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Leading in turbulent times

Agility

Mastering strategic agility comes down to learning how to minimize strategic trade-offs

11 February 2022 • by Stéphane J. G. Girod in Leading in turbulent times

Strategic agility is a difficult concept to unpack as there are so many ingredients to it. Two-thirds of participants in a webinar given by Professor Stéphane J.G. Girod said they considered it...

Strategic agility is a difficult concept to unpack as there are so many ingredients to it. Two-thirds of participants in a webinar given by Professor Stéphane J.G. Girod said they considered it a buzzword, in large part because of the haziness of the term in popular imagination. 

A good start is to see strategic agility as the ability to adapt the strategy content (where you play and how you win) in a dynamic way, together with the strategy process (how you strategize). This will help you respond to your environment and, even better, to shape it to your advantage, Girod said. 

But why is it necessary to be strategically agile in the first place? Today’s degree of uncertainty and fast pace of change mean many companies face a relentless challenge to keep up their competitive advantage. Firms die if they are too rigid to renew this advantage as often as required. 

After finding out what strategic agility actually is, 43% of participants  said via an online poll that the degree of strategic agility in their company was weak. This was attributed variously to a fear of changing the status quo, the “success trap” and a top-down only approach to strategizing. 

5 strategic trade-offs that agile companies are trying to minimize 

Strategically agile companies are actively shifting from an “either or” to a “both and” approach to strategy, said Girod, whose research in this area culminated in the 2021 book, Resetting Management: Thrive with Agility in the Age of Uncertainty. Their priority is to resolve competing demands, and this entails multiple shifts: 

  • From protecting the core business only, to protecting the core business and engaging in the faster experimentation of next market-creating businesses 
  • From disciplined planning and resource allocation processes only, to having that discipline and fluid, experimental planning and resource allocation processes 
  • From excessive simplification of the business, geographic and/or customer segment portfolio, to optimizing for both a simple enough portfolio and a portfolio that is as diverse as necessary 
  • From excessive “politicking” in the top management team that paralyzes innovation, to encouraging open and deviant thinking for generating next S-curve ideas and ensuring leadership unity at the time of execution 
  • From an over-reliance on internalized resources and capabilities to keeping some of the key resources in house and orchestrating a network of external resources and partnerships. 

“Kodak is a great example of why a company that doesn’t do both is in danger. Kodak had great ideas, and even invented the digital camera. But the leadership couldn’t execute and make it their own, and so the company wasn’t able to respond to fast-changing conditions.” 

If firms do let themselves get out of touch with their environment, at best they will need to make great leaps to change. Strategic agility offers a more dynamic alternative. 

Leaders should anticipate that addressing competing demands often complicates matters, he added: “Companies have tended to want to control lots of areas, such as talent, in house. It is simpler. Opening initiatives to an ecosystem of partners is more complicated, but firms that do both are more flexible.” 

Reinventing Luxury Lab

Future-proofing luxury in highly volatile time

Solving tensions: a key step 

Strategic agility is tough because there will be tensions when you try to resolve competing demands. Such tensions include career progression considerations – that is, an “I want to play it safe so that I will be promoted more easily” attitude – as well as having too much homogeneity in executive teams, which can “stifle innovation and reduce the chance of an outlier idea pushing the needle forward”. 

“The more senior people have to accept they might not have the best ideas,” said Girod, referring to the way certain mindsets could create tensions. “In fact, they may well be more out of touch with the market. Take digital transformation, where the more senior people are indeed likely not to be the best prepared.” 

It was partly this realization that led the hotel chain Accor to give junior employees a chance to come up with a new brand under Accor – JO&JOE – as a means to find an effective way of competing against Airbnb with a new sort of offer for millennials, in a context where ideas were being blocked at the top due to a lack of diversity. 

Crucially, by structuring the junior team directly beneath the management, they were shielded from cost imperatives and corporate pressures. 

KPIs that can be used to measure such an effort include monitoring on a quarterly basis what share of new business streams have been created, and rewarding management for that progress and the links made between core and new businesses. 

Too many companies have good ideas but structural issues, politics, and social movements often stall matters, and this is frequently overlooked, said Girod. 

The essence of strategic agility is reconciling competing demands to be more flexible and entrepreneurial. Ask: What are the strategic competing demands that matter to my business? What tensions are likely to result from trying to pursue competing priorities? How can we resolve those tensions? And, because this is dynamic, always keep an eye on whether there are new competing demands that you need to face. 

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Authors

Stéphane J.G Girod

Stéphane J. G. Girod

Professor of Strategy and Organizational Innovation

Stéphane J.G. Girod is Professor of Strategy and Organizational Innovation at IMD. His research, teaching and consulting interests center around agility at the strategy, organizational and leadership levels in response to disruption. At IMD, he is also Program Director of Reinventing Luxury Lab and Program Co-Director of Digital Execution. 

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Leading in turbulent times

Agile strategies: solutions for leaders

Join professor Stéphane J.G. Girod on 10 February to learn how you can use strategy to not only adapt to uncertainty but also use it to shape your company future with flexibility.

The uncertain climate in which we live seems to show no sign of fading. When vaccines against COVID-19 were launched, the world hoped it was turning a corner, only for it all to unravel in late 2021. In 2022, some commentators talk of a potential recession looming; others about geo-politically driven conflicts. The digital revolution is continuing to drive sudden and unexpected changes.

By learning how the most innovative and highly entrepreneurial non-digital native companies are thriving in this environment, you will learn how you can use strategy to not only adapt to uncertainty but to shape your company’s future in a flexible way.

Register for the webinar on 10 February, 12:00 (CET)

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Agile strategies: solutions for leaders

Learn Brain Circuits

Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on – they only take five minutes. Read more 

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