STRATEGIC PLAN 2023: A SUSTAINABLE OFFICE COMMITTED TO EXCELLENCE

STRATEGIC PLAN 2023: A SUSTAINABLE OFFICE COMMITTED TO EXCELLENCE

STRATEGIC PLAN 2023: A SUSTAINABLE OFFICE COMMITTED TO EXCELLENCE

 INTRODUCTION

Today’s challenging environment needs business leaders to hone their edge in three critical areas: insights, commitment, and execution. When leaders have strategic courage, they steer in the intended direction, ask for help when needed, admit error, relentlessly look for lessons, and change what needs to be modified in pursuit of the strategic intent often praise and reward heroic actions, the “dive in the dirt” moves that save the day. Sometimes speed and boldness win the day, but heroics can lure us into using ad-hoc interventions as a default instead of doing the less glamorous work that makes heroics rare and mostly unnecessary. For example, the courage of firefighters is visible and sometimes necessary, but the work of the fire marshal, risk managers, safety engineers, and building managers is preventative. When leaders have strategic courage, they steer in the intended direction, ask for help when needed, admit error, and relentlessly look for a person, luck, or ad-hoc measures. Sometimes, unusually great results are signs that something isn’t right. For example, the fraud that led to outsized results in retail banking at Wells Fargo or claims by Theano’s that small amounts of blood were adequate to deliver multiple test results. As shocking as these examples may be, millions more minor instances lead to loss, but leaders fail to identify the cause correctly. Why? Because leaders are as vulnerable to being distracted by heroes as anyone else. The leader may even be trying to be the hero. 

 The late Brazilian car-racing champion Ayrton Senna once said, “You cannot overtake 15 cars in sunny weather, but you can when it’s raining.” Well, there’s been no shortage of downpours in recent years. We’re living in a world where new shocks—the war in Ukraine, the return of inflation—have been layered onto earlier shocks—a deadly global pandemic, supply chain disruptions—that, in turn, were layered onto and dramatically accelerated, long-standing trends such as digitization and sustainability.

In almost all our recent conversations, CEOs, board members, and other business leaders share with us a common sentiment: this combination of shocks has created perhaps the most challenging environment management teams have ever faced—and one that likely won’t change anytime soon. We have entered an age of volatility. Such stormy times test leaders’ mettle. Today, some are pulling off the racetrack and looking for shelter. Others, however, are changing to wet-weather racing tires and stepping on the gas. Indeed, we see two types of a business leaders emerging. The first type adopts a cautious and defensive posture in dealing with volatility and uncertainty. These leaders are hunkering down and concentrating on the threats here and now. Scenario planning, resilience preparation, balance sheet management, near-term efficiency drives, and careful inflation monitoring are core areas of their focus. These leaders are in a strategic “wait and watch” mode as conditions unfold. In our experience, the majority of senior executives fall into this category.

But we see a second type of leader as well—one who is taking all the right defensive actions while also leaning into the volatility, using it as a catalyst to galvanize action around new opportunities. The current disruption has invigorated these leaders’ mindset of moving forward boldly, and they are rejuvenating elements of their strategy that may have been dormant. These leaders are playing both offense and defense. This Strategic Plan sets out our vision for where we want to be, as well as how we want to get there. It will ultimately form a new framework for cooperation among all stakeholders in the IP system, and help us to provide a prosperous future for European innovation and a strong patent network. The Strategic Plan comprises five goals, each of which has several key initiatives, like, goals 1 to 5 Engaged and empowered, Digital transformation, Master quality, Partner for positive impact, and Secure sustainability

 That’s a sound approach. Our research on corporate resilience shows that defense-only postures tend to lead to median company performance, while offense-only stances deliver a mix of occasional wins plus some catastrophic failures. The best leaders and companies are ambidextrous: prudent about managing the downside while aggressively pursuing the upside. These leaders are thinking about the next decade, not the next month. Many of them are spurring their organizations to rethink opportunities and reset the strategic gameboard in light of the current volatility. They are re-evaluating their M&A strategies amid lower valuations, making more dramatic resource reallocations, reimagining their workforce and talent proposition in a hybrid post-COVID-19 world, and taking a long-term view on innovation and growth.  The best leaders and companies are ambidextrous: prudent about managing the downside while aggressively pursuing the upside.

