Bringing Strategy Back E-Book

Jeffrey L. Sampler

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 271

Veröffentlichungsjahr: 2014

Beschreibung

Reconsider Strategy and Make Planning Relevant

In Bringing Strategy Back, strategy expert Jeffrey Sampler cuts through the clutter to reveal exactly why the usual tools of strategy are so sorely out of sync with our needs: windows of opportunity close far faster than they once did, many of these opportunities are smaller than they once were, growth rates are uneven across markets, and today's competition is more asymmetrical than ever. The upshot for managers is that they need to reorient their approach to absorb the shocks and surprises that strike at a moment's notice. Only then can strategic planning reliably play its part.

Leaders all around the world at organizations of any size and type will benefit by shedding their obsolete notions about strategy and becoming more resilient. Bringing Strategy Back rises to the challenge and presents a new prescriptive model. It introduces four "strategic shock absorbers" that enable leaders to build resilient organizations that can withstand even the most unexpected global turbulence. Based on the author's in-depth research in the world's most tempestuous markets, the model delivers several must-have qualities that interact and work together in an ongoing process: Accuracy, Agility, Momentum, and Foresight. With this new framework, Bringing Strategy Back shows how to be prepared and proactive, rather than reactive, even when the future is uncertain.

Leseprobe

Table of Contents

Cover

Title Page

Copyright

The Jossey-Bass Business & Management Series

Foreword

Introduction

Setting the Wheels in Motion

Chapter 1: Strategic Shock Absorbers

Chapter 2: Accuracy: Creating Order and Transparency

Decision Triggers

Creating Decision Triggers

The Strategic Wedge

The Art of Management: Accuracy

Chapter 3: Agility: Seizing and Repeating Opportunities

Constant Adaptation

Creating a Corporate Concierge

Making Strategy a Bottom-Up Process

The Art of Management: Agility

Chapter 4: Momentum: Speeding Past Shocks and Surprises

Mastering the End Versus Means

The Art of Management: Momentum

Chapter 5: Foresight: Getting Ahead of Change and Chaos

Strategic Assumptions

Changing the System

Alternate Strategies: Scanning the Periphery

Have an Exit Strategy

How to Proceed Toward the Exit

The Art of Management: Foresight

Chapter 6: Execution: Shock Absorbers in Action

Compression and Expansion

The Upside of Oscillation

Chapter 7: Driven by Values

How Values Steer Strategy

The Value of Values

Creating a Culture Where Values Matter

Chapter 8: Management Innovation from Fast-Moving Markets

Values Enable Coordination

Absorbing Change without Losing Momentum

Developing Foresight and Anticipating the Future

Executing with Accuracy

Reacting with Agility

Formalizing the Informal

The Author

More from Wiley

Index

End User License Agreement

Pages

v

vi

vii

1

2

3

4

5

6

7

8

9

10

11

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

101

102

103

104

105

106

107

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

146

147

148

149

150

151

152

153

154

155

156

157

158

159

160

161

162

163

164

165

166

167

168

169

171

172

173

174

175

176

177

178

179

180

181

182

183

184

185

186

187

188

189

190

191

205

206

207

208

209

210

211

212

213

214

215

Guide

Cover

Table of Contents

Begin Reading

Bringing Strategy Back

How Strategic Shock Absorbers Make Planning Relevant in a World of Constant Change

Jeffrey Sampler

Foreword by Vijay Govindarajan

Cover Design: Michael J. Freeland

Cover Image: © iStock.com / Zvozdochka

Copyright © 2015 by John Wiley & Sons, Inc. All rights reserved.

Published by Jossey-Bass

A Wiley Brand

One Montgomery Street, Suite 1200, San Francisco, CA 94104-4594—www.josseybass.com

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax [phone], or on the Web at www.copyright.com. Requests to the publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax [phone], or online at www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. Readers should be aware that Internet Web sites offered as citations and/or sources for further information may have changed or disappeared between the time this was written and when it is read.

Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directly call our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at 317-572-3986, or fax [phone].

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data

Sampler, Jeffrey L.

Bringing strategy back : how strategic shock absorbers make planning relevant in a world of constant change / Jeffrey L. Sampler.

pages cm. – (The Jossey-Bass business & management series)

Includes index.

