Strategy

Having foresight is key to developing a winning corporate strategy. But between sifting through a sea of data, navigating unpredictable events like the pandemic, and keeping up with the pace of technological innovation, knowing what to keep an eye out for can be challenging.

According to Gartner, the average corporate strategist spends 26% of their team’s time and around $200,000 of the annual budget investigating emerging trends. With the increased spending on corporate strategy expertise (up 51% YoY on Graphite), we wanted to know the trends shaping the future of this core functional skill.

To get to the bottom of this question, we engaged our network of experts on the ground floor in developing and executing corporate strategies for their clients on Graphite. Here are the five trends we unearthed.

1. Growth Strategy Will Take on a Whole New Meaning

For years, the role of corporate strategy was centered on where to play and how to win. But as the pace of disruption accelerates, it’s no longer enough to just focus on those areas. To succeed in today’s environment, corporate strategists must focus on speed and capabilities.

Yet focusing on speed and capabilities must also be done with caution. Rather than focusing on growth at all costs, the focus will be on making smarter, harder investment decisions that will lead to sustainable growth and a risk-averse portfolio.

A key component to accomplishing this will be finding new ways to differentiate the business from the competition. This will be done in several ways, either by M&A or building those capabilities within the business. Data and analytics, digital customer engagement, and the ability to create digital business models will factor greatly into strategic plans.

And while M&A growth will be more conservative when compared to 2021, it will still serve as a viable growth strategy as it relates to building out new business capabilities. In this regard, the use of data and technology as part of the transaction process and the ability to execute and move quickly will be vital for any M&A-led growth strategy.

2. Data and Market Research Will Play a Pivotal Role

Given the uncertainty of new and upcoming coronavirus variants, the economy, and geopolitical tensions, businesses are increasingly relying on data and market research to gain a competitive advantage.

Fueling this demand for information is the need to quickly synthesize patterns and trends to enable faster decision-making across the entire organization. From an operational perspective, data is essential in driving supply chain efficiencies. Visibility into inventory, distribution, and production goes a long way in protecting a company’s bottom line.

Likewise, the use of consumer data to inform go-to-market strategies enables companies to better position themselves when entering a new market or launching a new product or service. As digitization and the need to gain new capabilities increase, more emphasis will be placed on market research and data to ensure these initiatives succeed.

3. Building a Resilient Workforce amid Economic Uncertainty

Growing a team during uncertain economic times remains the main concern for CEOs this year. Leaders face a trifecta of challenges: a slowing economy, decreased profitability, and a tight labor market. Building a team that’s agile and resilient can future-proof the business. But where to start?

One way hiring managers are widening their talent pool is by leveraging a skill-based hiring model. By hiring for the right skill, companies can build a hyper-focused and more flexible workforce.

Another approach companies are exploring is on-demand talent acquisition platforms. This hiring model enables companies to build agile and flexible teams on demand— helping them pivot and innovate at a much faster pace than with traditional talent acquisition models.

Beyond filling an immediate need, businesses can upskill their workforce with the help of independent talent. Likewise, they can layer this hiring model on top of their existing talent strategy to build an agile operating model where talent can be deployed quickly to the highest priority work — ensuring strategic work gets done on time.

4. Developing More Flexible, Agile, and Adaptable Supply Chains

Supply chain issues will remain a hot-button area for businesses across industries for the foreseeable future. We’ve touched on this throughout this blog, as trends, like most things, are interconnected and influence and impact one another.

As businesses strive to optimize supply chain operations to satisfy consumer demand, they are using all the tools at their disposal. That means investing in data to facilitate the acquisition and implementation of automation, AI, and machine learning technologies to conduct M&As in adjacent sectors to remove barriers to resources.

To truly move beyond a reactive state, leaders will need to start focusing on producing the next disruption rather than waiting for it. As a result, companies will be relying more heavily on data and market research to compete effectively, not just with adjacent businesses, but with uncontrollable factors such as climate change as well.

This is especially true at a time when visibility, tracing, and sustainability are becoming central themes for supply chain leaders. As a result, ESG projects, although not a top priority at the start of the year, will continue to increase in the future.

5. Continued Acceleration of Digitization

Digitization has been an ongoing trend, but the pandemic put it into overdrive. Companies that did not have technology as a priority had to quickly pivot and reevaluate their stance on the tech and tools they use.

Today, the implementation of technology has permeated the entire business ecosystem. Companies are increasingly leaning into AI and machine learning to optimize supply chains, increase productivity, improve customer experiences, and enhance cybersecurity.

Business leaders show no signs of slowing down either. Global spending on technology is expected to rise by 2.4% this year. Despite an economic slowdown and cost-cutting efforts, companies remain firm in their commitment to digital initiatives by increasing their investments.

However, productivity and efficiency aren’t the only reasons behind the demand. Businesses are also analyzing how AI and machine learning can be used as a value driver rather than a cost factor.

John-David Lovelock, Gartner’s research vice president, says that IT spending remains recession-proof. He further states, “while inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown.”

It’s All about Staying Ahead of the Trends and Capturing Future Value Today

Corporate strategists today are dealing with multiple unknowns and must be able to pivot at a moment’s notice. Besides continuously developing holistic strategies that maximize the benefits of businesses’ investments and initiatives, they’re also expected to accomplish more with less.

In 2018, the average corporate strategy team consisted of five members. But with the shifts in today’s labor market, it’s likely that the sizes of these teams have either remained or changed, given the increased demand for this core functional skill.

One way to navigate the trends shaping corporate strategy’s future is to lean on independent experts to add capacity and horsepower to your teams. Adding expertise to your strategies can enhance the effectiveness of your projects while fast-tracking new projects and initiatives.

Want a look at how companies are using on-demand talent acquisition to power their corporate strategy teams? Read this blog on four ways companies are leveraging independent corporate strategy teams to learn how.