What distinguishes these two leadership mindsets? Is it intrinsic differences in risk appetite? Does one group have a better-honed management microscope (looking at the near term), while the other prioritizes the telescope (gazing out toward the longer term)? Or is there some other intangible that leads these management teams and their organizations to operate differently? As they start to create value from volatility, we see the ambidextrous management teams thriving rather than merely surviving in this environment. These leaders, who are both prudent and bold, are honing three types of edge to create “alpha” in organizational performance: in insights, in commitment, and in execution. CEOs and boards should challenge their companies on the extent to which their organizations can credibly claim to have each edge—and if they don’t, how they can develop it, rapidly.

The insights edge

When what is likely to happen is clear, understanding it more deeply than others may be useful but is not imperative. But, as financial traders know well, when volatility is high, an insights edge generates great value. It may not be possible to be right every time, but seeing accurately through the fog 10 percent more often than your rivals is a substantial competitive advantage. That requires investing the resources, time, and effort to go beyond the conventional analysis of conventional data that generates conventional wisdom. An insights edge comes from granularity, depth, and diversity. Granularity is necessary because the interaction of shocks with trends is playing out differently around the world. For example, as the supply of food and metals is disrupted owing to the war in Ukraine, Chile, which has both in abundance, is experiencing a different type of shock from Sri Lanka, which does not have them on hand. Depth of insight is important because the real impact often comes from the second or third bounce of the ball: suppliers’ production issues cause disruption down your value chain (such as wire harness producers in western Ukraine that frequently impede production for European automotive OEMs).

As for diversity, remember that in most circumstances where some claim “nobody saw it coming,” the situation had, in fact, been noticed by a good number of people, the COVID-19 pandemic being a recent example. In a world of increasing convergence across sector ecosystems, (what we refer to as the “death of SIC codes) diversity of insight requires going beyond sources within your company, or even your industry, and seeking out perspectives from other industries and from disruptors across industries.

To build an insights edge, one large global bank, for example, recently assembled its more than 70 chief country officers and used their collective wisdom to home in on trends and market- and industry-level insights that it then disseminated to sales teams to drive sharper client opportunity identification. Centrally capturing the knowledge of its many geographically dispersed leaders and turning it into an institutional capability has given the company an advantage with clients. The CEO of another financial institution, meanwhile, created a task force on inflation, led by the chief strategy officer, that consulted a range of experts (including rating agencies, advisers, and banks) to form a “house view” on potential inflation scenarios. The group then drew out the implications of each scenario—along with the upsides and downsides—for every business and function. This investment in insights has given the company the ability to adjust quickly to a range of macroeconomic developments.

Questions come which might ask to build an insights edge:

  • Do we have full visibility into our supply chain, including third- and fourth-tier suppliers, the risks embedded in those relationships, and our options for strengthening the supply chain’s resilience through dual-sourcing and in-region manufacturing?
  • Is our understanding of the transition to net zero nuanced enough, including the value upsides of some nongreen assets as the transition progresses, the likely declines rather than increases in some green premiums, and how carbon borders may shift trade flow?
  • Are we evaluating our portfolio at a granular enough level and fast enough pace to see region- or segment-specific headwinds and tailwinds that a higher-level view may obscure?
  • How intimate an understanding do we have of our customers and end consumers, and are we able to gather changes in consumer sentiment rapidly and continually?
  • Do we have a mechanism to pick up signals from across the organization, including geographic leaders and commercial financial planning and analysis, on a regular basis—or, better still, in real-time—and distill them quickly into options the organization can act on?
  • Are we building a culture that is diverse, inclusive, and externally oriented enough to capture signals from outside our company or industry and solicit thoughtful contrarian perspectives from across ecosystems—or are we collecting perspectives from the usual suspects and telling ourselves that constitutes insight diversity?
  • Have we built digital and analytics capabilities across the enterprise—from data collection and governance to machine learning—that yield cutting-edge proprietary insight?
  • Are our scenario analyses and risk identification sufficiently creative or do we risk falling prey to a failure of imagination about what could happen?

The commitment edge

As important as knowing what to do is doing it promptly and with sufficient ambition. The half-life of decisions has collapsed, requiring more frequent evaluations of whether choices made a few months or even weeks ago still make sense. What differentiates bold leaders and leadership teams isn’t moving in the right direction—which most do eventually—but doing so decisively before others have mustered the collective confidence to commit. In the face of uncertainty, these leaders’ mindset is to act and adjust, not watch and wait. After Russia’s invasion of Ukraine, for example, BP announced its plan to divest its Rosneft stake quicker than many stakeholders expected and before most other companies had evaluated their Russia posture and presence. This decision turned BP from one of the international companies most invested in Russia to one cited as an exemplar of a decisive reaction.

