Learning and adjustingDoes your organization learn from the past?
How successful are we anyway? We act, but do we also learn? We have a wonderful strategy, but do we exploit our full potential? It seems we fall into the same trap every year… Do we actually do what is in our strategy? Do we realize how our environment changes? These questions deal with the ability of an organization to learn ánd to adjust.
Doing the right things in the right way
A strategy provides direction and guidance to everyday practice. Strategy is the compass, it points to the spot on the horizon, but most distance is covered during regular work. Learning and adjusting is crucial to continuously determine whether an organization is doing the right things in the right way. Learning has an external and an internal component.
Learning from your own performances
The implementation of strategy offers many lessons for organizations. Which goals do we not achieve and which ones we do? Which markets are growing faster than expected?
Why do we not succeed in reducing costs? Is our pricing optimal? When expectations
under strategies are as explicit as possible (numbers, prices, market share, market size etc.) you can learn optimally about their effect and you are able to make adjustments during the ride.
Learning from the external environment
A lot of things happen outside the organization as well. It is important to identify and monitor trends and developments affecting the organization. Indicators provide insight into the direction and speed of developing trends. These range from, for instance, the growth of the market share of a new competitor to the number of patent applications. A qualitative judgment of experts about the future also gives relevant information. An organization that monitors its external environment is able to adjust in time.
Early warning system
An organization operates in a constantly changing environment. How do influential trends develop? Is there new information about critical uncertainties? The Environment Monitor brings home changes in the outside world, making them visible and tangible, and helps organizations determine critical uncertainties in their environment and monitor them in real time. The Early Warning System makes changes more visible. Organizations are thus able to switch more quickly and to adjust their business model and strategy.
A strategy is determined for a few years, three or four years is common. It is important to review halfway through this period if the chosen course is still the right one. Are we still working on it the proper way or do we have to adjust? This keeps the strategic conversation within the organization going. It also offers the opportunity to bring new opportunities and developments. Strategy and implementation thus retain the necessary sharpness.
An interesting way is to look at an organization as a portfolio of Product Market Combinations (PMC’s). These combinations consist of services or products available for a specific target group. They often run through the various internal departments of the organization and can be deliberately managed. The organization can make informed choices by scoring the strength by PMC. It is important here to look at the strength of the product as well as to the attractiveness of the market. By assessing the product market combinations on these factors, it is possible to derive a ‘standard strategy’ for each cluster. These strategies will help you talk about value creation of the company. In some cases, growth is important, in other cases improving results might be more relevant.
The strategy of an organization relies on assumptions about market size, market share, pricing and cost level. With a Variance analysis we investigate where and why the actual outcome of the organization differs from the original expectations. Which markets are growing faster than expected? Where is it difficult to retain market share? What is the reason for this? Why are our costs higher than expected? To report, discuss and identify deviations is instructive and helps refine the company’s strategy. Where is room for growth? How can we reduce cost in a targeted way?