Source graphite.com

The success of an organization depends on its strategy. The higher-level strategic planning and the ability of the company to implement its strategy determine how well the organization performs and remains successful in the long run in today’s fast-paced and competitive business environment. Strategy implementation is crucial because you must execute a strategy well to achieve your company’s objectives and goals, and you will miss opportunities and lose revenue.

In contrast, if you can execute your strategy well, your company can gain a significant competitive advantage. It will allow you to achieve your goals and remain ahead of the competition for a long time. As a result, companies are increasingly looking for ways to improve their strategic implementation and enhance their ability to execute their plans better.

Rising Usage of AI

Artificial Intelligence (AI) is among those emerging technologies that have gained focus in the business world in recent years. AI has gradually chipped away the inefficiencies in various aspects of operations and enhanced customer experience. Companies have been exploring and identifying numerous ways to use AI to drive growth and improve business outcomes.

One area where the use of AI is gaining momentum is strategy implementation. AI technologies enable companies to understand and leverage data better, gain valuable insights and optimize their strategy implementation. It leads to better decision-making and resource allocation and brings improved business outcomes. In this article, we will explore how companies use AI for strategy implementation to gain a competitive edge.

Manage the top line: your strategy, your people, and your products, and the bottom line will follow
Bill Gates

What is a Strategy?

Strategy is a blueprint and a high-level plan created by the management for achieving the long-term goals of an organization.

A business strategy is based on a detailed assessment of the following.

The current situation in the company
Strengths and weaknesses of the organization
New opportunities and threats
Current market conditions
Developments in the industry you operate in
Competitors and competing products
Risks that you may need to manage

Creating a strategy involves making decisions based on these factors, creating a roadmap for operations, and formulating an action plan to achieve the objectives. The business strategy governs the goals, targets, activities, outcomes, and resource allocation for various processes and operations of the organization, such as the following.

Market segmentation
Product development
Product positioning
Pricing
Sales
Marketing
And more

Strategy implementation involves creating ownership of the business strategy amongst employees, achieving strategic alignment across the organization, and fine-tuning processes and systems to deliver desired outcomes per the strategic plan.

When executed right, a business strategy will create desired outcomes at all levels, which will snowball into organizational growth, success, and fulfillment of the organizational objectives. It creates a sustainable, long-term competitive advantage for the organization.

How does AI help with strategy implementation?

Artificial Intelligence (AI) is a replication or a simulation of intelligence required to perform human tasks that involve perception and cognition. AI-powered machines perform tasks that require human intelligence, such as data analysis, visual perception, image processing, facial recognition, speech recognition, decision-making, translation, etc. These AI systems are constantly learning. They can update themselves, improve functionality, and adapt to new situations and environments.

In the business scenario, integrating AI in various aspects of the business enhances your ability to execute your strategy more effectively. Following are some of the ways AI helps in executing business strategy.

1. Automation of repetitive tasks

AI helps companies automate repetitive tasks, such as inventory management, which humans previously carried out thoroughly. For instance, AI helps in warehouse management and automation of procurement by managing purchase orders, maintaining the vendor database, sending purchase orders to concerned vendors at the right time, etc. Through this automation, the warehouse management system ensures the availability of crucial components, materials, and products just in time when you require them. It helps companies manage demand and supply better. AI is used similarly in various operations to reduce labor costs and increase productivity and efficiency.

2. Data analytics and insights

AI helps companies gain comprehensive insights by analyzing vast amounts of data to identify patterns and trends. For instance, AI can constantly track the number of leads generated through every marketing channel and compare them with the amount you spend in those channels for your marketing efforts. It helps you allocate resources better for different marketing efforts and get more out of reduced spending.

3. Predictive modelling

AI can help businesses build predictive models to anticipate future outcomes and trends. For example, you can predict product demand based on patterns identified from historical sales data and customer behavior. For instance, if the holiday season is nearing, AI can help you analyze and predict the surge of demand and make critical business decisions, such as setting higher production targets, running extra shifts, having a specific amount of products in stock, adjusting pricing, designing marketing campaigns and offers to attract customers, etc.

4. Personalization

AI helps companies personalize the customer experience. For instance, it provides product suggestions based on customer preferences. It enables personalization in other areas, such as emailers that can be customized and personalized with content based on certain predefined conditions. For instance, companies have abandoned cart reminders automatically sent to customers who add products to the cart but leave the site/app before making a purchase. Through these personalizations, AI makes it possible to cater to every customer better based on their preferences and improve customer experience drastically. It also helps to increase conversion and retain customers better.

5. Automated decision-making

AI can automate decision-making processes. For example, chatbots can cancel orders and initiate refunds upon request. In a variable pricing scenario, AI helps to determine the pricing based on predefined rules and criteria. It helps reduce human errors and make data-driven decisions to achieve success consistently.

5. Automated decision-making

6. Risk management

AI analyzes data and identifies business risks to help companies prepare for these eventualities and avert risks. For instance, AI can analyze patterns and save insurance companies from false claims by assessing historical data and finding the correlation between connected events and a spike in claims, such as the connection between the loss/damage of smartphones and the launch of next-generation models. The use of AI in risk management is gaining popularity in recent times.

A Step-by-Step Guide to Integrating AI into Your Strategic Execution

AI needs to be set up and customized to your use cases. Before you can start integrating AI, you need the following.

A clear understanding of the business goals and objectives
In-depth understanding of the data and systems required to support the strategy
Human resources and infrastructure to support the development and deployment of AI models and systems

You can start integrating AI and enhance your strategy execution by following these steps.

