Business cycles become faster and competition is no longer defined by clear industry boundaries. This leads to fleeting competitive advantage and a need for constant reconfiguration, challenging leaders across industries. These were some of the key themes of Rita McGrath, the keynote speaker at Collaborate for Growth 2020.
Rita mentions six elements of what she calls The New Strategy Playbook. As business environments become fast-changing, resources need to be reconfigured dynamically and should not get stuck in places or projects where they no longer provide as much value as they could. This implies learning healthy disengagement; we need to be able to let go and withdraw resources efficiently from projects that are eroding or not really taking off.
“We have gone from a world where we assume that stability is the normal thing, to a world where we assume that change is the normal thing.”
The rapid changes and short-lived competitive advantage is challenging especially for leaders. You need to stay up to date with where your resources are now, what the market and customer needs look like, what the possible future scenarios are, and what opportunities they offer. Most importantly, you need to be able to make decisions fast and take in also uncomfortable information.
According to Rita, we are shifting from industries to arenas of competition. Even if customer needs still are quite predictable, the ways they can be satisfied are diverse. Your competitors may come from a completely different industry than you.
Inflection points are instances that change the basic assumptions of entire industries or arenas, and thus create a lot of turmoil in the market. These situations are demanding because there is a high rate of assumptions relative to real knowledge. You need to find out which assumptions are true as fast and as cost-efficiently as possible so that you can invest in the right things.
Rita also had a very interesting discussion with Risto Siilasmaa and Tapio Peltonen about entrepreneurial leadership. When constant renewal of competitive advantage is needed, entrepreneurial people are key to sustained success.
The primary quality of entrepreneurial leaders is accountability. Founder and owner entrepreneurs are always fully responsible for all the aspects of the business and its future. Other types of leaders need to deliberately assume this accountability. Another characteristic of entrepreneurial leaders is that they constantly look for new opportunities to deploy the company’s resources and capabilities, which is crucial for renewing your competitive advantage in dynamic business environments.
Watch Rita and Risto's full discussion about entrepreneurial leadership from the event recording.
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