Quite a lot of the work I do nowadays is on laying out new strategies for companies which haven’t historically had a full written strategy, but in times past I spent much of the time adjusting strategy (often ones I’d originated).
Key reasons to adjust a strategy can include:
Internal circumstances have changed significantly (ownership or leadership changes)
External circumstances have changed significantly (market or tech changes) and/or circumstances have revealed that your strategy was wrong
Your strategy has achieved its original core goals
However, it’s important to balance out these factors with the fact that adjusting a strategy is costly in both management time and credibility. Strategy should fit circumstances. But panicking because of a slight variation in outcomes or situation is a classic strategic mistake – a strategy which changes every 6 months is not a strategy.
1. Ownership or leadership changes will automatically lead to a strategy review. For an ownership change this is always natural – the company is a vehicle for the owner’s purpose, and a new owner usually means a new purpose. And if the company needs to climb a new mountain, then it needs a new path to do that.
CEO changes usually also lead to a change in strategy. On the one hand, that’s also natural – the CEO must believe in the strategy, and this usually means they have to part-write it. On the other hand, the appearance of a new CEO is not in itself reason to believe that a strategy is wrong, so it’s important for the team to try and get the new CEO to adhere to ‘Chesterton’s Fence’ – the idea that you shouldn’t scrap a policy or strategy unless you clearly understand why it’s there and what it’s for
2. Changing circumstances is the trickiest one. In general you should aim to review a strategy around every 1-2 years, and only intervene between reviews if you are persistently or massively missing the KPIs that measure strategic success, and there’s no clear tactical solution for that.
How to review following a change in circumstances:
Strategies fail for four key reasons and it’s important to understand which is in play before you adapt them
a. Bad judgement of internal feasibility - ‘a’ company could execute this strategy, but yours can’t – you failed to consider the real situation of your company, or made poor assumptions about what was feasibility. A classic one I’ve seen a few times is assuming that a salesforce that sells one thing can rapidly be got to sell another thing. Alas, no.
b. Misunderstanding of external factors - possibly you missed that the target market is in fact dominated by a large and more capable competitor. Or that customers simply never buy two products you want to co-sell together. Or that there was an ongoing shift to another product.
c. Radical external changes – e.g. a large global software provider decides to spend billions to enter your market and eat your lunch. It happens.
d. Poor execution – the strategy is still feasible but needs better execution. Possibly by different people. This is usually the most popular answer with the people who wrote the strategy. However, in my experience one of the first two is more likely to be the actual reason for failure. Sorry.
If a), b) or c) is the problem, recut the strategy based on new insights (preferably while keeping some strands of it alive) and present the new one, being clear with everyone about what drove the changes. Solutions to problem d) usually involve a lot of hard conversations.
Outside KPI driven reviews, you should try and wait for an planned annual review before changing your strategy in response to events, which can be easy to over-react to if you react straightaway.
There are exceptions! Earlier in my career I was a contributor on a project that was looking to build a fantastic device – based on a large touch screen. It would deliver web-browsing, video calling, and more. It was an important part of the strategy. However, not long before we were due to launch it, Apple brought out the iPad which did everything our device did, better. It was a good choice to almost immediately change strategy, not launch our device and take the ‘L’!
3. Finally, if your strategy seems on track to achieve its core goals – congratulations! Plan in the space to create a new strategy in time to announce it at the celebration of hitting your goal.
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