Building Strategic Agility

MIAMI, FL - After attending sessions on the future of retailing (AI, supply chain, robots and facial recognition) and exploring the necessary business changes that will bring about a more educated and skilled workforce, NACS Leadership Forum attendees needed some hope for the future—or at least someone to teach them how to lead through the disruption that lies ahead. 

Enter Kathy Pearson.

Through her work at the Wharton School of Business at the University of Pennsylvania as well as her company, Enterprise Learning Systems, Pearson has worked for decades with mid to senior level executives, helping them to make strategic decisions in a time of uncertainty. “Most companies are so data rich. When I work with companies that are analytically driven, those companies always want more data, but when it comes to strategic decisions we can’t rely on the data,” she stated.  So how do you make good decisions in today’s climate?

“One of the things I hear often is that it seems that it’s so much harder today to make a good strategic decision. There’s something about today’s environment that makes it harder than it was 20 years ago.”  Why?  There’s too much info, she stated, and the environment changes so quickly. Compounding things, no one knows who is actually supposed to make the decision, often leading to a consensus-driven decision-making model where no decision is made.

In addition, many companies are not comfortable with failure, a necessary aspect of decision making. “Do your companies reward on outcomes or on a good decision-making process?” she asked the audience. Company leaders say they want managers to have more tolerance for risk, but most organizations do not reward for failure.

Clearly, every organization wants positive results. If we think about outcomes on a continuum, she said, they are largely based on our skill as well as luck/chance/uncertainty—or whatever we want to call that something we can't control.  If we want to raise the probability of a good outcome, however, we can build our skills in decision making and learn how to manage uncertainties, Pearson stated.

Pearson advised to look for early indicators that things are changing (one notable example of a company that did not: Blackberry discredited iPhone as not a business tool). The goal of managing uncertainty is not trying to predict it accurately. Rather, it is crucial to name your uncertainties and then dynamically monitor and look for early indicators of change and anticipate where you need to react. If you can’t figure out to adapt quickly, you will not have long-term sustainability. You have to be fast, Pearson said.

She shared a few focus areas to consider:

Understand that you have planners (those with 100% of their job focused on strategic planning) and doers (also some strategic planning but with P&L responsibility for outcomes).  One has an internal focus with the other an external focus.

Follow this mental model:

• Practice productive paranoia.
• Look at early, weak, lagging signals that could impact your business.
• Identify what you assume because “it’s always been like that.” 

Understand your confirmation bias: Often, we look for data that supports what we think should happen. And with too much info at our disposal, our confirmation bias becomes stronger, so it’s important to seek divergent views.

Decision rights: Identify who will make the final decision and when will the decision be made.

Finally, Pearson advised taking these three actions for strategic agility:

1. Identify the key uncertainties: Plan for the key trends and manage the key uncertainties.
2. Track the key uncertainties: “Trendspotting and “sense-making.”
3. Take action around the key uncertainties: Conduct rapid experiments, make small bets, and build adaptability and flexibility. 

The intent is to identify what we know we happen and what we know we don't know will happen.

Above all, it’s important to surround yourself with colleagues who are passionate about what they are doing and are willing to speak candidly. Be vigilant, be productively paranoid and be decisive, Pearson advised.  That’s the key to success in this disruptive future.