One of the biggest changes in business today is an ever increasing diversity of business environments, ranging from stable to highly unpredictable, fixed to highly malleable, favourable to harsh. To succeed leaders need to match their approach to strategy with their market landscape. To facilitate this the Boston Consulting Group created an incredibly useful Strategy Palette.
BCG uses a very simple analogy to explore how this would work.
The Classical Strategy
Let's say you own a lemonade business. You run it in a stable and predictable environment. In this instance you would use the classical approach; analyse, plan, then execute. This is how most people think about strategy. You realise that joggers are your best customers, so you position your stand along the jogging trails and become the biggest lemonade business in town.
The outcome for the Classical Strategy? Be big.
The Adaptive Strategy
Now let's say there are some freak storms. You can't predict the weather beyond a week or so right? So forget about planning. In this instance you would try the adaptive approach. As the storm clouds move so does the best spot for your stand. A good example of this is Zara. The business only finishes off their production run once they have some in-store, mid-season knowledge of which products are flying off the shelves. Then they scale up those items, and scale down the less popular items. This leaves them with much less wastage than other fashion brands at the end of a season. Likewise, you should experiment to track your customers and become the most agile player in your uncertain market.
The outcome for the Adaptive Strategy? Be fast.
The Visionary Strategy
Now let's say people are bored of lemonade stands on quiet streets. You need to revive your business with a visionary approach. Steve Jobs did this when he invented the iPhone. So you think about it a while, and remember the bus stop by the park. It's dingy, but has the most potential customers. You give it a sweep, fresh paint, and decorations. You're super persistent, and even put up new fairy lights. Voila! Soon people are lining up to experience your pioneering idea.
The outcome for the Visionary Strategy? Be First.
The Shaping Strategy
In the next scenario, jealous grown up competitors say kids shouldn't put so much energy into lemonade. Even Government regulation might be in the works, and working against you. You need to shape your environment, orchestrating events to your eventual advantage. So you start to tell customers about the crackdown, to garner support. You even create a brand new street vendor finder app, so that people can easily find vendors through you. Remember Steve Jobs? After creating the iPhone, Apple created an eco-system of app developers, and nurtured their growth through the App Store. This is the Shaping Strategy at work. Now back to your story. In return for your efforts, your new vendor network will push your lemonade products on your behalf.
The outcome for the Shaping Strategy? Be the orchestrator.
The Renewal Strategy
Now let's say there's a catastrophe. The lemon crop this year has been ruined by caterpillars. Time for renewal. In this scenario, the best play is to cut back and save your allowance. You then pick a new growth strategy when you're ready, say, a visionary idea. You sell seasonal drinks like pumpkin spice lattes, hot cocoa, and green smoothies.
The outcome of the Renewal Strategy? Be viable.
To succeed leaders must choose the right approach at the right time in each part of the business, selecting and refining the collage of approaches to stay tuned to changing environments. Which strategy do you currently use?