Part One – Uncertainty is a natural part of the business cycle
As a board director, and strategy and innovation expert, I understand the complexity of managing strategy during times of uncertainty. In this article, I will outline some best practices for boards to effectively navigate and lead their organisations through periods of uncertainty.
Firstly, it is essential for boards to recognise that uncertainty is a natural part of the business cycle and to adopt a mindset of agility and resilience. This means being open to new ideas and approaches and having the ability to adapt and pivot as needed. One effective way for boards to manage strategy in times of uncertainty is through scenario planning. By creating multiple plausible futures and identifying the potential risks and opportunities that each scenario presents, boards can make more informed decisions and be better prepared to respond to changing circumstances.
Additionally, regularly reviewing and assessing the organisation’s strategic plan is crucial. This includes examining the company’s mission, vision, values, and long-term goals, as well as the strategies and tactics being employed to achieve them. It is important for boards to stay closely attuned to the changing market and industry landscape and to be willing to adjust the strategic plan as needed to reflect new realities.
Effective communication is also vital for managing strategy in times of uncertainty. Boards should ensure that they are regularly and openly communicating with management, employees, and other stakeholders about the organisation’s strategy and how it is being implemented. This helps to build trust and alignment and can also uncover valuable insights and ideas.
In times of uncertainty, it is also important for boards to stay focused on the long term. While it may be tempting to make short-term, reactive decisions in response to immediate challenges, it is important to keep the organisation’s long-term goals and values in mind. This may involve making difficult decisions that may not have immediate payoffs. However, they may be necessary for the organisation’s long-term success.
In addition to these general practices, there are also several strategies that boards can employ to manage strategy in specific types of uncertainty.
One common source of uncertainty is technological change. In this case, it is important for boards to stay up to date on the latest developments and trends in the industry and to consider how they may impact the organisation. This may involve investing in research and development, acquiring new technology or expertise, or making strategic partnerships or alliances with other organisations to access new capabilities and resources.
Economic uncertainty is another common challenge that boards must navigate. In these cases, it is important for boards to be proactive in managing financial risks and maximising financial resilience. This may involve diversifying the organisation’s revenue streams, strengthening cash reserves, and carefully managing expenses. It may also involve considering strategic acquisitions or divestitures to optimise the organisation’s portfolio.
Political and regulatory uncertainty can also have significant implications for an organisation’s strategy. In these cases, it is important for boards to stay informed about the political and regulatory environment and to consider how it may impact the organisation. This may involve engaging with policy makers and other stakeholders to advocate for the organisation’s interests or making strategic decisions to mitigate potential risks.
Finally, boards must also be prepared to manage strategy in times of crisis. This may involve developing contingency plans and crisis management protocols, as well as staying agile and adaptable in the face of rapidly changing circumstances. It is also important for boards to communicate transparently and consistently with all stakeholders.
In summary, managing strategy during times of uncertainty is a complex task. However, by embracing agility and resilience, utilising scenario planning, regularly reviewing and assessing the strategic plan, effective communication, staying focused on the long-term, and employing specific strategies to manage different types of uncertainty, boards can effectively navigate and lead their organisations through periods of uncertainty.
About: Gary Morgan is an experienced board director, chief executive, consultant and corporate advisor with deep strategy, innovation and scaleup experience in the health tech, aged care, agtech, information security and research sectors. Gary is a Fellow of the Governance Institute of Australia, a Member of the Griffith University Industry Advisory Board for the ICT School and has co-authored papers and reports that have been published in leading entrepreneurship and medical journals and presented at international conferences.