ISBN 978-1-118-83009-3 (hardback) ISBN 978-1-118-83008-6 (pdf) – ISBN 978-1-118-83007-9 (epub)

1. Strategic planning. 2. Organizational change. I. Title.

HD30.28.S254 2015

658.4'092–dc23

2014024323

The Jossey-Bass Business & Management Series

Foreword

Historically, innovations have originated in rich developed countries in the West and later flowed downhill to the populous developing world. But it is also possible for innovations to originate in poor countries and trickle up to the wealthier world. This is what I've termed reverse innovation.

I initially became interested in reverse innovation during a two-year stint as Professor in Residence and Chief Innovation Consultant at General Electric. At the time, GE CEO Jeff Immelt had put a stake in the ground to grow the company organically by meeting the needs and budgets of customers in heavily populated developing markets. As part of that plan, GE went on to introduce revolutionary new product adaptations—a $1,000 handheld electrocardiogram device and a portable, PC-based ultrasound machine that sells for as little as $15,000—created to serve rural India and China. By developing lower-cost end-user solutions, GE has been able to cultivate an entirely new market. Just as notably, these innovations have since been adapted and sold in the United States and Europe.

It's clear that if rich nations and established multinationals are to continue to thrive, the current generation of innovators must look beyond their own backyard and consider the needs and opportunities in the vast developing world. And the idea of reverse innovation extends well beyond just product creation. For starters, we see pockets of reverse process innovation springing up as well. Hospitals in India, for example, are transforming health care by performing open-heart surgery for $3,000 rather than the $150,000 we see in the United States—and not simply because of lower labor costs, but also because they have adapted standardized processes from assembly-line manufacturing to make the procedure far more cost effective. This type of innovation would be possible anywhere, but it's more probable in poor countries because it meets their needs and requirements.

The reality is that the future of growth and innovation is far from home—in places like Asia, the Middle East, and elsewhere.

Reverse innovation is any innovation that is adopted first in the developing world. This includes management innovation, a subject that Jeffrey Sampler knows extremely well. What he's done in this excellent book is bring my work on reverse innovation together with Gary Hamel's idea of management innovation to create a new model for understanding and using the latest and greatest management innovations from places as far away as India and Dubai. Economies such as these are radically different from mature Western economies, and they have radically different needs. Therefore, their solutions must be radically different. Based on the author's vast research and experience working with executives at companies across these markets, the “Strategic Shock Absorbers” introduced here form a tool kit of management innovation that was developed because the pace of growth and change in India and Dubai was so intense that the Western management ideas simply did not apply.

The tools and advice here present an opportunity, and a solution, for Western multinationals that are not only struggling with the ever-increasing pace of change at home but also looking for ways to compete with incumbents in developing markets. The companies featured, such as Arvind Mills, Dabur, Future Group, DLF, or Network18, may be unfamiliar but they have succeeded because of, not despite, the seismic shifts that have occurred in the Indian economy over the past decade. They have made the most of change and Jeff Sampler makes a compelling case that they set the standard in terms of innovative management practices that serve not only to hedge against risks and but also ride the ongoing wave of change and disruption that is common in developing economies.

The stakes are enormous for adopting the type of reverse innovations of management ideas described here. Today, rich countries and poor countries account for roughly equal shares of the global economy. But for years, growth has been far more robust in poor countries. Increasingly, understanding how success happens there is a prerequisite to continued vitality at home. In the transformed economic landscape, reverse innovation—including the management innovations featured in this book—is not optional in any market.

Vijay GovindarajanCoxe Distinguished ProfessorTuck School of BusinessDartmouth College

Introduction

Bringing Strategy Back

Books, blogs, and business magazines feature charismatic CEOs and credit their dazzling success to bold strategy moves. Executives attend conferences about change and hire management consultants to oversee strategic reinvention. Everyone scrambles to uncover the next big strategy play in the haystack of operational imperatives. Why? Because in business we equate great strategy with great performance. Our heroes are the bold movers and shakers who can shift on a dime when it matters most and bring the entire organization with them. But this type of behavior is the exception rather than the rule. More often than not, strategic change occurs exclusively in reaction mode. Sales are slipping and market share is declining. Profitability is worsening. Disruptive competitors enter the fray and dethrone incumbents. Only then do we find that we are able to break the strategy mold and make bold moves quickly. But, having waited, these are often ill-fated attempts born of desperation, and they frequently fail or arrive too late to turn the tide.

