Editor’s note: Paul Santilli heads up the Hewlett Packard Enterprise WW OEM Industry Intelligence & Strategy Organization.
The universal global disruption from the coronavirus has created societal chaos that hasn’t been experienced in recent history. When it’s over – which seems far off and, even worse, if it ever is really over – our lives will be permanently altered. There will be implications across the board for business, government, culture and leisure. Changes will permeate all facets of business functions and development, i.e., supply chain, research and development, marketing, sales, manufacturing and distribution, etc.
What position will your organization be in to respond to (and anticipate) the global demands of your customers amongst all of this uncertainty? How are you going to differentiate yourself from the competition? How does one prepare, almost on a continuous basis, for these highly disruptive environments with varying levels of uncertainty and, moreover, employ an intelligence system that can better anticipate and prepare for global shocks in the marketplace? McKinsey suggests that, “At the heart of the traditional approach to strategy lies the assumption that executives, by applying a set of powerful analytic tools, can predict the future of any business accurately enough to choose a clear strategic direction for it.”
Many of these tools and actions are predicated on the fact that there is an appropriate organizational structure, culture and mind-set instilled through all levels of the company that align to this proactive business posturing. Otherwise, what commonly happens in many organizations is a siloed approach to global and industry business challenges. Only certain functions within the company “get it” and are in tune to the direction and understand the level of urgency associated with this disruption. As a result, their impact on changing the direction of the company ship is minimal. What can occur is infighting, fiefdom-building and multiple edicts on organizational direction, strategy and investment. Ultimately, this is the demise of many companies that cannot (or will not) align to a single course of action.
Effective organizations must start looking at the disruptive landscape through a different lens – understanding and anticipating the ramifications while promoting and developing an infrastructure that best addresses and responds to this new landscape. There are many facets associated with developing parameters to address this major challenge but it is fundamental that the following precepts be internalized, disseminated and acted upon towards an overall company strategy:
1. Disruptions are the new norm
Since the Fourth Industrial Revolution has taken a foothold in business economics, disruptions are essentially continuous, arise very quickly and are highly impactful. Adapting to and embracing these disruptions really goes against human nature. Many of us resist change and the uncertainty that goes with being out of our comfort zones and thus we end up living in a climate of fear and doubt. This gets amplified when internal and external sources fan the flames of unease through exaggerated claims and falsehoods.
Disruptive events require a nonlinear approach to enterprise architecture. Companies can employ several mechanisms to address these disruptive continuity trends. One such approach is trendspotting – quickly assessing rapid permutations in business direction, technology usage, customer servicing, supply chain sourcing, regulations and restrictions, etc. – in order to be keenly aware of the early stages of how these fluctuations can impact your business model and the industry sector as a whole.
2. Scenario planning and predictive analyses need to happen continuously
Scenario planning must be played out on multiple time horizons and segmented by business function. A study by McKinsey1 suggests employing “plan-ahead” teams that can develop strategic crisis-action plans that guide organizations though stages of the disruption. Plan-ahead teams should be charged with collecting forward-looking intelligence, developing scenarios and identifying the options and actions needed to act tactically and strategically. Unlike typical strategy teams, they will have to continuously plan across multiple time horizons to ensure operational readiness and maximum flexibility.
Scenario planning2 can also provide a variety of perspectives for executive leadership that were not previously considered. Additionally, it can highlight areas ripe for change and disruption. This focus could aid in a preemptive push for change that could redefine the firm's industry position.
Finally, scenario planning reminds executives of the interconnected, web-like relationships between all industries. When there is movement in one area, the whole web shakes. If a portion collapses or breaks, the entire web is compromised and must be discarded. Thus, leaders have an opportunity to take advantage of a unique perspective, one offering a glance into a hypothetical future providing insight regarding the strategic path an organization can choose, based on potential futures derived from various data points and help with long-term planning.
However, doing these planning exercises in a manual, batch-style format is time-consuming and really not efficient given all of the urgent considerations mentioned earlier. The lack of scale, speed and application are indeed the factors that have stopped traditional business intelligence and predictive analytics from driving real business value. Rather, thankfully we have achieved important technology milestones where applying predictive analytics (most likely through augmented or artificial intelligence applications) can be a game-changer. The ability to run millions of regression models with different combinations to identify key influencers and develop hypothetical scenarios to predict their impacts is instrumental in driving strategy models best suited for the continuous disruption landscape.
3. Data acquisition, analytics and strategy development need to be fluid
Data generation and consumption must done as frequently as possible – given by definition the changing dynamics of disruption in the first place. To use the COVID-19 example, every day there are different assessments published around infection rates, vaccination studies, impacts of social distancing and quarantining, and geographical illustrations on “curve-flattening.” All of this dynamic information has to be synthesized continuously to effectively understand predictive outcomes and subsequent potential roadmaps.
Business scenarios can equally change as quickly. Today, major disruptions can not only be started by the unseen forces of earthquakes, floods and viral pandemics but also by the kid in the basement of their grandmother’s house who has found a different and more enticing way to digitize another form of social interaction on the internet. These global changes can literally occur overnight and impact entire industries.
Given the exabytes of data that are generated every day, in virtually every format, it becomes overwhelming in both scale and content value when trying to ascertain actionable insights from this data. Utilizing AI tools and knowledge management systems to manage this vast storage of data is essential to garnering any sort of value from this information. These tools can not only perform complex analytics on the data itself but can regularly monitor the data, thus benefiting the data scientist with great insight into potential trends and roadmaps that can be predictive and, ultimately, prescriptive.
4. Organizational preparedness is a fundamental cornerstone
Additionally, there should be flexibility around major components of an organization to quickly pivot from one operating model to another, including things such as activities around flexible and redundant supply chains, manufacturing nimbleness on product configurations and features, transitions to core services as a deliverable commodity and de-committing clauses for efficient exit strategies out of long-term investment guarantees.
Lastly, the fundamental organizational structure has to be one in which flatter organizations provide faster decision-making capabilities and complementary management modules in the form of self-managed work hubs that treat product and R&D teams more as an entrepreneurial group in decision-making, P&L and go-to-market capabilities without the inherent overhead and heavy infrastructure load that traditional hierarchical chains of command demand.
Chart a course
Organizations that can best understand and acknowledge that disruptions are the new norm in business and industry will be able to minimize these organizational fears and chart a fact-based, data-driven course through the uncertainty. Companies that refuse to acknowledge this fundamental fact endanger their organizational health and, ultimately, their very existence. Whether it is viral pandemics, digitalization of societal behaviors or newly developed technology that renders industry cornerstones obsolete overnight, waiting to react to such disruptions is a recipe for disaster. Only companies with an organizational culture and planning strategy that recognize the new norm in global and industry disruptions can adapt sufficiently to not only weather the continuous stream of disruptions but grow and profit in spite of them.
References
1 Martin Hirt, Sven Smit, Chris Bradley, Robert Uhlaner, Mihir Mysore, Yuval Atsmon and Nicholas Northcote. “Getting ahead of the next stage of the Coronavirus.” McKinsey & Company. April 2020. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/getting-ahead-of-the-next-stage-of-the-coronavirus-crisis?cid=other-eml-alt-mip-mck&hlkid=da6132784e504d26b73ba152c8f8a3fe&hctky=9764053&hdpid=d52f8189-6d6f-4fd8-87ad-51442a8b1801
2 James Bezjian. “Scenario planning can help businesses plan for disruption.” Greenvile Business Magazine. February 5, 2020. http://www.greenvillebusinessmag.com/2020/02/05/296475/scenario-planning-can-help-businesses-plan-for-disruptions