How to Strategize During Disruption

Kristie P. Paskvan, CPA, MBA Board Director and Leadership Fellow
Strategies for Today's Corporate Finance Leaders

As a result of COVID-19, many companies and their boards are reevaluating their planning processes. You might expect this to be an annual thing, but while many organizations revisit their business strategies annually during their budget processes, those exercises are more about executing plans—how many people to hire, what capital investments to make, etc.— and are not full-fledged strategic reviews.

Should organizations and boards revisit and adjust strategy more frequently—especially in a time of upheaval? How should they go about building and executing strategies that can weather storms without necessitating constant revision? What new perspectives are needed in the new normal? Here are three insights I utilize on how to make and execute strategic decisions in turbulent times.

Don't Make Strategy Changes Lightly

When surprising events occur, it is tempting to revisit your plans and make changes. But there is an argument to be made that once put in place, strategy should not be changed lightly. In his recent Harvard Business Review article, “When to Switch Strategy in a Crisis,” Mark Chussil discusses his research, which he believes shows that organizations should only consider revising organizational strategy when there are major disruptions to either long-term market conditions or structural and environmental changes.

Chussil’s point is that changes to strategic plans are often reactionary and weaker than the original plan. For a major strategy shift to occur, the future outcome of the revisions must be undeniably better than the expected outcome of the current plan. Leaders must first examine various possible scenarios, including verifying and debating the outcome of making no changes at all. Boards are important partners in that process, vetting and approving strategic plans as well as any major revisions by drawing on their experience and bringing an outsider’s critical eye to the process. Generally speaking, Chussil’s research shows that knee-jerk reactions and changes for the sake of changes are usually worse than the original plan.

Utilize Experts

Recently, I conversed with a CEO about their current strategic planning process. One of the more impressive aspects of their planning was the expansive network of experts that the team has accessed, including economists, futurists, industry think tanks, regulators, and academics. In all, the executive management team spoke with more than 30 organizations and individuals to proactively evaluate future opportunities and mitigate future risks. This CEO undertakes this process every three to four years to strengthen the overall company strategy and anticipate any changes that might be necessary. The steps they undertook three years earlier using this same process are currently accelerating growth—even during the pandemic.

The idea that strategy should not be changed lightly makes it even more important that organizations get their strategy right the first time. Here are a few examples of the various resources utilized by companies and their boards during the strategic planning process to get a fresh and unique point of view on how to move forward. (What exact resources you should use should be informed by your business industry vertical and its dependency on market conditions.)

Universities
This might not seem like an obvious choice, but many universities have affiliations with companies not just for recruiting, but for marketplace research, scientific advances, innovation labs, and state-of-the-art thought leadership. My undergrad alma mater, the University of Illinois at Champaign-Urbana, is just one example. Like many major higher ed institutions, they have invested in industry-agnostic forums for innovation. The Champaign-Urbana campus includes a research park occupied by companies looking to advance team collaboration and ideation, a disruption center utilized in the exploration of new technological advances, and a supercomputing center much-lauded within the industry. Relationships with faculty at higher-ed institutions can offer insight into academic research and its application to future market conditions.

Futurists
Every year, I seek out the opportunity to listen to at least one futurist talk about the accelerated pace of change in our world. Staying informed of how these changes alter marketplace infrastructure is critical to surviving into the next decade and beyond. This is the kind of knowledge that allows a company to capture opportunity when it presents itself—the intersection of preparedness and chance.

Economists
The financial services industry may be more affected by the capital markets than others, but all businesses benefit from following the data collected and interpreted by economists. Economists follow more than just financial trends about growth, supply and demand, competitive data, and GDP. They have a wealth of knowledge about population and labor trends, global supply chain actions, climate shifts, trade policies, anti-trust actions, and legislation.

Many disruptions can be foreseen and prepared for by planning in collaboration with various advisors. Consider how the possibility of a pandemic was discussed by health experts and futurists long before COVID-19 reared its ugly head and disrupted our business world.

Tie Strategy to Operations

In times of crisis and disruption, an organization’s operational units are tested first. When the pandemic first hit and stay-at-home orders went out, technology was immediately put to the test. Retail operations had to instantly shift to digital platforms. Global supply chains broke down as flights were cancelled and cargo ships sat in ports. A year later, technological advancements are still a priority for organizations, as is overall reevaluation of operational divisions and processes.

Strategic planning takes months. While the overall path forward is being determined, the executive team and board are also connecting the strategy back to execution. The operations of the company are dictated by the chosen strategy, so all operations—including areas of staffing and compensation, organizational structure, geographic expansion, and client fulfillment—must align with the organization’s strategic goals. Changes in strategy require an evaluation of the executive leadership team’s ability to execute, including an assessment of CEO and board member skill sets. By linking strategy intrinsically to operations, leaders can ensure that their strategic goals are possible. This link is another argument for not making strategic changes in a crisis without serious thought and vetting.

Moving forward, we must approach strategy differently, knowing that unthinkable events are always possible. The companies and boards that utilize these practices in their strategic planning processes will be prepared to seize new opportunities even in turbulent times.