Consider Kodak's famous fall from grace. For most of the twentieth century the juggernaut was the biggest brand name in the photographic film industry, bar none. They were miles ahead of the competition in terms of innovation and industry dominance. But in the 1990s they failed to recognize the significance of a development that they themselves pioneered—digital photography. Although Kodak invented the first digital camera in 1975, they dropped the product for fear that it would threaten their bread-and-butter photographic film business. Even later, after Kodak realized the digital camera's significance, they failed to successfully capitalize on their early lead. Kodak declared bankruptcy in 2012, leaving analysts and consumers alike wondering how they managed to squander so many years as the market leader.1

In part, this problem of inertia stems from a change-averse mind-set, because until recent history we have been accustomed to relative stability, and the need for constant adaptation has been less urgent. But the larger reason has nothing to do with our poor appetite for change. Instead, the root cause is a dusty and broken process. In many cases, strategic planning does not work because the tools we use are seriously out of date. The five-year strategic planning horizon, for example, is a surviving relic from the previous age. Few today can plan five months ahead (not to mention five years), and so strategies die on the vine. As a result, executives in fast-changing industries are abandoning strategy altogether at a time when they need it the most. Consider the director of strategic planning at one of the world's top five technology companies who told me flat out: “Strategy is irrelevant in the current environment. In our case, success is about experimentation and luck.” Few managers are quite so unequivocal in expressing their doubt and dismay about strategy, but many can relate to the idea that the tools we use are badly out of sync with the times. Our tried-and-true methods for planning are obsolete for a number of related reasons.

First, today's windows of opportunity close faster than ever. Over the long-term horizon, particularly in Western markets, we have grown accustomed to the luxury of comparative stability. Therefore, many companies focus on long-term opportunities to serve established markets that often change only slowly and incrementally. This is the type of opportunity that fits the mold of the conventional strategic planning process. It's predictable and familiar. Yet, increasingly, as we compete in fast-moving global markets, industry dynamics and new opportunities do not resemble the situation described here. Consumers are fickle and loyalty is fleeting. A product or service may succeed one day and disappear the next. As a result, there is a far greater need to react and adapt instantly to fluid opportunities. Most companies do not have this capability.

Figure I.1 Strategic Planning Is Obsolete

Second, opportunities are shrinking in size and becoming more fragmented. Beyond speed and reaction time, companies are faced with the reality that many new opportunities today are relatively small (at least upon initial examination). Many Western firms ignore these opportunities because their strategic filters deem them unattractive. However, small opportunities can turn into something bigger, particularly in environments where requirements shift quickly and markets expand rapidly. Organizations need strategic tools (and a strategic mind-set) to target modest and often fleeting opportunities and accurately gauge their potential for growth.

Next, growth rates across markets are uneven and volatile year over year. In the West, GDP grows at 1–3 percent annually at best.2 Whereas, in China GDP has surged at 7–14 percent per annum over the last decade while India achieved 6–10 percent for some time and then sunk to 4.7 percent more recently.3 This means that a five-year planning horizon in the West in some years was equivalent to as much as a fifty-year horizon in parts of the East, because their economies were growing at up to ten times as fast. Thus, emerging economies in the East and Africa can't simply import strategic planning ideas from the West. The ideas must be scaled to fit their local business environment. Likewise, Western companies targeting opportunities in high-growth markets need to rethink their strategic tools and timelines to suit the local climate. In addition, as Eastern companies acquire Western rivals and vice versa, they must be in a position to plan for growth and retraction that is fast and difficult to predict.

Finally, the intensity of competition today is elevated and asymmetrical. One could make the counterintuitive argument that the last thing any company would want right now is to be visibly successful. Why? Because success attracts new competitors like hornets to honeydew. What was once a successful market becomes oversaturated; profitability declines and blue oceans quickly become red. Our strategic planning conventions simply don't factor in the speed with which new entrants rise from below the radar in both emerging and established markets.