1. Encourage the adoption of data analysis

While AI can provide insights that can lead to business-critical decision-making, the stakeholders and decision-makers need to realize the importance of data. They should build a deeper understanding of how to decode insights and rationalize decisions and actions based on that. Otherwise, your team won’t be able to leverage the data for the organization’s benefit. So it is essential to train your workforce, management, and leadership team on data analytics and ensure they have the analytical skills to drive business outcomes. A consistent understanding and interpretation of insights go a long way in driving sustained change.

2. Identify your use cases

While implementing AI Can bring efficiencies and ensure better strategy implementation, it also costs a lot. So it is essential to study how your competitors and the leading companies outside the industry implement their strategy using AI. You can draw inspiration from them, but identify your unique use cases and analyze the feasibility of integrating AI. It is crucial to discuss with all the stakeholders, including concerned teams, and analyze if the benefits outweigh the costs.

3. Select the areas of opportunity

After you can identify the use cases, you have to select the areas in your business operations that will benefit the most from AI integration and get a quick return on investment. You can forecast this using various metrics to analyze the potential impact of AI implementation in these areas.

4. Audit your capabilities

You have to thoroughly analyze and identify the human resource and technology requirements to implement artificial intelligence in the identified areas. You need to identify the gaps in existing technology and the lack of skills required to leverage AI. Based on this analysis, you have to organize training and workshops for concerned employees and seek the expertise of consultants and other third-party associates, to leave no stone unturned regarding AI implementation.

5. Narrow down your choices

While you can choose broad areas of business where artificial intelligence makes sense for your operations, you have to narrow your focus further. For instance, if you want to implement AI in marketing, you can do it in many ways. You can use AI to automatically segment customers based on their preferences and behavior on your e-commerce website and create categories in the mailing list accordingly; you can automate sending of emailers based on certain pre-determined conditions; you can use AI to track the performance of marketing campaigns and optimize marketing efforts; you can use AI to provide personalized experiences by sending personalized offers to customers and creating loyalty programs optimized to increase conversion rates. You can narrow your focus to specific operations and processes in your broader use cases by identifying inefficiencies in operations, finding suitable AI solutions to address them, and doing a cost-benefit analysis.

6. Implement a pilot project on a small scale

When integrating AI for strategy implementation, you can first test it on a smaller scale. You need to gather data, develop customized algorithms and release it on a smaller scale in a controlled test setup involving experts in artificial intelligence, data analytics, and the concerned business processes. It helps to measure the impact, foresee the risks and tweak your AI models before scaling them up.

7. Establish a baseline understanding

Document your learnings and establish a baseline of understanding. Compare the results with the forecasts and see whether your small-scale pilot project met its objectives. It helps to build on your experience and knowledge of AI and fathom its impact on your strategy implementation.

8. Scale your AI integration

Once you verify the effectiveness of your AI on a small scale, you can gradually scale AI deployment. As you scale up the AI integration, you may need to continuously tweak the algorithms and business processes. Ideally, the impact of AI on your strategy implementation will show up in your metrics and help build confidence across the organization. It will convince the stakeholders to experiment with AI integration in other aspects of your business and broaden the influence of AI in your strategy implementation.

9. Complete the AI integration

Integrating AI is one thing, but gaining a competitive advantage in the long run and achieving long-term growth by improving its lifecycle, testing, and deployment is another.

You can achieve these by building a modern data platform that enables the streamlined collection, storage, and structuring of data so that the accuracy of chosen metrics and the quality of insights and reporting remain consistent. You can structure your organization in such a way that the development of data platforms and governance based on the priorities of your business power your goals and decisions. You should also build processes and expand the technologies required to manage data elements from various parties.

10. Build on the implementation and find room for improvements

AI models and processes require continuous improvements to keep in sync with the rapid changes in the business environment and quickly respond to changes in the strategy. It would be best to listen to feedback and proactively address the lack of AI adoption or resistance to AI at every level of the organization.

Frequently Asked Questions

1. What is the role of AI in business strategy?

AI helps companies improve strategy execution by analyzing massive data, offering valuable insights, influencing business-critical decisions, and optimizing operations to achieve a sustained competitive advantage.

1. What are the 4 AI business strategies?

AI strategies can be classified into

(a) Effectiveness strategy – to make operations more effective and impactful

(b) Expert strategy – for the automation of decision-making

(d) Innovation strategy – for promoting creativity and innovation

1. What is an example of how businesses use AI?

An example of AI usage by e-commerce businesses is the automation of sending personalized abandoned cart emailers.

Conclusion

AI is transforming the way businesses approach strategy. By leveraging AI to analyze data, automate operations, and personalize the customer experience, businesses can gain a competitive advantage in today’s fast-paced business environment.

Source: profit.co

Strategic development is a joint board-management responsibility. It is the key stage of the strategy process where the board and senior management team work together to develop the organisation’s strategy. At this stage, the attention is on the top-level strategy; the overall corporate strategy and, depending on the size of the organisation, the business strategies of the major divisions.

It is now common for the board and management team go off-site for a board retreat to discuss the current strategy in detail. If the strategy is working and is well understood by both directors and managers, this stage might involve nothing more than an annual review of progress, discussion of changes in the strategic landscape and a reaffirmation of the core strategies. On the other hand, if current results are poor or if major changes are forecast for the external environment, a far more searching review and re-evaluation of strategy might be required. This may take a longer than one retreat and may require a number of follow-up workshops.

The advantage of the retreat is that by isolating the board from regular distractions and spending a significant time delving into the organisation’s strategy, the quality of any decisions is likely to be enhanced. A strategy retreat also provides an ideal opportunity for team building and encourages active participation from all board members. It is also a major opportunity for discussion and development of shared views about strategy both among directors and between the board and senior management.

The decision to hold a retreat is an important one, because it represents a significant time commitment for board members and in many cases management. Retreats commonly occur over one or two days, generally on a weekend. If directors are to spend this much time dedicated to strategic issues, it is important to plan the weekend to ensure that optimal results are obtained.