Resource commitments that are large enough to materially affect the company’s trajectory are as important as speed. The acceleration of trends is increasing the returns on sizeable, well-placed bets, given the variance between leading industry performers and the also-ran. Our research on resource allocation, digital strategy, sustainability, and numerous other topics has shown that those who move early and at scale gain significant advantages. In other words, fortune favors the bold.

For instance, one US financial services CEO challenged the notion of a physical return to the office post-pandemic. Instead, he pushed the company to reimagine long-held norms surrounding how, where, and when work could be done with the goal of building competitive differentiation in the market. By mobilizing an enterprise-wide effort that drew on employee and customer preferences, leading-edge data, and innovations in other industries, the organization was able to design a flexible working model that dramatically reduced its real estate footprint and carbon emissions, increased its attraction and retention of a diverse workforce, and drove adoption of new hybrid working norms.

Questions you might ask to build a commitment edge:

  • What are our “billion-dollar beliefs,” and are we betting sufficiently boldly on them?
  • Is our top management team effective at committing decisively to strategic choices, or do we need to change the team’s membership, processes, or mindsets to ensure they can?
  • Have we engaged the board sufficiently in developing scenarios and responses to them so that our government does not hold back bold moves at key moments?
  • Do we embrace the mindsets of growth leaders who see and seize opportunities?
  • Have we developed an “offense playbook” for bold moves such as M&A and divestments that is ready to be activated when a trigger point is reached?
  • Can we ring-fence a portion of our capital and operating expenditure to redeploy dynamically as opportunities and threats emerge during the year?
  • Do we keep continual track of how far industry peers, leaders in other industries, and cross-industry disruptors are moving so we can act at a sufficient scale?

The execution edge

Execution is the third competitive edge in an age of volatility. The ability to execute well is always valuable, of course, but just as volatility drives up prices of stock options, it likewise raises the value of strategic options—the ability to rapidly pivot in response to changing conditions. Once you have the commitment to act, capturing the value of those actions requires an execution edge, especially in situations where moving first confers an advantage.

A central source of an execution edge is speed: getting things done fast and well. The life sciences sector famously executed at a rapid pace to develop the first COVID-19 vaccine. Similarly, a leading building-materials company navigated the pandemic with greater resolve than several industry peers because its leadership team included many who had led businesses during the global financial crisis and thus were experienced at handling rapid market changes.

The pandemic has been both a petri dish and a catalyst for innovating ways to increase speed, making it a valuable capability as an endogenous part of the strategy. Speed matters in today’s volatile environment; leaders and organizations that break down silos, streamline decisions and processes, empower frontline leaders, and cut through slow-moving hierarchies and bureaucracies will have a clear edge. Research by McKinsey and the Harvard Business School found that companies that had launched agile transformations before the pandemic performed better and moved faster during the crisis and its aftermath than those that had not. Agile organizations had this edge because they already possessed the processes and structures that proved critical to adapting to the COVID-19 crisis, from cross-functional teams to clear data on desired outputs and outcomes for key customer journeys.We have to develop with a solution to build an execution edge:

Reinventing our organization for speed, assessing existent technology stack is modern and modular enough, and whether are we paying down our tech debt fast enough so that our technology accelerates rather than constrains execution, our strength capabilities that underpin growth—such as marketing, customer experience, sales, and pricing—strong enough for this era, our shift procurement from a valued “utility” function to a source of strategic competitive advantage in creating value from volatility, the balance sheet flexibility to execute bold moves in tougher times,  we able to build new businesses with the agility and ambition of a disruptor, while harnessing the reach and resources of an incumbent, and e we institutionalized the transformation best practices that enable organizations to “get stuff done,” such as high-cadence, disciplined initiative tracking, and a transformation office. we codify the lessons from significant past experiences—important acquisitions, recessions, and crises—into playbooks and dry-run their execution so they become second nature.

John F. Kennedy once observed that the word “crisis,” when written in Chinese, is composed of two characters—one represents danger, the other opportunity. He wasn’t altogether correct on the linguistics, but the sentiment holds: times of crisis, disruption, and volatility require courage from leaders to make bold strategic choices. It’s also a chance to leave less-creative rivals in the rearview mirror.

 

Our strategy consists of six pillars – key objectives that will define our success – and four enablers to help us get there.

