Business Mastery for Entrepreneurs – Part 25: What is the Best Strategy for Your Business? – Tool XVIII – Renewal Business Strategy

In today’s article I will share a brief introduction to the renewal approach to strategy and show when you should use this strategy.

Why do we need a renewal approach to strategy?

Because we live in a world of faster change, raising the likelihood that a company’s approach to strategy will become mismatched to the changing environment. It is so important to be vigilant for change. Leaders must ensure that their strategies don’t get out of step with their environment.

In their book, Your Strategy Needs a Strategy, Martin Reeves and his co-authors,¹ emphasized the importance of the renewal approach to strategy for business environments that became harsh.

A great summary of their work can be found in the Harvard Business Review ² or in the Boston Consulting Group publications.³

Overview

⇒ What is a renewal approach to strategy?
⇒ When is the renewal approach to strategy the right choice for your company?
⇒ What are the right steps to create a successful company again?
⇒ Summary

What is a renewal approach to strategy?

The renewal approach helps your company to conserve and free up resources to ensure its viability.
There are two steps a leader must take to be successful in using the renewal approach:
- Step #1: Free up resources
- Step #2: Use one of the other four approaches

These other approaches will rejuvenate growth and ensure long-term prosperity.

What are the indicators that you should consider the renewal approach?

For example, your industry or company

displays low or negative growth and is losing money or
is subject to restricted access to capital.

When is the renewal approach to strategy the right choice for your company?

When your company faces harsh circumstances that are caused by
- either a mismatch between your companies strategy and its environment, or
- because of internal or external shocks.
Such a mismatch can come about, either because
- your company chose the wrong strategy or
- the environment has changed.

What are the right steps to create a successful company again?

Step #1: Notice

A company must first notice and react to the deteriorating environment as early as possible.

Step #2: Economize

The company needs to economize to decisively address its immediate impediments to financial viability or even its very survival.
To do so, it focuses the business, cuts costs, and preserves capital while also freeing up resources to fund the next part of the renewal journey.

Step #3: Pivot to Growth

The company needs to pivot to one of the four other approaches to strategy to ensure long-term growth and competitiveness, by resetting the strategic direction of the company in line with its environment and innovating strategically.
The steps are:
- Defining a new strategic approach
- Investing in the strategic innovation to support and communicating the new strategy.

A successful renewal strategy executes the plan to focus and economize and then pivots to a new strategy for long-term prosperity.

Summary

Key Point #1: A renewal strategy helps to renew the vitality and competitiveness of your company when it is operating in a harsh environment.
Key Point #2: For example, such difficult circumstances can be caused by a protracted mismatch between the companies approach to strategy and its environment.
Key Point #3:The company needs to act decisively to restore its viability – economizing by refocusing the business, cutting costs, and preserving capital, while also freeing up resources to fund the next part of the renewal journey.

Supporting you

I´m available to support you by re-imagine your business and propel it to the next level. The renewal strategy will support you to rejuvenate your company and ensure long-term success.

Contact me for a complimentary 30-minute strategy session:

https://nextlevelcoach.as.me/schedule.php

Coming up next month

In my next blog post, I´ll share the shaping strategy.

Stay tuned!

Martin Reeves, Knut Haanes, Janme Jaya Sinha, “Your strategy needs a strategy, how to choose and execute the right approach”, Harvard Business Review, 2015.
https://hbr.org/2015/06/navigating-the-dozens-of-different-strategy-options
https://www.bcg.com/publications/collections/your-strategy-needs-strategy/classical

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