As we navigate through what often seems like an endless succession of crises, businesses must build on two key pillars if they hope to seize fleeting opportunities.
The pandemic, the war in Ukraine, and the energy crisis have crystallized a new competitive environment where change is fast, volatile, and complex. With change becoming endemic, markets feature brief windows of opportunities and fleeting competitive advantages. This calls for quick decisions, real-time coordination and agile execution—in other words, strategic agility. Businesses can improve this by building on two key pillars: customer-centric experimentation and simple rules of action.
Businesses must add speed and agility to their game
Customer-centric experimentation. The best way to prepare for the future in these conditions is to create it in small steps engineered as experiments that help test various opportunities. Instead of long-drawn-out plans, the idea is to formulate hypotheses about the product, the target customer, the competition, etc. Experimentation is frequent and often fails, however, the cost is controlled because it rests on minimum viable products (MVPs). Simply put, instead of wasting time perfecting the product in the lab, we create an early version of the product with as many features as the early users need to express an opinion and probe the market with frequent, increasingly mature MVPs, incorporating users’ realistic suggestions. MVPs are behind the success of many iconic businesses: In 2009, Dropbox relied on a video to display the value of a cloud storage application that offers common access to the user’s documents from all devices, while in 1997, Netflix tested the—at the time—innovative DVD mail rental service, by mailing a DVD to co-founder Reed Hastings.
Simple decisionmaking rules. To countervail the risk of experimenting for conflict, delays, and lack of coordination, companies need to rely on guidelines or simple rules for easy communication and coordination of teams operating in a decentralized manner, instead of constant reporting and control, with decisions being transferred to frontline employees. According to research by Eisenhardt and Sull, simple rules are clear instructions on how to seize opportunities, how to set priorities, response time to the competition’s moves, or withdrawal time from an investment. Simple rules that speed up a business’s operation should be limited in number in order to be memorable – up to 3-5 rules should do the trick. They are task specific and focus on the obstacles on our way to achieving our goals. Lego’s simple rules, for instance, to teams developing new products are: Will the parents approve? Does the new product have high quality standards? Does it encourage the kids’ creativity and imagination? Is it consistent with Lego’s look and feel?
Strategic agility brings to mind the legendary boxer Muhammad Ali’s quote “float like a butterfly, sting like a bee,” which encapsulates the agility principles he introduced in boxing. Besides strength, just like Ali, businesses must add speed and agility to their game in order to avoid competitors’ blows and seize fleeting opportunities.