TOP 10 TRENDS YOUR CHIEF STRATEGY OFFICER SHOULD BE THINKING ABOUT IN 2019

The future matters. Just ask anyone, or any organization, who thinks they don’t have one. All of your greatness today – your people, products, partnerships, brands, operations, capabilities, culture, customers – will not matter for long unless they are working together, as part of a strategy, to create your future.

This is why good chief strategy officers (CSOs) stand with their head in the clouds and feet on the ground, a lightning rod that prods you into action for what comes next. This is why every few months we convene a network of CSOs to explore the future.

Through our Outthinker Network, we gather in conference or training rooms with windows overlooking New York or Boston, close the door, and sit as peers with a thought-leader, to learn from each other. And dig into the most critical trends that CSOs feel will shape the future.

CRITICAL TRENDS SHAPING TOMORROW

Here, for the first time, we summarize what CSOs of many of the world’s leading companies are most concerned with now. Before we tell you what chief strategy officer think are the most critical trends that will shape the future, we want to clarify what this is not.

This is not output from a massive global survey sent out to thousands of CSOs selecting from a list of pre-defined topics that you find leading strategy consulting firms publishing every year. Those efforts, we believe, are fundamentally flawed because they can only measure the popularity of buzzword concepts.

You will not see many such buzzwords here like “design thinking” or “the future of work” because we are seeking to glean what is coming next, to explore beyond language … the ideas, concerns, and concepts CSOs are concerned with that have not yet gotten a title. As philosopher Ludwig Wittgenstein wrote, “The limits of my language are the limits of my mind. All I know is what I have words for.”

This list was forged through conversation, CSOs sharing and agreeing on what they feel matters most, even when they cannot (yet) classify that trend under a simple heading.

Here are the top 10 trends they came up with:

1. Technology acceleration
2. New forms of competitors
3. A shift in mindset from competition to customer
4. New purposes for M&A
5. Timing
6. New forms of coordination
7. Purpose
8. Culture gets real
9. Managing time horizons
10. Activating employee-driven innovation

1. TECHNOLOGY ACCELERATION

It took the television nearly 50 years to be fully adopted, the microwave about 30, and the smartphone less than 10. Technology is being adopted – by your customer, your employees – at an accelerated pace. You may call this “exponentiality” related to “Moore’s law” leading us toward a “singularity.” But whatever terms you use, it indicates that we are being thrust into an era defined by an unprecedented pace of change.

This trend, as anthropologist Ian Morris’ research shows, has been building up for hundreds of years and is today crossing an historic marker. Human advancement has always been marked by the pace at which humans adopt technology – from arrows to cannons to airplanes – but now technology is getting smart and actually starting to tell humans what to do. It is starting with predictive analytics – machines giving us foresight – but will eventually lead to them suggesting what we do and eventually simply doing it for us.

How will accelerated technological adoption change what your customers demand and how your people organize themselves to deliver it?

Our favorite thought-leader on this topic: Salim Ismail, author of Exponential Organizations.

2. NEW FORMS OF COMPETITORS

It was once easy to draw a line around your “sandbox.” But the boundaries are blurring. It was once that the big fought back the small, then eventually acquired them. But today, massive pools of investment (e.g., SoftBank) are fueling well-funded start-ups, enabling them to scale at an unprecedented rate. As companies built for an agile world scale more rapidly, they are finding ways of forgoing the trapping of size – bureaucracies and hierarchies – creating competitors that are able to act with agility at scale (consider, for example, Alibaba, Amazon, and Tencent).

How do you compete with fast-evolving competitors who give you little reaction time?

Our favorite thought-leaders on this topic: Stephen Denning, author of The Age of Agile, and Ming Zeng, author of Smart Business: What Alibaba’s Success Reveals about the Future of Strategy.

3. A SHIFT IN MINDSET FROM COMPETITION TO CUSTOMER

Nearly all of our theories of business strategy are rooted in a competitive world-view. We seek “sustainable competitive advantage” by controlling resources and raising barriers to entry.

But a new mindset has been rising over the horizon, one in which competition matters less – Amazon.com claims that competition does not matter at all – and instead your customer or humanity (see Trend 7, “Purpose”) becomes the unifying central purpose.

How would your strategy be different if you ignored the competition?

Our favorite thought-leader on this topic: Pete Fader, author of The Customer Centricity Playbook.

4. NEW PURPOSES FOR M&A

The role of M&A is evolving. You still engage in M&A to buy your way into fast-growing markets and technologies or to stay abreast of young, small disruptors. But increasingly it is being seen as a path to reinvention. Walmart’s acquisition of Jet and QVC’s acquisition of Zulily are prime examples. We are less often seeing the big fish eat and digest the small fish, and increasingly seeing the big fish embody the little fish.

How can you use your M&A strategy to transform yourself?

Our favorite thought-leader on this topic: Benjamin Gomes-Casseres, author of Remix Strategy: The Three Laws of Business Combinations.

