close
close

Which school of strategy works best today?

Which school of strategy works best today?

We once lived in a relatively predictable world. Customers were loyal to the brand, employees worked for the same company, and technology evolved at a manageable pace. Companies can rely on stable, long-term models by treating change as a rare event—a project with a clear beginning and end, often culminating in a proprietary transformation initiative or competitive strategy.

Fast forward to today, the competitive landscape is completely different. According to Accenture’s 2024 Momentum of Change Index, the pace of change affecting business has accelerated. by 183% since 2019With growth of 33% in the last year alone. This accelerated pace requires companies to move from periodic change projects to a continuous process of reinvention.

Our Reinvention Academy data supports this shift. Every two years, we conduct a rate of change study with our clients and community. In 2018, a survey of more than 2,000 managers found that 47% believed they needed to reinvent their business every three years or less to remain competitive.. By 2020, in the midst of a pandemic, that number jumped to 60%.

In 2022, one in five organizations globally were updating themselves every 12 months or less—faster than the normal budget cycle. Our data for 2024 is still coming in, but early results suggest that 22.5% of organizations are now pivoting annually or faster, the fastest rate we’ve ever recorded.. Of these efforts, nearly 45% are radical changes, compared with 33.4% for intermediate and 21.7% for incremental changes.

In short, we have entered an era where constant turbulence requires constant rethinking.

But what does this mean for our strategy?

As planning for 2025 is in full swing and most organizations are finalizing goals and approving budgets, what tools and approaches should we use?

What’s working today?

“There are two people, and only two, whose ideas should be taught to every MBA in the world: Michael Porter and Henry Mintzberg,” says McGill Desautels faculty professor Carl Moore. “Both have influenced the study of strategy. Porter’s work emphasizes a deliberate strategic approach, while Mintzberg advocates an emergent strategy. Both views are still widely taught: for example, Porter’s Three Broad Strategies and the Five Forces Model were covered in a strategy course at McGill just two weeks ago.”

But in a world of constant upheaval which school of strategy is more useful today?

What is a sound strategy?

Deliberate strategy, most widely advocated by Dr. Michael Porter of Harvard University, emphasizes careful planning before taking action. It is based on the idea that the most important decisions are made before a single step is taken. Typically these decisions are made at the executive level, often away from the day-to-day realities of the organization.

Once these decisions are made, implementation becomes a separate process of pure execution—no adjustments are allowed. For decades, this approach has worked well, providing a clear roadmap for stability and growth in a predictable environment.

But the current situation is far from stable. The rapid pace of change makes it difficult for companies to follow a set plan without constantly encountering new obstacles that require rapid adaptation.

Emergent Strategy: Designed for a World of Constant Change?

The emergent strategy, led by Dr. Henry Mintzberg of McGill University, takes a very different approach. Instead of planning each step in advance, the emphasis is on trying, learning and adapting along the way. Here, strategy emerges over time as plans encounter and adapt to ever-changing reality.

With an emergent strategy, the most important decisions are made throughout the process and are often based on the first set of actions taken and feedback received. Instead of viewing strategy as a rigid plan, emergent strategy creates a flexible process that allows you to constantly invent something new.

Deliberate or Emergency Strategy: Which One Works Best Today?

In his 2007 book Black swanNassim Nicholas Taleb introduced the concept of a “black swan” – a rare, unpredictable event that has enormous consequences. Decades ago, black swans were an anomaly.

Today, one disruption follows another, making these events seem almost routine. In a world where all swans now appear blackThe rapid pace of change has fundamentally changed our approach to strategy.

What once worked as a thoughtful, step-by-step approach may not be enough. Companies cannot afford to set a fixed course and hope that the environment will remain stable. Instead, a new strategy that embraces the unexpected and uses real-time information has become essential.

The deliberate school of strategy has served us well in a low-volatility world, but today’s environment requires adaptability. As products, business models and markets evolve at unprecedented rates, companies must be agile, constantly adjusting strategies to meet new challenges.

Real examples of emergency strategy

1. Amazon – Amazon is constantly reinventing itself. Starting as an online bookstore, it has grown into a technology and retail company adapting its strategy to changing market demands. Amazon’s willingness to experiment and pivot in response to real-time data is an example of a new grand strategy.

2. Netflix Netflix’s journey from DVD rental service to streaming giant to production powerhouse shows how a new approach is helping companies stay relevant. Netflix adapts to changing consumer demands and technological advancements, reinventing itself time and time again to fit the changing landscape.

3. Unilever’s flexible approach – At Unilever, teams test new products in the market, collect feedback and make adjustments as needed. This cycle of rapid experimentation allows Unilever to innovate and respond quickly to consumer preferences, using a new strategy to achieve sustainable growth.

How to implement an emergency strategy in your business

If you’re ready to take an emergent approach, here are some starting points to explore:

1. Develop trend observation and scenario planning skills.

Build a team that can spot trends and disruptions before they reach your doorstep. By developing trend monitoring and scenario planning skills in your organization, you can proactively identify and respond flexibly to market changes. This proactive approach keeps your strategy dynamic and ready for rapid change.

2. Think “experiments” rather than “final solutions”

One of the biggest obstacles in today’s fast-paced environment is the fear of making the wrong decision. People can spend endless amounts of time thinking and calculating, hoping to find the “perfect” solution. But in a world that is constantly changing, waiting for certainty can mean missing out entirely. By changing the wording to “pilot projects” and “experiments” instead of “final solutions”, you will eliminate the need to be perfect. This shift in thinking encourages action, allowing your team to test ideas, learn quickly, and make changes when necessary without fear of costly mistakes.

3. Use the latest science to increase your planning and budgeting flexibility

Most planning tools were developed in the 20th century to suit a slow-changing, predictable and low-volatility business environment. But in recent years, new tools and approaches have emerged that are specifically designed for a high-volatility world. These include setting goals in ranges rather than fixed goals, and using shorter strategic sprints to adapt as conditions change. Learn which 21st century strategies work for your organization instead of getting stuck in an outdated 20th century toolkit.

The future of strategy is here

Gone are the days of rigid long-term planning. As we navigate an era of constant change, adopting new strategic thinking may be the key to staying competitive. By understanding when to employ thoughtful planning and when to pivot through emergent learning, companies can build the resilience needed to thrive in an unpredictable world.

In the end, the best approach may not be choosing one strategy over another, but learning when to use each. By understanding both schools of thought and adapting as needed, organizations can create a strategic framework that can weather any storm.