The importance of planning

But strategy retreats do not always live up to their potential and can fail to meet the board’s objectives without proper planning and commitment from both the board and management. From personal experience, boards that are not engaged in the planning and committed to the process can very easily derail a board retreat. For example, it is not productive to have three directors delay the start of the afternoon session by an hour on the first day of a retreat because they were unhappy with the lunch menu approved by the CEO without board input and demanded alternate meals be prepared for them.

As such, planning should include:

Date – it should be in the board’s calendar at the earliest opportunity, as having all directors attend can be vital to the acceptance of the decisions made during the retreat;
Objective(s) – this will depend on whether it is it an annual strategy retreat to develop a new strategic plan, review the current strategic plan or in response to a major change in the organisation’s environment, e.g. funding cuts, loss of a major customer;
Duration – this will depend on the objectives;
Budget for the retreat – this will influence many of the other decisions;
Responsibility – allocate responsibilities, e.g. organising bookings, preparing discussion papers or presentations;
Attendees – will it be the board only or the board and management? Are spouses invited?
Facilitator – an external facilitator can often help to keep the agenda on track; ensure all attendees are given a chance to participate; and deal constructively with any conflict that arises without becoming emotionally involved;
Location:
- Meeting facilities – size of the room (it should allow participants to spread out for group work), whiteboards, projector, internet access, printing, photocopying, etc.;
- Accommodation;
- Catering; and
- Recreational activities;
Data – what input/information is required from directors and managers prior to the meeting?

As noted above, I have witnessed a number of board retreats go awry for a variety of reasons. Too much to drink at the previous evening’s dinner or during lunch can see directors or senior managers falling asleep or obviously intoxicated during a session. Lower level managers may be reluctant or not interested in participating because they have not had previous exposure to the board and have no idea what they are doing there. Directors being rude to the managers present or each other. Just as in regular board meetings, clear ground rules about what is expected for the retreat in terms of behaviour and participation is a good start, so too is gaining buy-in from the attendees to the outcomes of the retreat so that it adds value to the organisation rather than draining its resources, which are often scarce in the case of not-for-profits.

To ensure that optimal results are obtained. Board retreats are most effective if the following steps are followed:

Before the retreat – management should collate and develop materials such as competitor analyses for discussion well in advance of the retreat, while both directors and managers should do pre-work (see below for the benefits of pre-work).
Conduct targeted analysis prior to the workshop, and then develop a clear agenda focused on achieving specific outcomes and resolutions in key decision areas.
During the retreat – management presentations at the retreat should be concise and factual. The objective of the retreat is to stimulate discussion of strategic issues, not to spend your time listening to lengthy presentations by managers or invited guest presenters. A note taker should be appointed to capture agreement succinctly.
After the retreat – management will incorporate the decisions made at the retreat into strategic options, detailed objectives and strategies for board review and approval. This will then be followed by the annual implementation plan and budget.

For those organisations without the time or resources to conduct a retreat, there are other options. For example, a review of the board’s strategic plan can be included as part of the yearly board agenda, and has the added advantage of regularly concentrating the board on strategic issues. Another option for the board is to hold a number of special board meetings to review particular strategic issues. As part of this process, the board may wish to consider a one-day facilitated session with senior management to consolidate previous board discussions and decisions to guide management.

The benefits of pre-work

The benefits of pre-work include:

Sets the ‘climate for strategic change’ within the organisation;
Establishes a ‘strategy mindset’ for participants prior to attending the workshop. They are now ‘ready to learn, listen, contribute and participate’ – after all, they are the ones who have to make it work;
Frees up the retreat for discussion;
Saves time – reduces the threat of ‘time-pressure’ facilitation;
Enables facilitators to present the ‘group view’ or ‘invisible group consensus’, rather than their own views;
Participants are more likely to respond openly in pre-work than in front of their peers;
Identifies topics for debate.

Compiling a databook

To get the most from a strategy retreat, the board must ensure there is a real understanding and agreement as to the major issues facing the organisation that is based on facts. As noted above, a solid understanding of the organisation’s strategic landscape comes from gathering relevant data and allowing directors and senior managers to consider and discuss this data using a sound framework. I always recommend compiling a databook that includes the results of the survey (collated and themed) and the information developed by management. For example:

External data
- Industry trends
- Competitor analysis
- Market trends
Internal data
- Current strategy and goals
- Financial
- Operational
- Markets

The data book will be used in conjunction with this workbook to guide the discussion throughout the retreat. The databook should be circulated to directors at least seven days before the retreat to give them time to prepare.

Incorporating risk into the strategy retreat

Risk and strategy are totally interrelated. Consequently, any discussion or decision by the board concerning strategy also involves a discussion of risk. The challenge for boards and management teams is to integrate these two essential roles of the board. For example, considerations of alternative strategies should use the organisations approved risk approach as one technique for analysing these strategy alternatives. Workshops or retreats devoted to risk can be conducted in tandem with a strategy retreat, but at the very least the major strategic risks to the organisation should be considered.

Conclusion

Holding a successful strategy retreat can be a key factor in the achievement of an organisation’s strategic objectives. As discussed, the preparation for the retreat will be the difference between a retreat that achieves little in the way of genuine strategic planning and one that provides a solid basis for management to formulate the detailed strategic, business and implementation plans, and budgets that the board will be asked to approve.

Source: effectivegovernance.com.au

As the year 2023 steadily draws to a close, it’s an opportune moment to pause and reflect. For businesses, this prompts a critical question: how successful have we been in executing our strategic plans? In the fast-paced realm of strategic planning and execution, success transcends lofty visions and boundless ambition. It hinges on setting a clear course, continuously monitoring progress, and making data-driven decisions.

