We appreciate the value of solid quantitative analytics, but when it comes to creating growth or innovation strategies, analytics can become a crutch that inhibits bold decision making.
At Stratalis we are analytic by nature and, like many of our peers in executive advisory, we appreciate the value of solid quantitative analytics. We have also observed that, when it comes to creating strategies for new and significant growth and innovation, analytics can only take a company so far and, in fact, can become a crutch that inhibits bold decision making.
As an example, one of our global clients faced a bold strategic question; whether to invest in expanding production by 10%, or eke as much as possible out of existing facilities. They initially spent millions of dollars on a complex analytic model of the Chinese market, developed by one of our top peers in consulting. The Chinese market was important for their product and the model was very well built, providing a great deal of quantitative support for what economic growth could mean. It fell short, however, when it came to strategizing, yielding limited strategic impetus and perhaps more importantly, not specifically addressing the question.
The Stratalis moment was in understanding that the key to determining the right strategy was to develop strategic scenarios of the future. The scenarios identified key market drivers and uncertainties. They combined the analytic with qualitative components and other strategic issues, such as likely competitive moves or the effects of global unrest. These “portraits” of what the future could look like brought a broader perspective into play that clarified the opportunity and created executive agreement for action.
Scenarios are less about predicting the future than they are about exploring what could happen and what disruptions, good and bad, might mean for the business. They also provide context for analytics and a common framework for assessing opportunities.
In this case, the company could not come up with a viable scenario in which the Chinese market did not fundamentally change the demand for their product. They also discovered that they had a key competitive advantage, but would have to act quickly and decisively in order to maintain it. As a result of this work, they did not expand their production by 10% but rather by 500%, thereby positioning themselves for extraordinary growth and a dominant position in their market. The analytic model provided useful, but the scenarios were the key to creating a disruptive strategy.
At Stratalis we use scenarios to help organizations develop new perspectives and more context for strategic decision-making. We then develop and test opportunities for growth within each scenario set and work backwards to create and evaluate strategic options. While some opportunities work better in some scenarios than in others, even the less attractive opportunities can lead to valuable conversations around interim options, future expectations and risk mitigation. By tracking scenarios over time and reassessing strategies based on how the world develops, we help organizations more effectively stay ahead of their market.
Before you design your next strategy, consider strategic scenarios. Their usefulness may surprise you.