Strategic Renewal

The Concept of Strategic Renewal

Strategic Renewal is the process of change and the outcome of adjustment in strategic direction that have the potential to determine the long-term competitiveness of a firm.

The objective of strategic renewal is to provide a strategic fit between a firm's internal capabilities and shifts in the external environment involving technology, markets, industries and the economy  that require a change in the status quo of conducting business.

Two Types of Strategic Renewal

• Incremental renewal: based on a series of regular minor adjustments in the firm in order to alleviate external pressures. This is an evolutionary process of survival that maintains the firm's operations and improves its chances of survival. Gradual change and adaptation, when carried out effectively, empower organizations to cope with changes as they occur. They reduce the pressure to go through more radical more difficult transformations later on. The principle is to persist and protect the firm's competitive position on an ongoing basis through a sequence of path-dependent  decisions and timely reactions to business opportunities. The accumulation of small adjustments in strategic direction leads to major transformation in the long run.
• Transformational renewal: changes in the business model, technological platforms, organizational structure, resource base, and strategic capabilities. The redevelopment of long established financial capital, organizational capital, human capital and social capital. The transformational renewal cases tend to be successful when firms are reacting proactively to a market opportunity, rather than reacting to business treats.

5 Essentials of strategic renewal:

1. Revisit your strategy
2. Focus.Focus.Focus
3. Modify your business processes
4. Cut the CRAP
5. Plan on the run - Develop a handful of key performance metrics and examine your progress at least monthly (in times of turbulent change 动荡的变化时期, weekly monitoring may be in order). The plan on the run formula: plan-execute-learn-adjust-execute-learn-adjust… Build constant strategic renewal into your culture. Make the renewal competency your competitive advantage.

The process that follows is more than addition and subtraction; it is multiplication and transformation. It's a set of practices that can guide leaders into a new era of innovation. Because strategic renewal involves making changes ahead of a crisis, the efforts can be extremely difficult to initiate, fund and lead; many companies, including Xerox, Kodak and Firestone, attempted but failed to move ahead of their respective crises

The strategic playbook

• Select growth aspirations that connect with people emotionally.

• Treat strategy as a dialogue as opposed to a ritualistic, document-based planning process

• Use experiments to explore future responsibilities

• Engage a leadership community in the work of renewal

• Apply execution disciplines to the effort.