Vital to this journey are Key Performance Indicators (KPIs) and metrics, which bridge the gap between your strategic objectives and the path to achieve them.

In the following article, we will explore the essential elements of mastering KPIs for strategic success, offering you valuable insights to conclude this year on a high note and step into the next with even greater confidence.

Establishing Impactful KPIs within your Strategy:

When it comes to using KPIs in strategic planning, two extremes often emerge. Some plans lack metrics entirely, relying solely on immeasurable qualitative descriptions, while others become swamped with metrics, lacking a clear strategy for their effective use.

The key to success lies in striking a balance. At the pinnacle of your strategic plan, you’ll find overarching goals or lagging metrics, representing your ultimate destination—outcomes you can’t directly control but can improve over time with diligent effort. Supporting these lagging metrics are leading metrics, elements within your control that provide immediate insights and the power to drive change.

Imagine it as setting a New Year’s resolution to become healthier. You could trust your instincts or overwhelm yourself with countless health metrics. The optimal approach involves setting a clear lagging metric, such as losing 20 pounds, and pairing it with actively measurable leading metrics like exercise frequency, calorie intake, and sleep hours. An effective plan encompasses both elements, turning strategic planning into a journey where you monitor not only your destination but also the progress along the way.

Selecting the Appropriate Metrics and KPIs:

One common pitfall in metric selection is emphasizing leading indicators at the expense of lagging ones. While leading metrics are essential for immediate progress, an overabundance of them can lead to a tactical focus that misses the big picture.

Imagine diligently tracking your exercise routine to lose 20 pounds but neglecting your calorie intake. Similarly, focusing solely on driving website traffic without converting visitors into customers won’t fulfill your overarching goal of revenue generation.

To avoid these pitfalls, strive for clear alignment between leading and lagging metrics. If your chosen leading metrics don’t contribute to your overarching goals, you’re on the wrong track. Ineffective plans often blur the line between objectives and execution or get lost in activity-based metrics that don’t drive strategic success.

Recognizing these missteps and ensuring a strong correlation between selected metrics and strategic goals enhances your organization’s planning and execution processes.

Measure the Success of Your KPIs and Strategy:

In strategic planning, many organizations spend excessive time selecting metrics. It’s crucial not to get bogged down by this decision. What matters most is getting started and ensuring your chosen metrics serve one of three primary purposes: increasing, decreasing, or maintaining a specific value.

Begin with your current state and aim for incremental improvements. For instance, aim to improve your revenue by 10 percent. This provides a benchmark to adjust throughout the year.

Avoid overcomplicating the process; focus on setting realistic goals. We suggest a goal to achieve around 80 percent of your metrics. Aiming for an 80 percent success rate allows you to maintain momentum and refine your strategy. Reaching 100% may imply your goals weren’t demanding, while achieving just 20% could be discouraging, hinting at excessively difficult objectives.

When assessing the effectiveness of your plan, focus on completion of initiatives, KPI tracking, timeliness of updates, and project timelines. These aspects collectively contribute to measuring the success and effectiveness of your strategic plan.

Conclusion:

Remember, it’s not about finding the perfect metrics but about taking the first step, continuously improving, and making informed decisions on your strategic journey. With the wisdom shared by H. Pierson’s Strategy team, you’re well-equipped to master KPIs for your strategic success.

Author: H. Pierson Strategy Team

In today’s rapidly changing world, businesses face an ever-expanding range of risks that can disrupt operations, impact financial performance, and even threaten their very existence. While traditional risk management practices focus on known risks, it is crucial for organizations to proactively identify and manage emerging risks. These are risks that may not be well-understood or have not yet materialized but have the potential to significantly impact business objectives. In this article, we will delve into the realm of emerging risks, explore their characteristics, and provide practical strategies for identifying and managing these unknown threats.

Understanding Emerging Risks

Emerging risks are dynamic and multifaceted, constantly evolving as technology advances, social and regulatory landscapes shift, and new global challenges arise. These risks often stem from emerging trends, such as technological advancements, regulatory changes, geopolitical uncertainties, environmental shifts, or socio-cultural transformations. Identifying and understanding these risks requires organizations to be forward-thinking and adaptive.

Characteristics of Emerging Risks

Uncertainty: Emerging risks are characterized by a high degree of uncertainty, making it challenging to predict their exact nature, timing, and potential impact. For example, the rapid emergence of new technologies like artificial intelligence (AI) or blockchain introduces unknown risks that may disrupt industries or create unforeseen vulnerabilities.
Complexity: Emerging risks often exhibit complex interdependencies and systemic effects. They can transcend organizational boundaries, simultaneously affecting multiple sectors, industries, or geographic regions. An example of this is the interconnectedness of global supply chains, where a disruption in one region can have cascading effects worldwide.
Novelty: Emerging risks are often novel or unfamiliar, lacking historical data or established risk management frameworks. As a result, organizations must adopt a proactive and adaptive approach to identify and address these risks effectively.

Strategies for Identifying Emerging Risks

Horizon Scanning: Regularly scan the business environment for emerging trends, technological advancements, regulatory changes, and socio-cultural shifts that may have an impact on the organization. Engage in foresight exercises, monitor industry publications, attend conferences, and collaborate with external experts to stay abreast of the latest developments.
Scenario Planning: Develop and analyze plausible scenarios that explore potential emerging risks and their implications for the organization. These scenarios should consider a range of future possibilities, helping management anticipate and prepare for potential threats. By conducting scenario planning exercises, organizations can better understand the potential impacts of emerging risks and develop appropriate risk response strategies.
Stakeholder Engagement: Engage with internal and external stakeholders to gather diverse perspectives on emerging risks. Employees, customers, industry experts, regulators, and other relevant parties can provide valuable insights and identify risks that may not be evident from a single viewpoint. Encouraging a culture of open communication and collaboration can help foster a proactive risk management mindset within the organization.

