A balanced portfolio of initiatives is the basis for avoiding irreversible strategic faults in economically uncertain times
The economic effects of the Corona crisis will accompany us for a very long time. The predicted recession is causing continuing uncertainty and shows that we have to prepare for long-term cuts. It therefore makes sense for companies to concentrate for the time being on the critical effects of the global initiative landscape on revenue, liquidity and costs. In this way, it is possible to keep the greatest risks under control and ensure viability.
In order to take the right decisions and measures quickly, they are simultaneously forced to increase the agility of the organization. Because one thing is clear: volatility and uncertainty will continue to be constant companions of the business world in the post-Corona period. Agility becomes a basic requirement for managing change - at best actively steering it.
Now, in times of crisis, there is a risk that agility will turn into operational hectic and opportunism while important strategic issues fade into the background. Under pressure, we optimize our existing business and run the risk of losing sight of future success potential.
Nothing distinguishes a powerful management from an incapable one as much as the art of balancing contradictory goals against each other ... (Peter F. Drucker)
Operational management naturally becomes more important in phases of crisis. The ongoing assessment of our initiative landscape and potential disruptions with a focus on operational performance is initially right and proper in times of crisis. However, combined with high market dynamics and uncertainty, the risk of making ad hoc decisions that weaken us strategically in the long term increases. In other words, the one-sided focus on key operating figures means that, although we may be able to save ourselves through the crisis, in the end we are weaker and sicker than before.
Operational data such as sales, profits, costs, liquidity can easily be strategically misleading due to their character. They are always a result or an anticipated result from the past. And they are also peppered with assumptions that are mostly based on our history.
If the operational data look bad, it is usually already too late for strategic actions. This lost time weighs twice as heavily in a crisis that requires agility. It can no longer be made up for in the event of major strategic mistakes. On the basis of solid operational data, we need to make the right decisions on the right initiatives quickly, especially now. At the same time, the decisions we have to make today must not spoil our future.
This is why we should always critically review our portfolio of initiatives. The operational financial perspective remains an important factor, but not the only one. In order to avoid strategic mistakes in the current phase, further perspectives must be adopted.
With these 5 perspectives, when evaluating your portfolio of initiatives, you ensure that you avoid one-sided optimization at the expense of your strategic future:
The realization of consciously balancing the broad initiative landscape in the company with regard to different perspectives is not new. We already meet this demand from Peter Drucker, Kaplan & Norton, Jim Collins and Fredmund Malik in many areas. However, the opinion that the crisis entitles us to take only one perspective consistently is dangerous. As important as financial benchmarks are, we must be aware that these are operational data.
Managing an organization by financial dimensions is a purely operational management that can lead to sacrificing one's own future viability to a profitable present. In difficult phases, we must be particularly sensitive and not be guided by panic and operational opportunism. A crisis opens the door to strategic mistakes that can endanger the long-term viability of the organization.
A balanced portfolio of initiatives is critical to success if we are interested in sustainability. For one simple reason: Due to the high level of complexity and increasing dynamics in the markets, we will no longer have the time after the crisis to correct strategic mistakes with reasonable effort.