The largest commercial real estate developer in India, DLF, is no stranger to this challenge. As Managing Director Ramesh Sanka told me: “Sometimes your size and strength can become a potential risk. It is a risk that comes with being the leader… Once you are on that pedestal it is easier to mark you out.”4 Be it competing firms, new entrants, or even an organization's own customers and workers, the slightest glitch or complacency from a market leader guarantees a fervent response. This type of risk is difficult to plan for.

Taking all this into account, it is not surprising that the most basic principles underlying traditional strategy planning, including the five-year plan, are seldom valid. Traditional strategic planning is suspect, in part, because it relies on past performance to help predict future results. Anyone who managed through the 2008–09 recession (or the ones before or after it) will agree that extrapolating from the past no longer creates a clear picture of the future. One might even say that conventions such as the five-year plan are harmful to companies because they create the illusion of certainty. Lulled into a false sense of security, companies feel confident that major contingencies have been accounted for. With that, they view the task at hand as one of execution over adaptation. This perspective has held true in past decades, but the extreme conditions in today's markets puncture the thin veneer of safety that traditional strategic planning creates. On the contrary, one-size-fits-all, long-range planning and prediction models have all but been laid to rest.

Where does this leave us? How do we bring strategy back and make it an ongoing process? If our tools for strategic planning don't apply, we find ourselves backed into a corner. Lacking alternatives, strategic change occurs in reaction mode. But the problem with reactive planning, of course, is that it happens too late. We find ourselves playing catch-up. The damage is done and someone else claims the competitive advantage. The challenge is to make strategic planning proactive and preemptive as a matter of course. That type of fast, fluid approach requires a mind shift, to be sure, but it also requires a new set of tools.

Setting the Wheels in Motion

The obsolescence of conventional strategic planning became apparent to me when I was researching cases in India. I was calling around to a number of companies four to six months in advance of my visits to schedule interviews. At the time, executives seemed universally hesitant to commit. I was confused, because in most cases I knew these companies and their executives, or was being introduced and referred at the highest levels.

I understood, finally, when one senior executive told me: “Call me two weeks before you arrive. I promise we will meet sometime during your trip and I will also arrange other interviews for you in my company. But, at this point in time I cannot give you an exact meeting date—I just can't see that far ahead!” Sure enough, when I called a few weeks prior to my visit, I was able to fill my schedule completely.

At that moment I finally got it. Scheduling time with an Indian executive six months in advance was asking the impossible. Their world operates at a different “clock speed,” or rate of growth and change. At the time, shock waves were surging through their financial markets. Their tax rates and tariffs were changing. Government policy shifts were a regular occurrence. Their economy was undergoing rapid expansion. Considering the pace of growth in their sphere, I was asking these senior executives the equivalent of can we have lunch four years from next Tuesday?

That one stark realization set me on a research path that lasted over a decade. In addition to closely examining how dozens of top companies in high-growth markets were able to succeed amid turbulence, I also spent significant time in the company of a number of CEOs, senior executives, and heads of state in order to learn about their values and corporate customs. The research I conducted, often with colleagues, and the contacts I made allow me to present examples in this book that go well beyond the usual suspects.

More specifically, I collected stories and lessons from across India and Dubai. Why have I chosen to focus on these particular markets? The reason is simple: both countries at the time were experiencing massive growth and transformation. The planning challenges that exist in both places, then and now, are the effect of the corresponding growth and turbulence occurring on a regular basis. The level of development, the pace of change, and the ensuing unpredictability in the business environments made the nature of strategic planning there a test case for the rest of the world. All the growth that we have seen in India and Dubai, for example, occurred in just the last two decades. From an organizational perspective, they went from having a limited need for strategic planning to facing some of the most complex and fast-moving business environments in the world.

For instance, when India opened up its economy to foreign investment in the early 1990s, it witnessed a surge in consumer spending. This was partly a realization of the latent demand in the Indian market. Other factors, such as an influx of overseas money, had a noticeable impact. More basic changes were also under way in the Indian marketplace: changes in the pattern of consumption, a rising young population, consumerism, the globalization of their workforce, technological advances, and the rise of business process outsourcing (BPO). All of this made the Indian marketplace more dynamic.

