Wednesday, March 23, 2016

Adapt and Envision Your Strategy (While You Can).

The article “Your Strategy Needs a Strategy” resonated particularly well with me. I appreciated the detail it went into regard the different main types of strategies that commonly emerge in industry.

The four main types presented were classical, adaptive, shaping, and visionary. Classical strategy involves longer time frames and traditional year over year plans. It is susceptible to rapid changes in markets or competitive conditions. Adaptive strategy involves incorporating more flexibility than Classical strategy and can vary from cycles of less than a year to continual strategy revisions. Shaping strategy involves influencing the competitive environment itself, where the company is no longer a passive factor, but it becomes an active agent that can change things for the better. Shaping is similar to Adaptive but it focuses both outward and inward on a short term cycle. The Visionary strategy is the converse to the Classical strategy. It is primarily market changing in focus and does so with a long term plan in mind.

One particularly interesting was Zara, the Spanish retailer that using a highly adaptive strategy to adjust to continually changing consumer tastes. They have established a flexible supply chain that integrates their design to store process in a speedy manner. They will prototype and experiment with trends and see what sells without making large investments of time and money.

Zara is in the clothing industry which is well suited for a flexible fast supply chain. The products are low investment and there are many methods for creating on-demand short run products. They can order a common cloth in bulk and create many designs from the same source. Flexible CNC technology can free them of patterns and tooling. The setup of Zara’s business allows them to adopt this strategy, but many companies cannot be as flexible. Most industries rely on more definite and process heavy materials to build their products. The high cost of implementing designs means higher risk and upfront research, design and investment.

One industry particularly at the mercy of high upfront costs is the AV mount industry. AV mount companies are at the mercy of technology that their product supports, but also trapped within a high investment structural materials supply chain. A combination strategy may work in the near term; combining a Classical strategy for mature sustaining product lines, and an Adaptive strategy for newer products. At some point however, technology will shift. Before this point, if someone in the company does not plot a Visionary strategy, the shift may leave the company without a market.

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