Managing Emerging Risks

Risk Assessment and Prioritization: Conduct a comprehensive risk assessment to understand emerging risks’ potential impact and likelihood. This process involves evaluating the organization’s vulnerabilities, assessing the effectiveness of existing risk mitigation measures, and prioritizing emerging risks based on their severity and potential consequences.
Agility and Adaptability: Cultivate an organizational culture that embraces agility and adaptability. This includes fostering a mindset of continuous learning, encouraging experimentation, and empowering employees to identify and respond to emerging risks promptly. Agile organizations are better equipped to effectively adjust their strategies, operations, and risk management approaches to mitigate emerging risks.
Robust Risk Response Plans: Develop robust risk response plans to address emerging risks. These plans should include specific actions, responsibilities, and timelines for implementation. Depending on the nature of the risks, response strategies may involve enhancing organizational resilience, diversifying supply chains, investing in technological solutions, or creating contingency plans to ensure business continuity.

Conclusion

Organizations must proactively identify and manage emerging risks to safeguard their future as the business landscape becomes increasingly complex and interconnected. By understanding the characteristics of emerging risks and adopting effective strategies, businesses can enhance their risk management practices, strengthen resilience, and seize opportunities arising from uncertainty. Embracing a proactive approach and fostering a risk-aware culture will enable organizations to navigate the unknown and thrive in an ever-changing world.

References:

Global Risks Report 2023: World Economic Forum.
https://www.weforum.org/reports/the-global-risks-report-2023

“Managing Emerging Risks: A New Approach” – Deloitte.
https://www2.deloitte.com/us/en/insights/focus/risk-management/managing-emerging-risks.html

“Identifying and Managing Emerging Risks” – Harvard Business Review.
https://hbr.org/2018/05/identifying-and-managing-emerging-risks

“The Agile Risk Management Manifesto” – Risk Management Society (RIMS).
https://www.rims.org/resources/agile-risk-management-manifesto

Organizations are well served when they examine, embrace, and utilize what makes them unique in the perspective of the clients they serve during these most difficult times. A discriminating competence assessment is a common name for this type of study. Such an analysis identifies the collection of knowledge and tools that enables a business (or organization) to offer a certain value to a consumer.

A discriminating competence or core competence is a highly developed skill that enables a business to provide distinctive value to clients. It represents an organization’s collective learning, notably on how to coordinate various production skills and integrate various technology.

Understanding discriminating competencies enable organizations to invest in their competitive advantages and be distinct from the competition.
For government and nonprofit organizations, discriminating competence is essential for determining where programs and services can/should be delivered in an efficient, cost-effective way.

Organizations use Discriminating Competencies to:

Create positions and plans for competition that take advantage of organizational strengths.
Create new markets and penetrate developing ones swiftly
Improve knowledge and skill transfer between business units and functional units within the organization.
Increase the range of an organization’s innovation capacity to provide new goods and services
Improve branding and increase consumer loyalty
Choose where to put resources.

Amazon is a prime example. As they put it, Amazon wants to be “earth’s most customer-centric company.” In this case, we can see that Amazon’s main capabilities are focused on:

offering a first-rate customer experience through quick delivery based on their innovative infrastructure and logistics
excellent customer support
and easy access to a broad variety of goods at a cheaper price.

These capacities open doors to a variety of markets, make it difficult for rivals to copy them, and significantly increase the perceived value for customers. The fact that Amazon has been able to develop, use, and rearrange its discriminating competencies into long-lasting competitive advantages is a prime example of why the company is so well-positioned to grow its services and thrive in a quickly shifting external environment.

Maximizing Your Core Competency:

First, you need to identify where your organization has competence mastery. The following list of typical core competence areas includes:

Product Quality – superior to industry norms in terms of product or service quality.
Service levels that are far superior than industry norms.
Strong consumer focus resulting in a high level of customer closeness.
Brand reputation & image – built over several years of exceptional performance.
Special and distinctive technical abilities of one or more team members

Particular attention should be paid to the internal capabilities of the organization which customers recognize as its competitive advantage. The organization’s core competency becomes the center around which pertinent business prospects are selected and the organization’s strategic direction is established.

Discriminating competences have to be seen as dynamic components that change over time in response to the operational environment of the firm. You can turn a skill into a core skill and become “competitively different” in the process.

For a competency to be considered unique, it must be a quality that the customer appreciates and that competitors would like to have in their own business. A discriminating competency cannot be an essential quality to the organization’s operations (but not exceptional in any way) because it does not distinguish the organization from competitors.

An ability that is essential to an organization’s operations but is not remarkable in some manner should not be regarded as a core competency since it does not set the company apart from its rivals.

Amazon has undoubtedly embraced this justification. Perhaps it’s time to implement this practice if your company doesn’t already.

H. Pierson Strategy Consulting Team.

Open Banking refers to banks and other financial institutions opening up data for regulated providers to access, use, and share. Ensuring security for a data-sharing project such as open banking is paramount, and banks are effectively putting in place the infrastructure for their customers’ data to be shared more securely with third parties, with customer permission. That data sharing takes place only with customer authorization is important. Open banking wasn’t designed to allow banks to sell their customers’ data more easily.

The intention is quite the opposite — open banking was conceived to improve financial services for customers by opening up access to data that has historically been kept in-house; new companies and new products can enter the market and use this data in helpful, innovative ways.

So what does it all mean?

For financial service providers — At the top of the chain, open banking will allow financial service providers to significantly innovate their product offerings to businesses.
For businesses (large and small) — Those innovations made by financial service providers will mean more effective and efficient financial tools in your business — notably payments. This will mean more automation, freeing up more time, doing away with the headaches of manual tasks, and ultimately saving you money.
For customers — Open banking will mean better ways to spend, borrow, and invest.