The shifts that occurred between the early 1990s and the present day in India were across the board. The household per capita consumption expenditure increased 110 percent from 1994 to 2005.5 The share of nonfood items in household consumption increased from 37 to 49 percent in that time, while that of food items decreased from 63 to 51 percent.6 In the rural market, the share of nonfood items in the household consumption jumped from 34 to 45 percent, while in the urban market the share increased from 43 to a massive 57 percent.7 These changes reflected the maturing of the Indian economy in many ways. Not only were Indian consumers spending significantly more, but they were also spending increasingly more on nonfood items. These many changes presented major opportunities, as well as extreme challenges, for companies in India and elsewhere.

Zoom in on 2005, for instance, when the United States lifted textile quotas. The sheer pace of change that was unleashed left Indian textile companies with no precedent to look to in a situation that was completely new and fluid. Consider India's largest denim producer, Arvind Mills. Growth at Arvind that year was not up to expectations; then, denim prices suddenly crashed due to new investments leading to excess manufacturing capacities in the market. China became a force to reckon with as it offloaded almost 40 percent of the world's denim supply into the international marketplace. With rising input prices alongside falling revenues, and with the literal doubling of competition and no one to blame other than the external environment, the underlying assumptions for doing business suddenly needed a serious reexamination. As we will see, Arvind Mills8 owes its success after that to turning their every plan on its head and completely transforming itself in response to the requirements of the day.

Companies in places like India and Dubai that were caught ill prepared for such drastic changes—both economically and culturally—were left behind. Indian brands that were popular and rising before 1990 were suddenly bleeding market share. By the turn of the millennium many faded into oblivion. Risks of a dynamic marketplace include cost pressures, changing retail structure, competitive pressures, and human resource challenges.

Because strategy planning in India and Dubai needed to be modified under conditions of extremely rapid growth and dramatic transformation during this time, they present highly relevant case studies for Western organizations that need to learn the lessons of strategic change. DLF's Executive Director Saurabh Chawla explains that this anomaly is the reason why Indian companies are compelled to have strategic plans with much shorter time horizons compared to Western companies. “What would be a ten-year strategic plan in the United States would turn out to be a three-year plan in Indian context,” explains Chawla.9

My focus on India and Dubai examples are intentional and intended to be instructional. The reality is that the turbulence India, Dubai, and other high-growth regions faced then (and continue to face now) have since become a global contagion. Turbulence and turmoil, expansion and contraction, growth and decline: all of these in rapid succession are the norm everywhere. The takeaways from the examples in this book, and the corresponding framework for making strategy relevant, therefore, are broadly applicable in any market. In addition, the cases and prescriptive ideas presented come together hand in glove. The cases each demonstrate all the ideas in my framework, as opposed to proving one piece at a time. This suggests two key insights. First, the findings in this book are robust and shared across a variety of industries, companies of different sizes, and countries. Second, the ideas in the model are part of an integrated system—that is, if just one or two ideas are implemented the results will not be the same.

The overarching message of this book, above and beyond the stories and prescriptions, is that we need strategic planning today more than ever. It needs to be an ongoing and adaptive process. With executives fully occupied responding to seismic shifts, surprises, and bumps in the road, it is crucial to have tools to simplify the task. The challenge for organizations is to somehow develop the capability to absorb everyday bumps and shocks in order to maintain operating speed and adjust strategy as the global environment continues to change. Like many of the management innovations of our time, the way forward begins with a solution from a different domain. It is retooled and translated here for the management space. Bringing strategy back is no small matter, but as we will see throughout this book, it is both possible and necessary.

Notes

1

 Rupert Neate, “Kodak Falls in the ‘Creative Destruction of the Digital Age,’”

The Guardian,

Jan. 19, 2012,

http://www.theguardian.com/business/2012/jan/19/kodak-bankruptcy-protection

.

2

 International Monetary Fund,

World Economic Outlook—Recovery Strengthens, Remains Uneven,

Washington, April 2014, 2,

http://www.imf.org/external/pubs/ft/weo/2014/01/pdf/text.pdf

.

