The visionary and inventor Elon Musk once said: “Some people don’t like change, but you need to embrace change if the alternative is disaster.”
We’re living in a world in which new shocks and disasters are increasingly commonplace. In chronological order we have had the climate crisis, Brexit, the Covid-19 pandemic, supply chain disruptions, the war in Ukraine, the return of inflation, soaring energy costs, a cost-of-living crisis and market turmoil—that in turn were layered onto, and dramatically accelerated, long-standing trends such as digitisation and sustainability.
A recent McKinsey research supported what we have encountered in many of our recent engagements with CEOs and leadership teams in that they share a common view: the current combination of shocks and major disruptions have created perhaps the most challenging environment management teams have ever faced—and one that likely won’t change anytime soon.
Such difficult times test leaders’ abilities. Some may choose to play safe and hope for better times, whereas others are dealing with these challenges as well as preparing their businesses for future expected disruption.
Cautious leaders adopt a defensive position in dealing with uncertainty, focusing on the threats here and now, by carrying out scenario planning, resilience preparation, balance sheet management or short-term efficiency drives. These leaders are in a strategic wait and watch mode as conditions unfold. In our experience, the majority of senior executives fall into this category.
However those leaders facing challenges head on and who take defensive actions while also using disruption as a catalyst to focus activities aligned to these new opportunities. These leaders are thinking about the next 3-5 years, not the next month. Many of them are driving their teams to identify opportunities and reset strategic objectives in light of disruption, in a hybrid post-COVID-19 world, and taking a long-term view on innovation and growth.
What differentiates these two leadership approaches is typically a near-time/ microscopic leadership vs a longer-term / telescopic one. As they start to create value from disruption leadership teams with a long-term lens will thrive rather than just survive in this environment. These leaders are creating a competitive edge by focusing on three key strategic ingredients: insights, commitment, and execution.
Strategic ingredient 1 – Insights
To obtain key insights it requires more than allocating time and resources but deploying a more granular, in-depth, and diverse analysis.
Key aspects for consideration are:
- Supply chain visibility and any associated risks embedded in those relationships and options for strengthening the supply chain’s resilience
- Requirements to achieve net zero
- Product / service portfolio analysis to identify segment-specific challenges and opportunities
- Customer insight analysis
- Internal insight analysis, such as commercial, financial, customer or operational insights
- External market analysis from diverse sources
- Data analytics derived from appropriate digital and analytics capabilities
- Scenario-planning and analysis
Strategic ingredient 2 – Commitment
As important as knowing what to do is doing it quickly and with appropriate commitment. The half-life of decisions has significantly reduced in the digital age, requiring more frequent evaluations of whether choices made a few months ago still make sense. What differentiates ambitious leadership teams isn’t moving in the right direction, as most di that eventually anyway, but doing it quickly and before others have decided to commit. In the face of uncertainty, these leaders’ mindset is to act and adjust, not watch and wait.
Resource commitments that are sufficient enough in terms of scale to materially affect the business’ trajectory are as important as speed. The acceleration of trends is increasing the returns on tangible, well-placed investments. Wider research shows that those who move early and at scale gain significant competitive advantage.
Key aspects for consideration are:
- Identify key game-changers
- Efficiency and make-up of the leadership
- Embracing a growth mindset to identify and seize opportunities
- Ring-fencing capex /opex to enable rapid and dynamic investment.
- Tracking leadership behaviour in other sectors
Strategic ingredient 3 – Execution
Execution is the third key strategic ingredient during the age of disruption. The ability to execute well is always valuable, of course, but the ability to rapidly pivot in response to changing conditions is vital to drive competitive advantage. A central execution component is speed. The pandemic has been both a testbed and a catalyst for innovating ways to increase speed, making it a valuable capability as an intrinsic part of strategy. Speed matters in times of disruption and leadership teams that break down silos, streamline decisions and processes and cut through bureaucracy will have a clear edge.
Key aspects for consideration are:
- Reinventing the organisation for speed
- Assessing whether the existing technology stack is of high-enough quality and agility
- Marketing, customer experience, sales, and pricing strength and capability
- Balance sheet flexibility to execute bold moves in tougher times
- Ability to act with the agility and ambition of a disruptor, while protecting the reach and resources of an established business
- Embracing digital and organisational transformation principles
Coming back to Elon Musk, the visionary and inventor recently tweeted about author William MacAskill’s new book ‘What We Owe The Future’. Recommending the book, which makes the case for long termism, the view that positively affecting the long-run future is a key moral priority of our time- Musk wrote, “Worth reading. This is a close match for my philosophy.”
We are keen to hear your views on these points, as well as your view of key strategic innovation priorities. Please post your thoughts and tag ‘Whitecap Consulting’ (LinkedIn) or @Whitecapconsult (Twitter) or send Stefan an email at [email protected]
If you feel that your strategy development and strategy implementation process would benefit from independent review and challenge, please get in touch.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education and Professional Services, including Corporate Finance and PE.