Strategic renewal - a new capability-based approach for defining strategic must-wins and achieving long-term commercial success.
Strategic renewal is and will be vital for organisations to adapt to the changing circumstances and stay competitive. The strategy process must therefore move from a traditional two-step strategy definition and implementation model towards a continuous strategising process strengthening the capabilities that differentiate the organisation.
Throughout the years, businesses have used the same tools to understand markets, develop strategies and set KPIs. We suggest that strategic renewal requires a new approach in the radically changing technology and purpose-driven landscape.
A capability-based approach enables businesses to predict and create opportunities, effectively manage resources and develop value-adding offerings that outperform competitors also in the future.
These capabilities depict systems, processes and future competencies that should be developed and managed to reach a set purposeful vision of the company.
Defining strategic capabilities and competencies
Strategic capabilities represent the ways that people and resources are brought together. They consist of tangible assets, such as financial resources or production means, and more intangible elements, such as processes, networks, brand or culture.
Strategic competencies combine related skills, knowledge and abilities that enable a person or team to act effectively in a particular job or situation. Competencies enable capabilities.
Our previous study on strategic renewal showed that very little effort has been set to develop and actively manage strategic capabilities and competencies. Organisational models, practices for business and offering development, systemic management of data and value-adding ecosystems are still in their infancy to secure future success.
Any business' strategic capabilities will depend on the unique circumstances of the organisation, its industry, and market.
The five-step approach to strategic renewal
We are basing our approach on five steps:
01 Understanding the market and the broader value network the organisation is involved in
02 Defining a visionary purpose based on the organisation's mission and values
03 Understanding current assets and competencies of the organisation
04 Defining the organisation's operational and core capabilities and selecting 4-6 strategic capabilities supported by strategic competencies that are specific for the success of this unique organisation
05 Defining must-win initiatives to develop these strategic capabilities and continuously monitor their development
The strategic planning cycle has become even shorter, requiring organisations to review and update their strategies consistently. A capability-based approach gives a more long-term solution for improving competitiveness and allowing to tackle changes in the marketplace. It combines longer-term business development with people development and leadership.
About the author
Marc Hinnenberg is the CEO of Hanken & SSE Executive Education. Marc has vast experience in sales, marketing, business development and innovation. His passion is to improve businesses and make organisations stronger for more significant business impact and better profitability by understanding the customers' needs.