We conducted our annual Strategic Renewal Survey 2023 at the turn of the year among mainly top management of large organisations. Industrial organisations were slightly more represented, reflecting the need for renewal well. Our day-to-day experience at Hanken & SSE supports the idea that particularly industrial organisations are on the verge of significant changes, and the traditional way of operating and leading is being challenged again and again.
Our first finding in the survey was that top management was more satisfied than middle management and managers with how well the company's strategy responds to changes in the business environment. The whole idea of the survey is based on the systemic notion that a successful organisation's strategy responds to changes in the business environment and is, therefore, able to adapt to the situation and changes.
At the same time, the whole strategy concept is subject to renewal since a traditional positioning-based strategy cannot anticipate the world at hand and its movements. Strategy is an ongoing process of dialogue, learning and strategising which should involve a broader range of people than at present. A good objective would surely be for the strategic debate to lead to a situation in which the majority of staff feel that it responds to changes in the environment. At the individual level, there should also be an understanding of what kind of action, capability and capability and competence will take us forward.
That obvious customer value - or is it?
Delivering customer value was identified by respondents as the most important capability that ensures renewal and competitive advantage. Culture and engagement came second, together with strategy execution. Strategy execution as a capability may come as a surprise. In essence, it means having a shared understanding of the strategic direction and getting things done flexibly and agilely, as a strategy should be executed.
Delivering customer value emerged strongly as a cultural issue. A thought-provoking shift arose from the responses that reveals that more organisations, regardless of role, consider customer needs and how to address them in their operations better. That is an obvious point, some may argue. But when you learn more about the day-to-day life of organisations, you can see that this way of thinking is still evolving in many. We have a long tradition of imagining work and customer needs in advance and defining processes and job descriptions on that basis rather than building flexible organisations where customer needs are easier to meet and implement. Responses also identified the need to be bolder in inviting customers to participate in development work to ensure renewal.
New phenomena need concretising
Combining different skills into new solutions and services also emerged as a critical competence need. A recent example of this is the case of AI Aaron. A middle manager in a company was delighted to have an AI expert in the organisation and the new team member's name happened to rhyme with the emerging capability of the organisation. The conclusion of the discussion was naturally that AI Aaron's expertise alone would not be enough to strengthen the AI capability of the organisation. The organisation's competencies and identity must evolve to integrate AI into more traditional engineering and vice versa.
Mastering digital and leading with data emerged as essential needs among respondents. Surprisingly, respondents found it difficult to describe the specific development and skills requirements for those capabilities in more detail. There are certainly no ready answers for all digital developments, but continued curiosity and discussion about the opportunities offered by data and digitalisation, in general, would go a long way. Leading with data risks becoming the emperor's new clothes if companies do not properly clarify the need for data and how it can be used.
Similarly, leading the green transition was highlighted as essential, but articulating how to make it concrete and what skills are needed was a challenge. Large companies are taking significant steps in the green transition. In practice, this means, as one example, increasing understanding of what ESG implies in terms of reporting. There is still a genuinely inspiring journey ahead to understand all the requirements and opportunities of the green transition throughout the value chain and clarify the commercial opportunities the circular economy brings.
A culture of learning and developing together creates a competitive advantage
Given the capability needs listed above, it is easy to think that various leadership and organisational renewal requirements also arose. Flexibility and a growth mindset were highlighted as essential enablers of renewal. Respondents also summarised this need as "we need smart organisations that can use knowledge and insights wisely and flexibly to create customer value". Competitive advantage is often created together with partners; therefore, managing and operating in different internal and external networks and ecosystems emerged as an important capability. These formations are not managed by building silos in functions, but by an inclusive culture in which everyone's potential and specific competencies are taken into account and utilised meaningfully. It is also a key driver of commitment and job satisfaction. For the best talent, it is crucial that their skills are used in a meaningful way and that they have the opportunity to develop continuously.
"When culture and engagement together with customer value creation are strategic focus areas the organisation will succeed in other things like sustainability."
The above is how one respondent summarised his comment. This view sums up a lot about the spirit and will of business renewal. At the same time, the survey revealed that there is much to learn and develop in these areas. The main themes for learning in enterprises, according to the respondents, are:
- A new attitude to learning new things
- Customer orientation and service attitude
- Understanding changes in business models
- Flexibility in change situations
- Learning to use data
"We need to learn to be bold and dare to go completely different from our competitors", said one respondent. The environment must be safe to dare to be bold. As we know, leadership can have a significant impact. The survey shows that the biggest need for leadership renewal is at the middle management level. Strategic renewal requires a more human approach to leadership. Good interaction, listening and coaching skills are important and will become even more so. With sufficient dialogue and listening skills in an organisation, we are closer to an experience where the entire organisation believes that strategy responds to changes in the environment, and that there is no gap between senior management and the rest of the organisation. It also brings the idea of strategy as continuous learning to life.
Our Strategic Renewal 2023 survey, conducted in collaboration with the Confederation of Finnish Industries, explored what skills and competences organisations need, and how to actively manage and develop them to ensure future success. Read the survey report for insights and strategies to help your organisation succeed in the future.
About the author
Mari Tasanto D.Sc. (Admin) is Growth Area Director of Customised Solutions at Hanken & SSE Executive Education. Mari has more than 10 years of experience in various manager positions and international experience from HRD and talent management positions. She has worked more than 15 years in leadership development and organisational development consulting and training organisations. Mari specialises in strategic capabilities consulting and competence management. She has designed and delivered several talent development programmes internationally. Another focus area is management team development and potential assessment of management teams. She is passionate about continuous learning and organisational renewal and her mission is to support the potential of the organisations as well as individuals.