5. TIMING

As the pace of change accelerates (see Trend 1, “Technology acceleration”) it becomes ever more critical to get the timing right. You cannot wait a year to assess whether the shift you are seeing in your marketplace represents an early signal or whether it represents an inflection point that could change the industry.

Flatiron Health, for example, launched as a software company to help oncologists manage their offices, but their understanding that the data they collected could transform how the entire oncology community would think about trials and treatment development took everyone by surprise. In just seven years, the team scaled, changed the way the FDA and industry thought about testing treatments, and then sold to Roche Pharmaceuticals for $1.9 billion.

How can we more accurately identify market inflection points and respond more rapidly and intelligently to them?

Our favorite thought-leader on this topic: Rita McGrath, author of Seeing Around Corners: How to Spot Inflection points in Business Before They Happen (upcoming).

6. NEW FORMS OF COORDINATION

We have long been talking about the long-term macro-trend of moving away from control to coordination. Whether you are coordinating through crowdsourcing, open innovation, industry platforms, or blockchain, the central strategic concept is as simple to see as it is difficult to embrace.

Nearly all of the techniques you learned in business school are rooted in the idea of control. The idea that coordination is a better currency for the future requires a deep and fundamental replacement of your organization’s current strategic mindset.

Perhaps more importantly, successful firms are experimenting with new forms of organization, mixing centralized hierarchical norms with internal marketplaces (e.g., for talent), democracies (e.g., for ideas), communities, and ecosystems.

What opportunities is a control mind-set preventing your organization from seeing or seizing?

Our favorite thought-leaders on this topic: Tom Malone, author of Superminds, and Bharat Anand, author of The Content Trap.

7. PURPOSE

Corporate social responsibility is increasingly viewed as a façade by your customers. They no longer accept you profiting from what they buy if you give some of it away. They expect the corporations they choose to buy products and services from to dig deeper, to not only adopt policies that are socially positive but even for your business model to fundamentally be good.

Your employees, especially the younger ones, expect the same. They are expecting a purpose that ignites their passion and gives them a mission worth fighting for.

While in the past you could communicate the good you do through marketing and corporate communications, it is ever easier for customers and employees to pierce through your messaging. They access information you cannot control and judge your product or brand by a totality of your choices, how well you pay factory workers, where you invest your capital, who you hire, how you source.

How do you install a true, activating purpose and, when you do, how will your business model change?

Our favorite thought-leader on this topic: Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing the World.

8. CULTURE GETS REAL

We see a repeated desire by CSOs to better understand how to manage culture both in a practical way and for practical ends. Corporations already can measure and communicate cultural norms but are now seeking to better understand how to more precisely align incentives to reward those norms.

New advances in our understanding of human behavior, the proliferation of detailed performance and behavioral data, talent analytics, and data capabilities are shining light into the previously mysterious corners linking culture to performance. It seems many of the theories of culture fail to prove their effect and companies that glean early insight into what works will build an advantage.

How should you be rethinking your management of culture given recent insights and new tools?

Our favorite thought-leaders on this topic: Lindsay McGregor and Neel Doshi, authors of Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation.

9. MANAGING TIME HORIZONS

Organizations have always had to balance the short-term with the long, the activities that secure your core business today, generate growth in the near-future, and create options that help you stay relevant in the more distant future.

The weight you put against these different horizons has historically been quite constant. But as the pace of change accelerates, as the future hits us ever more rapidly and unannounced, our calculus must change. Not only must we figure out how to optimize investments across time horizons, adjusting our focus will require also rethinking the organizational structures, investor expectations, and operational norms tuned to a slower world.

What will it take to rejigger your organization to better balance the short and long term in a faster-paced world?

Our favorite thought-leader on this topic: Ian Macmillan, author of Discover-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity (with Rita McGrath).

10. ACTIVATING EMPLOYEE-DRIVEN INNOVATION

Since “innovation” took hold as a popular business concept, organizations have generally sequestered it into innovation labs, incubation teams, and R&D departments. Isolating innovation from the mother ship, the prevailing logic has held, protects new ideas from the “innovation antibodies,” decision-making processes, and resource allocation practices that kill off innovation within established organizations.

But the narrative is shifting. Forward-looking strategy officers are seeking, and finding, new ways to activate innovation broadly throughout their organizations. As AI and robotics take hold, the skill demanded by the workforce will evolve rapidly with creativity, innovativeness, lateral thinking, and problem-solving becoming more critical workforce capabilities.

Cognitive diversity, the ability to attract the next generation of worker/innovator, and establishing formal and informal organizational forces that encourage greater employee-driven innovation could become some of the primary determinants of a firm’s future viability.

What is required to attract, activate, and maintain an innovative workforce?

Our favorite thought-leaders on this topic: Robert Wolcott, author of Grow from Within, and Kaihan Krippendorff, author of Driving Innovation from Within (upcoming).

CONCLUSION

To stay ahead of the pace of disruption, you and your CSO need to think beyond the current limits of language, understand the emerging concepts that will shape your future. Hopefully these 10 trends will give you a starting point. If you are not thinking about them, you risk being left behind.