Is Your Business Ready? How Strategic Reinvention Beats Disruption

Forbes

2 days ago

As leaders, we are all facing an accelerating cascade of disruptions.
We had barely recovered from the pandemic when Russia's invasion of Ukraine plunged Europe back into war, further disrupting global supply chains in the process. At the same time, the emergence of generative AI is transforming whole industries and impacting virtually every aspect of your business. If all that was not enough to contend with, we now must deal with tariffs, trade wars, and the upending of the global rules-based order.
That is why the most urgent task for every company is what I call strategic reinvention.
Don't wait to become a victim of disruption – take control of your future by beginning the process ... More of strategic reinvention today so your company doesn't just survive change, but thrives by leading it.
According to PwC's latest annual survey of CEOs, 42 percent say their companies will not make it another 10 years if they continue on their current path – and that was before the current trade war began. PwC found that 63 percent of CEOs have tried to change course, but most of those efforts are insufficient to meet the challenges those companies face.
'Will these moves be enough to power reinvention? For many CEOs, the honest answer will be no,' PwC concluded. 'Barriers to reinvention include weak decision-making processes, low levels of resource reallocation from year to year, and a mismatch between the short expected tenure of many CEOs and powerful long-term forces, or megatrends, at work.'
I believe companies can overcome these deficiencies through a simple, four-phases strategic reinvention process.
It starts with radical clarity – taking a hard, unflinching look at your company's situation, both internally and externally, and the challenges and opportunities created by this current era of disruption. You need to identify the assumptions you are making and challenge each of those in a structured and deliberate manner. You also need to look at not only the macroeconomy, but other external forces and factors that are impacting your business, or which could impact your business in the future.
Once you have that clarity, you need to develop a strategic reinvention plan.
If you are a successful company, this will be an evolution of your current business strategy informed by the insights you gleaned from the first phase. If you are already struggling or facing an existential crisis, then a more radical reinvention may be in order.
In any event, this should be a collaborative, iterative process that includes your entire leadership team. Don't pay others to do this for you; developing and implementing a winning strategy is why you and your executive team get the big bucks. Don't outsource thinking to a high-priced consulting company that you know will turn that work over to a bunch of recent business school grads or dust off the same plan they developed for one of your competitors last year.
The next step is resiliency testing. That means stress-testing your strategic reinvention plan to ensure that it is strong enough and flexible enough to stand up to whatever tomorrow throws at you.
The best way to do this is by conducting a Pre-Mortem Analysis. This is a powerful technique developed by my friend and colleague Dr. Gary Klein that is designed to uncover the causes of failure so that you can modify your plan to prevent those from occurring or develop mitigating actions if they do. Other tools, such as my own Swan Dive method can help as well.
The final phase is unified execution. This not only means working together effectively as one team to implement your strategic reinvention plan but also communicating your plan simply and clearly so that every single man and woman in your organization understands it and knows where to put their shoulder to get the flywheel moving in the right direction.
Unified execution also means effectively managing the implementation of your new plan, and that requires transparency and accountability. The best way to create both is the Business Plan Review Process developed by my mentor, legendary CEO Alan Mulally. He used the BPR Process to save two of the largest, most iconic companies in the world from bankruptcy: Boeing and Ford. It will work for your company, too.
By working through these four simple phases together with your leadership team, you will gain a better understanding of where you stand as a company and how to navigate the current maelstrom to help ensure your future success in an increasingly volatile marketplace. This will enable you, as a leader, to move forward with confidence.
How does this work in practice?
Imagine a large multinational semiconductor corporation facing escalating trade wars and geopolitical tensions. Initially, the leadership team would assess how tariffs, sanctions, and shifting alliances affect their global operations and supply chains. Challenging existing assumptions, they might discover vulnerabilities in raw material sourcing and market dependencies. Next, they would collaboratively develop a strategic reinvention plan to diversify their supply chain, invest in regional manufacturing capabilities, and pivot product portfolios toward markets less exposed to geopolitical disruptions. They then apply resiliency testing, conducting a pre-mortem to anticipate potential failures like sudden sanctions or export controls, adjusting their strategy accordingly. Finally, the entire organization aligns through unified execution, clearly communicating the new strategy to all employees and adopting a transparent management process such as the weekly BPR to maintain agility and swiftly respond to emerging geopolitical shifts.
This proactive, internally driven approach positions the corporation not merely to survive disruptions but to thrive amidst uncertainty.
'If CEOs need further encouragement to double down on reinvention, they should note that we see a strong association in the data between the number of reinvention actions companies have taken and the profit margins they achieve,' PwC noted in its annual report.
This reveals a powerful truth that highest-performing companies already know: Strategic reinvention is the secret to long-term success, even in more stable operating environments. The best businesses are the ones that disrupt themselves before they are disrupted.
I witnessed a great example of this back in 2004 when Toyota Motor Corp. Chairman Fujio Cho delivered one of the most amazing keynotes I have ever witnessed at the global automobile industry's annual confab in Traverse City, Michigan.
This was hostile territory for Toyota. The auditorium was packed with executives from all the world's automakers, but it was dominated by the three home teams: General Motors, Ford, and Chrysler. Many of them scowled at Cho or rolled their eyes as he went through a detailed presentation showing how Toyota was meeting or exceeding its strategic targets for every market in the world.
When he was finished, Cho took off his glasses, folded them, looked out over the room and said this was why Toyota needed to change its strategy.
'Any company not willing to take the risk of reinventing itself is doomed,' he said. 'The world today is changing much too fast.'
Four years later, Toyota passed GM to become the largest automaker in the world. By the end of 2021, it was number one in the United States as well.
Like Toyota's Cho, the best leaders in the world know that change is the only constant in the world – and that change requires strategic disruption. This is true in business, and it is true in government and the military as well. Those still fighting the last war always lose.
So, don't wait to become a victim of disruption – take control of your future by beginning the process of strategic reinvention today so your company doesn't just survive change, but thrives by leading it.