Why business strategy is an iterative process

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Fennemiek recognises that although it might be easy in hindsight, it’s difficult to know when to start looking ahead and designing the second curve for long-term growth.

“It’s always a challenge to predict how fast trends will become reality”, she says. “Some developments happen as we predicted them, others not at all, but mostly we struggle with the timings of foresight because they don’t develop in a linear way.

The Club of Rome, for example, already warned in 1972 that we’d reach the limits of growth by 2000, many are convinced that the turning point is today, but others feel we still have more time. Another example is digitisation. When news started to become available via the internet, it was predicted that paper newspapers would become obsolete in 10 years’ time, and they are still around.

“It’s good to be aware that our human biases tend to favour the status quo and that we generally underestimate the speed of change,” Anne Mieke says. “Dealing with uncertainty means you need to be prepared for various scenarios and make room for experiments to explore what the next curve could look like.”

Look beyond linear business strategy

Anne Mieke and Fennemiek encourage business leaders to look beyond the linear strategy development approach that often works for making the most of their current business.

Instead, they emphasise that a combination of both iterative and linear strategy, what they call a “both/and approach” should be applied to strategy and leadership development.

“A linear strategy approach is effective when your main objective is ‘exploit’: growing your current business”, Fennemiek tells Business Chief. “You start from analyzing the status quo of your own product-market combinations and those of your competition, and you plan the different steps from A to B, execute, finish, and evaluate. The scope of the project is defined at the beginning, with clear expectations, responsibilities and stage-gates to decide when to go to the next step.”

Designing the future of a business however is not so black and white. You start from the end, what people imagine the future to look like, and then repeat actions until the desired outcome is reached.

“You learn by doing, experimenting, failing and adjusting along the way. Setting up pilots and learning from those is a major component. An iterative process is a messy process, circling back and forth but moving forwards nonetheless”, continues Fennemiek.

Innovation labs make a space to design business futures

Allocating dedicated time to explore what a business’s future could look like and working through iterative processes is an essential part of designing a company’s future. To get this started, Anne Mieke and Fennemiek recommend regularly organizing innovation labs in which a team of hand-picked young talent creates solutions to the design challenge.

“Ask: ‘What if our current business would cease to exist – what would our future business look like?’. These sessions with creative sprints result in ideas for pilots to test the new strategic direction”, says Fennemiek.

“These innovation labs should be designed as an intensive and iterative design sprint”, adds Anne Mieke. “The added advantage of designing strategy development this way is that your team learns by doing and develops the skills that make them future-ready. We see innovation as a learning process.”

Using a different kind of entrepreneurial mindset

“In an iterative process it takes creative courage to keep on trying, even when your previous attempt has failed and you’re not sure what’s next. It requires a different type of mindset and skills, which to me is the biggest difference between an iterative and linear strategy process”, says Anne Mieke.

“The exploit side of business requires an executive, more left-brain-dominated style of leadership, while explore requires an entrepreneurial leadership style. I’ve done research into the differences between the two, the results are summarized below.”

To be future-ready businesses need both/and: linear and iterative strategy development, and executive and entrepreneurial leaders, argues Fennemiek.

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