The six pillars are:

1. Grow CSP business faster than market

2. Expand the share of enterprise in our business


3. Actively manage our portfolio


4. Secure business longevity in Nokia Technologies


5. Build new business models


6. Develop ESG into a competitive advantage


The six pillars are underpinned by four enablers:

1. Develop future-fit-talent

2. Invest in long-term research


3. Digitalize our own operations


CONCLUSION

VUCA is an acronym that stands for volatility, uncertainty, complexity and ambiguity -- qualities that make a situation or condition difficult to analyze, respond to, or plan for. Understanding how to mitigate these qualities can greatly improve the strategic abilities of a leader and lead to better outcomes. Let us discuss them one by one VUCA.

Volatility is the quality of being subject to frequent, rapid, and significant change. Small triggers may result in large changes. In a volatile market, for example, the prices of commodities can rise or fall considerably in a short period of time, and the direction of a trend may reverse suddenly. Uncertainty occurs when events and outcomes are unpredictable. The cause and effect are not well understood, and previous experience may not apply to the situation. It is unclear which direction events will go; in an uncertain market, for example, it is not clear if the price will go up or down or by how much. Complexity involves a multiplicity of issues and factors, some of which may be intricately interconnected. The relationships between items and people are difficult to understand. A change in one place may cause unintended changes to other things down the line. Cause and effect are obscured by many layers, and it is not clear which factors are important in the decision-making process. In a complex market, for example, the changes in gas prices affect the prices of many other items that are not directly related. Ambiguity is shaped by a lack of clarity and difficulty understanding exactly what the situation is. Information may be misread or misinterpreted. During ambiguous situations, all the facts are not clear. The goal or intended outcome may not be evident to all parties involved. In an ambiguous market, for example, not all information is public and unseen factors may be affecting prices.

VUCA use and history

The acronym VUCA was first used in the U.S. Army War College in 1987 and was publicly published in 1991 by Herbert Barber. The method was developed after the concepts presented by Warren Bennis and Burt Nanus in their book Leaders: The Strategies for Taking Charge. VUCA was applied to the conditions following the end of the Cold War and the conflict in Afghanistan at that time.

The term VUCA can be applied to a situation in general. Sometimes it is used dismissively to discount the value of planning.  In this sense, its use is similar to FUD (fear, uncertainty, and doubt). The proper use of VUCA is to apply it to a situation to help quantify risks and create mitigation strategies. Use the VUCA method to go through what is known and not known about a situation or plan. This helps create a better understanding of the situation and what the vulnerabilities and risks are. Using VUCA can help leaders manage the ever-changing modern business landscape.

The following questions can be used in a thought exercise to identify the VUCA in a situation:

·      Volatility. What are the highest and lowest possible values that we can expect? How fast can these values change? What amount of change can we absorb before it negatively impacts us?

·      Uncertainty. What can change? What are potential signs of change? Will we know when things change? How fast can we respond to a change?

·      Complexity. How well do we understand the structures involved? How are these items interconnected? What is our ability to stop a chain reaction or cascading failure?

·      Ambiguity. What is our visibility into the internal and external factors? What is the possibility of misunderstanding and confusion? How can directions be issued more clearly? What signifies that more information is needed before making a decision?

VUCA mitigation strategies. By using VUCA, people can identify potential surprises and outcomes. From there, they can make mitigation and response strategies to prepare for the potential for rapid change in VUCA situations. They can go from "unknown unknowns" to "known unknowns" and be sufficiently prepared. Leaders may also apply the OODA loop of observing, orienting, deciding, and acting for good decision-making.

Volatility. Accept change. Build in Slack and wiggle room for unaccounted issues.

Uncertainty. Seek new viewpoints and take time to understand triggers and indicators. Monitor key metrics and add indicators of success and failure at every step. Have regular reviews and port modems. Perform what-if exercises to help train staff and get ready for unforeseen occurrences.

Complexity. Communicate clearly and frequently with all parties. Encourage collaboration between teams and groups. Identify areas where more insight is needed and add talent to address them. Build in fail-safe and backup systems.

Ambiguity. Perform tests to bring clear understanding to ambiguous information. Be prepared to change as more information is discovered.

Technology is a rapidly changing and advancing field where experts may not agree or have differing opinions. Global supply chains and interconnected systems are complex and difficult to untangle. Disruptive technologies are introduced daily. Therefore, applying the principles of VUCA to technology structure can offer invaluable insights.

Before starting a new project, perform a VUCA analysis. This will identify potential weaknesses and risks. Institute Agile, CI/CD, and DevOps methodologies to be able to rapidly respond to changing needs and opportunities. Keep up to date with industry news to be able to take advantage of trends and emerging technology. Have in place crisis management, a disaster recovery plan, and a business continuity plan.


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