Why is it important/relevant?

The promotion of Open Banking holds the promise of bringing about innovation in the banking industry. Fintechs typically take up positions that traditional banks cannot fill. Ensuring a good open banking system will mean greater efficiencies leading to better services and, ultimately, better customer experiences. The banks and the fintech create a network of data sharing, which could be used to create more robust customer profiles, and information, understand spending habits, and aid in better risk modeling, which in turn will help reduce risk, particularly for institutions providing credit facilities.

In addition, open banking will necessitate new technology to bolster existing banking systems and will, in turn, provide efficiencies and profits that will exceed the investment required for these technologies. It’s a WIN-WIN situation.

What Was the situation PRIOR to the regulation?

Open banking, particularly in Nigeria, has been largely unregulated. Fintechs have low regulatory barriers to entry and face hardly any oversight compared to traditional banks (no banking licenses required). As such, the fintech industry in Nigeria has been expanding at a significantly high rate over the past five years. Numerous apps are available for consumers; some have become household names: Quickteller, Paga, Carbon, Piggyvest, etc.

However, as with any industry that sees such rapid expansion, the risks posed and faced by this industry become more apparent. When it comes to Open Banking, two prominent issues need to be addressed.

The first issue is privacy. This refers to the privacy of customers’ banking information that the banks share with third-party financial service providers. By regulations, banks are not allowed to share customers’ banking information without their consent. As such, customers making use of third-party financial services providers are required to agree to the providers’ “Terms of Service,” in which the customer will agree to the provider being granted access to certain information about the customer from the banks. Once the customer agrees to these terms, the banks can then grant the provider access to the information through the API. This part is all fine and well and is standard practice. However, once the provider gains that information, no strong regulatory framework dictates what they can and can’t do with that information.

The second issue is regarding Security: The security of the customers’ information and the security of the banking systems. Due to the lack of a strong regulatory framework for the providers and Fintechs, the requirements for the protection and security of customers’ information is vague at best. While this could be considered an existential threat to the providers, which they would have to address prior to commencing business, there are no guarantees of security, monitoring, or oversight.

Also, with regards to security, the providers and APIs being employed create extra points of vulnerability to the banking system. Of course, customers’ information is at risk, but the customer account information and access to the accounts could also be compromised. In Nigeria, the recently alleged hacking for Flutterwave is a good case in point. It is alleged that hackers got into Flutterwaves systems and were able to move NGN 2.9bn to a number of different accounts. Flutterwave is a payment system provider, not a money deposit bank, so where did the NGN 2.9bn come from? From Flutterwave’s customers’ bank accounts. It is important to note that Flutterwave has publicly denied this alleged hacking, but this highlights what is potentially at risk here.

Why is CBN putting out guidance for it?

The CBN initially put out a circular for the regulatory framework for Open Banking in Nigeria in February 2021. This framework covered some critical issues regarding Data and Service Access Governance, Guiding Principles for API specifications, Risk Management guidelines, Customer Rights, Responsibility, and Redress mechanism.

In furtherance of the released framework, the CBN in March 2023 approved the operational guidelines for Open Banking in Nigeria. While the regulatory framework addressed the overarching issues regarding open banking in Nigeria, the operational guidelines seek to tackle the more granular operational issues faced by third-party financial providers.

In conjunction with the regulatory framework, the operational guidelines should alleviate the risk and security concerns surrounding opening banking in Nigeria.

What does the guidance mean for Nigerian markets?

These guidelines mean that financial institutions and fintech companies will have stricter requirements to adhere to in order to ensure the security of customers’ information and their systems.

However, there are a few points that are important to note.

The level of monitoring and oversight that the CBN will do on fintech companies is not certain. It is expected that it will not be at the level of oversight provided to the traditional banks, but whether it will be effective enough to fully rein in the fintech industry is yet to be seen.

While the CBN guidelines for open banking are directed more toward the fintech, the traditional banks have their roles to play in ensuring a viable open banking environment in Nigeria. Banks need to update their Third-party risk management frameworks and policies to incorporate Open Banking into their risk management considerations.

H. Pierson Advisory Team

Strategic thinking has long been viewed as essential for leaders of organizations. The ability to anticipate and plan for the future, to think critically and creatively about complex problems, and make effective decisions in the face of uncertainty and change, is more necessary now than ever. These capabilities will be dramatically augmented and magnified by artificial intelligence systems such as ChatGPT.

With the ability to process large amounts of data, identify patterns, and make predictions, AI will provide fresh insights and perspectives that were previously unavailable to company executives. This will enable them to make more informed and accurate decisions – and to anticipate and plan for the future more effectively. But it won’t replace the human element in strategic thinking, which remains critical.

Currently, AI can analyze vast data, spot trends, make forecasts, and help leaders identify and mitigate business risks. Soon, it will also simulate different scenarios and provide leaders with various options and recommendations for which path to take. In the near future, I expect to see symbiotic relationships between executives and AI systems, in which they both work together to enhance decision-making, problem-solving, and strategy development.

WHAT CAN CHATGPT DO?

ChatGPT has a plethora of use cases across the board including.

Solving mathematical questions
Producing proof of concepts
Writing long-form content like essays and reports

WHAT CHATGPT DOES NOT DO?

ChatGPT can be a great place to start, but it won’t solve all of your problems.

It cannot think or make decisions independently.
It does not distinguish or understand emotions and may respond inappropriately in certain situations.
ChatGPT cannot understand the entire context of a conversation; it can only generate responses based on the input it receives at any given time.
Even though ChatGPT has been trained on a large amount of data, it is still inaccurate and may occasionally respond with incorrect or illogical responses in certain situations.