3

 The World Bank, “GDP Growth (Annual %),”

Worldbank.org

,

http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries

(accessed May 12, 2014).

4

 The material in this example, including quotations and data, is drawn from the author's case study. Whenever possible, the data has been updated with the latest available figures. Jeffrey Sampler

, Thriving in a Turbulent Environment Case Study: DLF,

2008, 8.

5

 Dabur Company,

Annual Report

, FY 2007.

6

 Ibid.

7

 Ibid.

8

 Jeffrey Sampler,

Thriving in a Turbulent Environment Case Study: Arvind Mills Ltd

., July 2007.

9

 Sampler,

Case Study: DLF,

10.

Chapter 1Strategic Shock Absorbers

The fast, fluid approach that we need to soup up and accelerate strategic planning is not entirely unlike the performance features engineers have built into automobiles over time. In the case of cars, we have become so accustomed to certain crucial design elements that we nearly take them for granted. For example, if you ask someone: why do cars haves brakes? Most people will answer: to stop. If you ask a second question: why do cars have shock absorbers? Most people will respond: for a smoother ride. It turns out that both of these assumptions are wrong.

Cars have brakes so that we can drive faster. If the only way to stop is to plow into something or drag your feet like Fred Flintstone, then the default will be to drive very slowly. Similarly, cars have shock absorbers to enable speed. Before shocks, particularly in the early days, a car's frame would bend or break if it hit a bump at high speed. Thus, people had to drive slowly to avoid destroying the car. Shock absorbers enable cars to go fast and maintain their speed.

For executives, operating in a business environment that is extreme and unfamiliar is a lot like driving down a winding English country lane in very heavy fog. They cannot see far ahead. Perhaps there is a deep rut in the road or even a meandering cow. Driving under these opaque conditions, the reflexive response is to proceed slowly and almost feel your way along. Yet, this is not an option in business—the competition is too intense. Companies need to absorb the impact of unexpected events without slowing down or destabilizing the entire organization. They need to be able to react to bumps in their path immediately, before the impact creates a chain reaction and the wheels come off the wagon.

With constant change the norm, having a fast reaction time is crucial. There is a clear and convincing rationale for this. First, even small shocks have a cumulative effect. Companies are made up of a complex web of associations. They are global and multinational; connected in myriad ways to customers and employees; and they operate in an ecosystem where partners and competitors may be one and the same. With this interconnectedness, surprises that hit one part of a business or ecosystem can affect other parts in ways that are difficult to predict. The bigger the shock, the greater the potential for throwing off a destabilizing effect in multiple parts of the business. In addition, there are always new bumps just down the road a piece. When you cruise over a pothole and continue without regaining control, it becomes more difficult to swerve to avoid the sheep standing in the road or to veer around whatever obstacle arises next. In other words, stability is the exception rather than the rule. Companies need a means for adapting to environmental changes without slamming on the brakes every time. When the world is in chaos, strategy needs to be adaptive in order to be effective.

Through my research in fast-moving markets and surging economies I have found that it is possible to make strategic planning fast and adaptive. Over a period of five years, I worked intensively with colleagues inside twenty Indian companies in order to better understand the Indian approach to business strategy and to identify the key lessons. In addition, I worked extensively in Dubai from 2000 to 2008—around the time the United Arab Emirates was dramatically building its infrastructure and economy. The companies I examined in India and Dubai come from a range of industries—the media, manufacturing, air transport, government, retail, and banking.

The solution I found is what I call Strategic Shock Absorbers. Why Strategic Shock Absorbers? Because the capabilities that are part of this integrated framework allow companies to move quickly and fluidly, even amid massive turbulence. In addition, like the mechanism in cars, Strategic Shock Absorbers oscillate. They allow companies to move with the environment, contracting inward and expanding back again as conditions on the ground evolve. We will see that for each Strategic Shock Absorber time and information are compressed when conditions are grueling; and, when they improve, resources and options are expanded to unlock new opportunities. For example, as companies experience bumps in the road the Strategic Shock Absorbers call for lean operations that enable speed and precision. Then, when the environment stabilizes they expand—empowering people and preparing them to gear up for growth and new options.