g-f(2)60 “THE BIG PICTURE OF THE DIGITAL AGE”: The Essence of Strategy Is Now How to Change

Extra-condensed knowledge

• Business leaders need to evolve how they think about strategy in two important ways to be relevant in today’s dynamic and complex environments:
• First, their focus needs to shift from what is stable to what is changing — and specifically how these changes may neutralize historical sources of advantage and how they may give rise to new opportunities.
• Second, they need to broaden the number of stakeholders whose needs and potential contributions are evaluated during the strategic planning, review, and refinement process.

Genioux knowledge fact condensed as an image

The “genioux facts” Knowledge Big Picture (g-f KBP) charts

Condensed knowledge  

• Business leaders need to evolve how they think about strategy in two important ways to be relevant in today’s dynamic and complex environments:
• First, their focus needs to shift from what is stable to what is changing — and specifically how these changes may neutralize historical sources of advantage and how they may give rise to new opportunities.
• Second, they need to broaden the number of stakeholders whose needs and potential contributions are evaluated during the strategic planning, review, and refinement process.
• The most successful businesses today are those that identify when and how to change to improve their strategic advantage. 
• Whether it is Amazon embracing physical retailing to complement its digital capabilities and enable new business models, or Pfizer leveraging its marketing and distribution capabilities by partnering with other drug development companies, these actions can be traced to acting on change signals that indicated a focus on magnitude, activity, or direction.
• Companies that recognize the change signals appropriate to their context are more likely to direct their management and innovation energies most effectively — gaining the advantage.
• g-f(2)58, Stéphane Garelli, IMD. Digital technologies and other factors have caused the average age of the companies in the S&P 500 to decline from more than 60 years in 1958 to less than 20 years today.
• g-f(2)59, Thijs H.J. Geradts and Nancy M.P. Bocken, MIT SMR, Science Direct. The current emphasis on corporate purpose and environmental, social, and corporate governance are manifestations of the intense pressure companies are under to demonstrate their social legitimacy.
• In our previous article, “Changing How We Think About Change,” we outlined a framework to help business leaders evaluate the relevance and sustainability of their current strategy and identify what form of strategic adaptation is appropriate to their situation: 
• Magnitude: “We need to strengthen our execution of the current path.” 
• Activity: “We need to adopt new ways of pursuing the current path.” 
• Direction: “We need to take a different path.”
• The MADStrat framework uses two perspectives to determine what form of change (magnitude, activity, or direction) is appropriate in a given context: 
• Fit to purpose evaluates your market context and involves assessing the closeness of fit between your offering and the needs of customers (both now and in the foreseeable future), and how your business model also delivers value for other stakeholders. 
• Relative advantage involves assessing your capabilities relative to alternatives, not just direct competitors.

Category 2: The Big Picture of the Digital Age

[genioux fact produced, deduced or extracted from MIT SMR]

Type of essential knowledge of this “genioux fact”: Essential Deduced and Extracted Knowledge (EDEK).

Type of validity of the "genioux fact". 

• Inherited from sources + Supported by the knowledge of one or more experts.

Authors of the genioux fact

Fernando Machuca

References

The Essence of Strategy Is Now How to Change, B. Tom Hunsaker and Jonathan Knowles, December 17, 2020, MIT Sloan Management Review.

ABOUT THE AUTHORS

B. Tom Hunsaker is the associate dean of innovation and a global strategy professor at the Thunderbird School of Global Management. Jonathan Knowles (@typetwo) is CEO of Type 2 Consulting, based in New York. A free MADStrat self-assessment survey can be found at https://madstrat.com.