BENEFITS OF CHATGPT

Businesses can speed up response times and enhance customer service by using ChatGPT, which can handle a high volume of interactions accurately and quickly. In fact, the more you interact, the more ChatGPT can pick up on your tone and develop into an AI assistant.

ChatGPT can increase productivity by freeing up staff time for more complex and imaginative tasks by automating routine tasks like responding to frequently asked questions and creating a transcript from your most recent presentation.

ChatGPT can handle a high volume of interactions at the same time, making it an ideal tool for small businesses to large corporations.

I WANT TO CREATE MY STRATEGY, SHOULD I USE CHATGPT?

No. This is because:

Chat GPT will find it difficult to develop a thorough understanding of your environment because markets, rivals, suppliers, and a host of other factors have vastly different values and contributions to the success of your company.
An expert must compile, analyze, prioritize, and act on the data discovered during an internal SWOT or PESTLE analysis of your strengths and weaknesses. This is something ChatGPT cannot do.
ChatGPT is unable to develop a corporate, functional, or departmental strategy for your business due to a lack of situational understanding.
It won’t help you think strategically about how to use the information mentioned above to generate a clear path forward.

The goal is to use the tool as a support mechanism that provides leaders with basic-level strategic advisory services. It should be noted that the answers given will not be specific to the person who asked the question, but it can be useful for brainstorming ideas.

H. Pierson Advisory Team

Authors: Dr. Awele Ohaegbu and John Eni-Edom

A retreat is a meeting unrestricted by traditional approaches and routines to create an atmosphere that addresses overarching concerns, discussions, strategic planning and creative thinking. In other words, it is used to handle issues otherwise limited during regular business meetings.
Retreats enable a shared understanding of organisational needs, opportunities, and issues. It promotes a sense of unity, effective teamwork and mutual respect. Proper planning is necessary to achieve productive retreats. It is noteworthy that one single retreat is most unlikely to solve, recognise or determine opportunities. However, it is strongly recommended that the main issue to be addressed at every retreat be clearly identified. Once an issue has been identified, a theme is chosen, with at least one and not more than two topics within the theme for concentration.

Rationale

There are different types of retreats, which include succession planning retreat, strategic planning retreat, organising retreat, board evaluation retreat, and orientation retreat. In the real sense, employees look forward to retreats either with excitement or disdain. At best, it is an opportunity for renewal, refocus, and team building. At worst, it is just another “dull” few days of many talks or extended meetings.
To make your retreats more effective, there is a need to work with a strategic planning group on the outcome from the beginning. The goal is not to achieve a specific outcome, but to develop a focus that will guide you toward achieving the retreat’s objective(s).

At H. Pierson, we deploy visual thinking tools to aid organisations reach a shared picture of the future quickly. Click on the button below to download strategic retreat brochure

NAVIGATION

Before the retreat, endeavor to provide participants with the necessary data and insights required to make informed decisions during the sessions. These can include financial performance and forecasts; market performance; external market data; information on your competition; and customer analysis.

Depending on the type of retreat, it may be imperative to do a strategic analysis of what it is now, where you want to get to, and how to get there effectively. Also, it could be to foster a collective vision, create a common framework, develop goals and objectives, deal with conflict sources, resolve entrenched challenges, and orient new staff.

DOS AND DON’TS

Draw positive energy from physical and psychological distance from the office. Relax the rules, suspend formal boundaries! Have some fun. Informality and humour are tools for creating engagement. Involve professional firms in planning your retreat. These firms will help plan, develop, and set realistic goals with expectations from a neutral point of view. If there is a need to get an expert facilitator within the identified theme, be sure that with a professional firm, the sole interest is in achieving a successful retreat.

Do not presume the retreat as a reward or make an individual’s problem a group issue. A retreat is neither meant to fulfill a clandestine agenda nor expressly improve morale. If the retreat organiser does not intend to act on the suggestions of participants, then it may turn out to be a poorly executed one, achieving little results in the long run.

1. Growth Strategy Will Take on a Whole New Meaning

2. Data and Market Research Will Play a Pivotal Role

3. Building a Resilient Workforce amid Economic Uncertainty

4. Developing More Flexible, Agile, and Adaptable Supply Chains

5. Continued Acceleration of Digitization

It’s All about Staying Ahead of the Trends and Capturing Future Value Today

Rising Usage of AI

What is a Strategy?

How does AI help with strategy implementation?

1. Automation of repetitive tasks

2. Data analytics and insights

3. Predictive modelling

4. Personalization

5. Automated decision-making

5. Automated decision-making

6. Risk management

A Step-by-Step Guide to Integrating AI into Your Strategic Execution

1. Encourage the adoption of data analysis

2. Identify your use cases

3. Select the areas of opportunity

4. Audit your capabilities

5. Narrow down your choices

6. Implement a pilot project on a small scale

7. Establish a baseline understanding

8. Scale your AI integration

9. Complete the AI integration

10. Build on the implementation and find room for improvements

Frequently Asked Questions

Conclusion

The importance of planning

The benefits of pre-work

Compiling a databook

Incorporating risk into the strategy retreat

Conclusion

Understanding Emerging Risks

Characteristics of Emerging Risks

Strategies for Identifying Emerging Risks

Managing Emerging Risks

Conclusion

Organizations use Discriminating Competencies to:

Maximizing Your Core Competency:

Why is it important/relevant?

What Was the situation PRIOR to the regulation?

Why is CBN putting out guidance for it?

What does the guidance mean for Nigerian markets?

WHAT CAN CHATGPT DO?

WHAT CHATGPT DOES NOT DO?

BENEFITS OF CHATGPT

I WANT TO CREATE MY STRATEGY, SHOULD I USE CHATGPT?

Rationale

NAVIGATION

DOS AND DON’TS

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