundaries.
At the Global Center for Digital Business Transformation, an IMD and Cisco initiative, we define this extreme form of agility as digital business agility (DBA). DBA is composed of parts: hyperawareness, informed decision-making, and fast execution (see the article Disruptor and Disrupted: Strategy in the Digital Vortex for an in-depth explanation of these elements).