In our exploration of the growth of Shelley’s retail store – from a food and drink micro store to an international conglomeration focusing on the provision of services that includes animal hospitals and boarding facilities, subterranean hotels and above ground retail and entertainment complexes as well as overland expedition tourism services - we need to address the question: At what point does planning end and the need for dynamic strategic management start?
This question in turn demands answers to the question, “What impact will change in technology, the environment and social norms have on the way we ‘do’ strategy, and indeed business, in the future?”
With the story of Shelley’s business case in mind we invite you to read the proposition contained herein and to then provide us with your views on the validity of the observations either through our LinkedIn discussion group or here on our blog.
Shelley’s Dilemma: At what point do I stop planning and start strategising?
Meet 18-year-old Shelley, an ambitious and independent woman who in the late 1980’s set up a small food and beverage store in a remote location half way between two towns. One town was located near a port, the other near a picturesque park which abutted a flourishing underground mining operation. With a combined population of less than 75,459 there was more than enough traffic between each town for Shelley to earn a neat profit from the provision of food and drinks to motorists and truck drivers travelling between each of the two towns.
As the only store of any description on the road, and with no other sites available for commercial operations, Shelley’s business was free from competition. In an environment where customer demand and indeed quantification of future growth was quite predictable, Shelley had a good idea of how much food and drink she needed to make available for sale every day. With this degree of certainty, Shelley didn’t need a strategy, strategic plan or budget. She certainly didn’t need a strategy map; her business was simply a case of “what you see is what you get”.
Fast forward to the mid 1990’s and Shelley dared to think that a safe investment in the expansion of her business could be possible. The primary source of her optimism was the result of consistent goading from her customers, the announcement of a tripling of the size of the mining facility and a doubling of the size of the tourist park. Adopting an Outside In, market focused strategy her idea was to transform her small snack store into a combined fast food restaurant and grocery outlet. Having developed a clear vision and ambition for the new entity, she recognised she would need a viable transformation program - and a better understanding of what the market potential of her business really was. Now, she observed, the future of her business would become quite a bit more uncertain and a lot more complex. The preparation of a five-year strategic plan she thought, would be extremely useful, and it was - for a while.
Shelley’s new business model proved again to be very successful. Although the level of uncertainty wasn’t diminished as much as she thought, what did surprise her was the fact that after a very short period of time, the primary thrust of her five-year strategic plan had become irrelevant.
As barriers to competition gradually broke down, and as a result of greater urbanisation of the two nearby towns, her business landscape changed significantly, as did her drive and ambition.
Although her original strategic plan had been relatively aggressive in the beginning, she now realised that in reality it proved to have been far too limited in depth and scope. Driven by demand from her clientele, pleas from the nearby mining company and her capacity to exploit new sources of cash flow, her business had experienced an increase in sales volumes in core business as well as from her diversification into quite new business areas to the ones she originally proposed.
Due to the peculiarities of the geographical domain within which her business was located, Shelley’s business had over the years evolved into an animal hospital and boarding facility for domestic pets, a subterranean hotel and an above ground retail and entertainment complex. In addition, she also established a lucrative overland expedition tourism service that appealed to those interested in the flora, fauna and/or mineralogy of the region.
Fortunately, the extent of her success meant that the failure of the strategic plan didn’t have much impact on the performance of her business. She did however wonder why she prepared it in the first place. “Oh well, who needs a strategic plan anyway?” she observed.
Having blundered along for a while longer without a formal plan, Shelley contemplated the next iteration of her expansion ambitions. This time, Shelley realised that a more complex strategy and planning capability would be vital to her future success. As a novice in this specialist field, Shelley was unsure how she could build on her now Inside Out, ‘hard to copy’ competency that had proved to be so successful to date. Her idea was to focus less on market positioning and more on the leveraging of her resource-oriented business model into many other geographical locations that exhibited similar characteristics to hers, on an international basis. One major change in her thought processes was expansion into major cities where the presence of her combined service offering was unique.
In hatching this plan, Shelley was confident that this new phase of her business would prove to be popular. As she set out to develop a more detailed strategic plan founded on a comprehensive and readily renewable format, she was happy to combine a degree of ‘gut feel’ with a whole lot of research and examination of the facts.
As a result of her deliberations, however, it soon became apparent that the more she researched, the less uncertain her business proposition became. This was not only because of the extent of uncertainty in her underlying, fundamental assumptions of the day but also because of the revelation of numerous unforeseen implications that kept cropping up, quite often from unknown, unexpected sources. Who would have thought, for example, that a new underground rail system would suddenly become the key competitor to Shelley’s ideal choice of location for her city-based, subterranean hotel? Not many she thought, but was this a threat or an opportunity?
“If only I could find a way to get a more dynamic, insightful, future focused, agile and responsive perspective of what the future might hold” she mused – “is that even possible?”
Shelley decided to proceed with a hybrid approach to the management of business strategy, one that set the general direction, but also one that would be sufficiently dynamic to both anticipate and accommodate change as and when it occurred.
With an emphasis on dynamic strategy as opposed to static planning, Shelley adopted a systems approach to her strategising capability, one that includes the structuring of strategy based on a model of Inside Out and Outside In formats. This was followed by the development of a comprehensive evaluation of the external environment and attempts at developing patterns and scenarios of the future as a source of input to short term strategy implementation.
Rather than a static strategic plan, Shelley sought to develop a dynamic program of continual strategy renewal. Her approach would enable a conscious check on the alignment of her strategy - both from an adaptive and inventive perspective. That is, one that would be capable of monitoring, controlling and alerting her to any encroachment from would-be competitors as well as any other matters that might be of strategic importance to her business.
At the same time, Shelley considered the adoption of a comprehensive communications program, one that addressed the most important aspect of strategic management, that of stakeholder engagement – of whom there were now many.
Shelley continues to enjoy solid growth and with access to a dynamic, renewable and interactive strategic management capability. She was finally satisfied that she could now enjoy a much greater control over her future.
She often reflects on the ad-hoc nature of her early growth paths which seemed to happen in times and places that were least expected. The things that occupy her mind now, however, represent new dimensions in business and new dimensions in strategy and society in general.
The imminent arrival of digitisation in business is most perplexing for her as she recognises the extent to which technologies such as artificial intelligence, robotics and 3D printing will take hold and assume new levels of influence on business and society. When combined with other emerging concerns associated with the rise of new political powers, the arrival of adverse environmental and social health issues she now wonders, “do I need to be more structured in my strategy and planning activities?” “Could it be that there are now many things that business should not do as well as those that they should do?” If so, “do we need to return to a more deliberate and structured approach to strategy? That is, one designed to deter certain activities as much as encourage other new activities. Surely, we can’t just let our economies and businesses evolve without any real degree of control”.
As yet, Shelley has no answer to these questions, so it is over to you. We invite you to consider, comment and then contribute - either through our LinkedIn discussion group or here on our blog - to our conference proceedings with ideas and suggestions on what the emerging technological, environmental and political revolutions will have on society and on business.