What is Strategy Dynamics?
Strategy Dynamics explains how business performance has developed up to the current date, and how to develop and implement strategies to improve future performance. The approach emphasises building and sustaining the resources and capabilities needed to succeed.
Steps for Strategy Dynamics
The underlying science of the method is System Dynamics originated by Prof Jay Forrester at MIT in the 1960s.
Business is one of the largest and most valuable domains where system dynamics can make a big impact. This is because the most important business challenges are about how to improve performance over time AND System Dynamics can
- Tackle operational or strategic issues
- Answer one-time questions or provide a continuing plan
- Deliver answers for any type of organisation, of any size, at any level
Businesses must be constantly alert to competitive pressures and adjust their business strategies accordingly, says Linda Pophal, a strategic planning consultant and CEO of Strategic Communications. Even the best businesses can be knocked off their pedestals by a new market entrant or a major industry innovation, she says, pointing to both Apple and Microsoft as examples of this. Yet both companies continue to adjust to their markets by remaining dynamic and changing their strategies as changes in their environments dictate.
Gone are the days when companies could develop 10-year strategic plans and put them on the shelf, says Pophal. Today's businesses need plans that are more dynamic and that serve as living documents to guide the organization's practices on an ongoing basis. A formal annual plan update is common, but a business should continually monitor its plan and plan performance and be able to make adjustments as necessary.
Identify the factors that cause resources to be won and lost
Good intelligence is essential for good decisions. Dynamic business strategies require businesses to pay close attention to a variety of sources, both from business operations (sales data, for instance) and stakeholders (customers). Monitor your environment and put processes in place to collect, aggregate, analyze and react to information from various sources, both inside and outside your company.
Benefits of Strategy Dynamics
- The method works for every kind of enterprise - commercial, public-service, or voluntary - as well as to every function within an enterprise.
- Being evidence-based, it can solve differences of opinion amongst team-members. It also allows each individual, both amongst the management team and in the wider organization beyond, to see where their activity contributes to the whole, and on whom they depend.
- Since it highlights exactly where management actions and decisions exert control, it provides clear and specific strategies and action plans, that can be adapted as the future unfolds.
- The method provides a solid foundation for methods such as the Balanced Scorecard and Value Based Management, and is a means of integrating other established strategy frameworks and approaches, such as PEST, Core Competence and Value Chain.
- It is also applicable to not yet existing enterprises, such as new ventures or voluntary initiatives.
- The method is strongly evidence-based and rigorous, offering a solid understanding of what causes current performance and confidence in the future performance.