I launched this newsletter in the summer of 2020. It was a time of great uncertainty (I’m sure you remember why). Well, here we are, five-and-a-half years later, and once again, significant uncertainty is with us.
Yes, it feels very different this time, as it is driven by very different forces. There’s our heightened political volatility and polarization, as well as the evolution and rapid growth of generative AI, to name just two obvious factors.
But the truth is, it’s not so much that the uncertainty has returned — in many ways, it never really left. Regardless, it’s precisely during times of extreme uncertainty that strategy is most important.
Strategy = Clarity
A good strategy — one that is developed through a collaborative process involving multiple levels of the organization — specifies what matters most. It identifies what is critical to the organization and what its purpose is. It acts, in effect, as a guide to what the organization should do and what it should not do.
But it’s not a multiyear business plan attempting to precisely predict the future for years to come. Rather, strategy is “organizational GPS” — a tool that helps move the company towards a predetermined destination, all the while assuming that “road conditions” are likely to keep changing along the way.
As you think about the coming year, a few core ideas strike me as most relevant…
#1. Let Strategy Guide When Facing Tough Tradeoffs
In times of great uncertainty, organizations tend to make one of two mistakes. Either they freeze — they hunker down, trying to “ride out the storm” — or take bold but misguided action.
For example, with the current pressures on universities — cuts or threats to federal research grants, changes in visa processing, adjustments in financial aid programs, etc. — some institutions are responding with across-the-board cuts and hiring freezes. These are significant steps, certainly. But they act as blunt instruments — approaches that negatively impact critical programs and more marginal ones to the same degree, rather than more well thought out, nuanced tactics.
A better approach is something along the lines of what Brandeis University didwhen it launched a major initiative this fall they called “The Brandeis Plan to Reinvent the Liberal Arts.” The plan calls for investing $25 million in humanities and liberal arts in such a way as to “integrate career preparation into every stage of a student’s education.”
The Brandeis plan isn’t action for its own sake; it makes strategic sense in light of its strengths, assets, and history, and in the context of today’s economic realities (most notably, pressure for more “employment-focused” majors). Investing to strengthen liberal arts at a time when others are cutting back is bold — and likely funded by reallocating funds from activities that are less critical to their strategy.
#2. Focus on Core Elements
Over time, many organizations add programs, services, or product lines — often with the goal of increasing revenues. Sometimes, these additions are strategically thought out and succeed in improving things. Boston Beer’s expansion into “non-beer beverages” is a good example of a strong player managing around the ebbs and flows of its core product line.
More often, however, the additions are less strategic and instead result in muddled strategy and loss of focus. When legendary toymaker LEGO moved beyond building blocks and related accessories into video games, apparel, and more in the 1990s, it resulted in a loss of focus and what one analyst called “complexity creep.”
By the early 2000s, LEGO was losing money and heading towards bankruptcy. The return to their current position of great strength has been attributed to the new CEO, Jorgen Vig Knudstorp, who instituted a new strategy, “Return to the Core.”
#3. Don’t “Set it and Forget it”
A good strategy is a guide for your organization; a decision “filter” that helps your team understand whether decisions they make move your organization closer to what matters most.
So it is not something you only revisit every few years. Make it a “living document,” where the underlying assumptions are clear. In that way, when things change in an unexpected way, much like a GPS, you can adjust the path.
Having a clear definition of what your organization is aiming to do can be a critically important guide when facing difficult trade-offs in the face of uncertainty.
Reflections
Management guru Peter Drucker famously said, “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”
These days, with turbulence all around us and no clear indication of how or when it may stop, successful organizations will be the ones that remain clear about what they are trying to achieve and flexible regarding the steps needed to get there.
