This piece first appeared as Steve Wunker's piece for Harvard Business Review
By Steve Wunker
Perhaps Thorsten Heins has longed to run a big, public company. But probably the dream didn’t look like this.
Heins, the new CEO of Research in Motion (RIM), has been plucked from the company’s relatively obscure COO position to fill the giant shoes of two longtime co-CEOs as they depart at the behest of angry investors. Having pioneered the smartphone industry with its Blackberry, RIM is dangerously adrift. Apple changed the nature of a smartphone from a corporate to a consumer device, and RIM has failed to reinvent itself accordingly. Part of the problem is that the industry is still moving at warp speed, and the company has dwindling resources to deploy against innumerable innovation challenges. Surely, one of Heins’ first tasks is to think through a strategy to pull the company out of its current mess.
One thing’s for sure: it would be unwise to rely on tried-and-true approaches that don’t fit the times. Trend lines, market sizing, and competitive benchmarks that served companies well during periods of gradual market evolution do little good in industries where new technologies create seismic shifts, demand is uncertain, and rivals emerge from left field.
How can RIM (and other companies in the same boat) chart effective strategy in uncertainty? A look at root causes of failed and successful efforts gives a clear view.
Strategic planning fails when:
It has fuzzy objectives Why is the company writing a strategic plan? Is it to argue for resources, allocate budgets, create performance metrics, decide among customer targets, or other reasons? If executives don’t have a detailed view of what choices the strategic plan will inform, the document may not provide clear guidance when those calls need to get made. Equally, it will be too easy to cut-and-paste templates from previous years’ plans when the real need is for fresh thinking to underpin big decisions. Strategic plans are usually best when they focus on a handful of critical issues, not when they churn out a list of 20 must-do’s that could have been written in any year, for any competitor in the industry.
It involves too many people When a strategic plan needs to finely calibrate the moves of loosely controlled business units and achieve consensus, then it often makes sense to include a wide range of stakeholders in the discussions. Yet in turbulent times this is dysfunctional. Industry upheaval often calls for tough choices, and consensus will not be possible. Pretending that a collaborative process will gain alignment simply invites passive-aggressive behavior, with participants feigning assent while they try to undermine key decisions behind the scenes. The result may be a messy compromise that fails to provide the firm with the focus required. Heins should seek input from many sources, but he would do well to keep the most important meetings small.
It is rushed Despite being faced with new and complex challenges, many businesses in turbulent industries devote too little time to strategic planning, often compressing the discussion into a single, marathon meeting. That is a big problem. It isn’t necessary to take several days out in the deep woods somewhere, but the process will be far more effective if it is staged over the course of several offsite meetings. Big decisions have to be framed, then informed by data, then thought through for execution. Clustering these steps into one meeting risks neglecting key details, or biasing discussions toward issues where data is readily at hand. Staging a handful of meetings over four to eight weeks gives time for needed research and reality checks.
Successful strategic planning requires:
Defining challenges A frank dialogue about strategy in uncertainty will usually produce a range of opinions. Dig deeper and you’ll find that the diversity of views usually corresponds with how executives frame the problem. Heins needs to pay attention up front to defining the challenges carefully. For RIM, is it the small base of application developers, or the lack of a handful of key applications? Is it Apple’s consumer appeal, or the declining influence of corporate IT managers? By aligning on the right issues, a team can focus on answering the questions that really matter and avoid meandering discussions.
Identifying a clear destination Big companies often hate to make choices. Choice means that someone loses, and that creates political risk. Alas, during industry turmoil muddling through may be impossible. Frame strategic discussions around a mutually exclusive menu of choices tied directly to agreed definitions of the challenge. The leap from present circumstances to the chosen future state doesn’t need to occur overnight, but the destination has to be clear. RIM could opt to double down on the corporate market, broadening its business from device maker into fields such as mobile security services and bandwidth management. The company could merge with Dell. Alternatively, it could make the most of its strong position in emerging markets to focus on low-cost smartphones.
Conceiving smart options Turbulent environments are characterized by uncertainty. It’s important to create strategic options through mechanisms such as partnering or incubating new business models. These moves require limited investment while providing critical hedges against unexpected changes in the marketplace. RIM has made a shoot-for-the-moon bet on a new operating system to be released near the end of 2012, but in the interim it might have brought out simple, rugged tablets tailored to corporate customers. The company did recently bring out a general interest tablet to poor reviews, but it might have more success with a device that aspires to do less but does it very well for key corporate accounts (much as its original Blackberry two-way pager did).
Developing effective strategy in turbulent times requires breaking with old habits and having difficult discussions. A robust strategy is most important not when there’s smooth sailing but when big storms loom directly ahead.