What is the best strategy to build and maintain a successful company?
The answer depends on your industry and environment and usually consist of more than just one approach.
Depending on your needs you might want to adopt different strategies to be able to respond to changes in your industry and environment fast enough to maintain your success.
In today’s article I will give you a brief introduction to the adaptive approach to strategy and show when you should use this strategy.
When is the adaptive approach to strategy the right choice for your company?
In their book, Your Strategy Needs a Strategy, Martin Reeves and his co-authors,1 emphasized the importance of the adaptive approach to strategy for business environments that are neither predictable nor malleable.
A great summary of their work can be found in the Harvard Business Review 2 or in the Boston Consulting Group publications.3
- ⇒ What is an adaptive approach to strategy?
- ⇒ What are the three essential thinking steps?
- ⇒ When should you use the adaptive approach to strategy?
- ⇒ What is different from the classical approach to strategy?
- ⇒ How can you determine the right strategy?
- ⇒ Summary
What is an adaptive approach to strategy?
- An adaptive approach uses adapting to change by continuously experimenting and identifying new options more quickly and economically than others.
- As the environment changes, the company rapidly iterate on this evolutionary loop to ensure that they continuously renew their advantage.
- It is recommended to use this strategy when the business environment is neither predictable nor malleable.
What are the three essential thinking steps?
To be successful your company needs to master three essential steps:
- Step #1: Continuously vary your approach to strategy
- Step #2: Generating a range of strategic options to test
- Step #3: Carefully select the most successful option to scale up and exploit
When should you use the adaptive approach to strategy?
- An adaptive approach to strategy is appropriate when your company is operating in an environment that is both hard to predict and hard to shape.
- An adaptive strategy is called for when forecasts are no longer reliable enough to produce accurate and durable plans because of ongoing, substantial change in technologies, customer needs, competitive offerings, or industry structure.
- So, you need to continuously vary how you do business by generating novel options, selecting the most promising, which you then scale up and exploit before repeating the cycle.
What is different from the classical approach to strategy?
An adaptive approach is therefore fundamentally different from the classical approach:
- It does not center on a plan.
- There is no one “strategy.”
- The emphasis is on experimentation rather than analysis and planning, advantage is temporary, and the focus is on means, not ends.
How can you determine the right strategy?
- The right strategy emerges from the continuous repetition of this vary, select, scale up thought flow, rather than from analysis, prediction, and top-down mandate.
- Adaptive: Vary – Select – Scale up
- Key Point #1: Use the adaptive approach to strategy when the business environment is neither predictable nor malleable.
- Key Point #2: Winning comes from adapting to change by continuously experimenting and identifying new options more quickly and economically than others.
- Key Point #3: Strategy emerges from the continuous repetition of this vary, select, scale up thought flow, rather than from analysis, prediction, and top-down mandate
I´m available to support you through this difficult time by re-imagine your business. We will determine if the adaptive approach to strategy is the right strategy for your company. If not, we will explore what strategy from the strategy palette will help you to become more successful in your chosen market segment.
Contact me for a complimentary 30-minute strategy session:
Coming up next month
In my next blog post, I´ll share how to use the shaping strategy approach.
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- Martin Reeves, Knut Haanes, Janme Jaya Sinha, “Your strategy needs a strategy, how to choose and execute the right approach”, Harvard Business Review, 2015.
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