product innovation blog

Why Traditional Strategy Does Not Win

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Traditional strategy development assumes that markets/industries are stable, but today that is not the rule for most firms.

Strategy is built upon certain vital assumptions about the external environment and about what the firm can control. For example, the external environment includes competitor activity, customer needs, technological developments, economic trends and regulatory changes. Virtually all of these factors are outside the control of the firm. What the firm can control includes the capabilities it maintains, the assets it invests in, the markets it serves and the way the firm is structured. The firm’s strategy is how the firm makes a profit given the particulars of its external environment.

Assumptions about the future external environment therefore play a crucial role in driving strategy. Because the future is uncertain, the firm faces the risk that its assumptions, and thus its strategy, are wrong. The greater the uncertainty about the future, the greater the risk of being wrong.

A traditional approach to creating and implementing strategy has four problematic characteristics:

  1. Assumes a stable or slowly changing environment (history can be used to predict the future)
  2. Internally focused (places emphasis on the firm and its performance over understanding the overall industry)
  3. Waterfall approach (senior management sets the strategy and successive layers implement; learnings from the front line are not fed back)
  4. Developed by the “chosen” few in the ivory tower (often a “strategy department” is established separately from the lines of business, further divorcing strategy from feedback)

In today’s world, many firms are experiencing the limitations of these traditional approaches as their businesses change due to new technologies, new global competitors, the creation of whole new industries and changing customer needs. Some of the symptoms include:

  • loss of sales and/or market share
  • declining success of new product launches
  • unexpected moves by competitors
  • unexpected entry of non-traditional competitors

The result can be confusion, feeling directionless and the common lament “We need to do things differently, and fast.”

A new approach to strategy is needed, one that can handle change, uncertainty, and adaptation for product development.  We propose the s2m Strategic Framework™ as an alternative approach to traditional strategy development. The framework explicitly considers the impact of change and uncertainty.

Strategy needs to go beyond the ivory tower and leverage the skills and insights of product development teams. We are now offering a seminar on Strategy for Product Developers (including ENGINEERS). Major highlights include building out the major components of your strategy (enterprise/business/product); including but not limited to innovation strategies, business models, roadmaps, and developing a strategic framework for the environment you’re operating in.

We provide tools and frameworks so you can get the immediate benefits of having a strategy:  speed, reduction in politics, and a common product development direction/goals.   This is a corporate seminar for the project and leadership team members.  The entire team learns how they can contribute to one of the most important parts of the product development system: Strategy.

 

 

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