ALWAYS-ON STRATEGY

By Nicolas Kachaner and Peter Kunnas

W hy do companies fail or fall

behind their rivals? Among the many
reasons, three stand out. Some companies
duce always-on strategy into their strategic
planning process. In our view, always-on
strategy should be designed to comple-
miss a major strategic shift or industry ment, not replace, the annual process. By
disruption. Others see a big change coming integrating always-on strategy into a
but fail to develop the right strategy in streamlined process, a typical company
response. And some define a winning can make strategic planning less rigid and
strategy but are not able to implement it sequential and more agile and continuous.
effectively. To increase their odds of success
in todays turbulent environment, leading One company, for example, uses monthly
companies are complementing their reviews of a watch list to track and, if
traditional annual strategy-setting process necessary, escalate strategic issues that
with something more dynamic. We call it were flagged during the annual planning
always-on strategy. process. The company also regularly re-
views the progress of strategy implementa-
Always-on strategy gives companies a sys- tion against KPIs, allowing it to spot devia-
tematic way to scan for signs of disruption tions easily and take corrective actions
and explore unexpected changes to the rapidly.
strategic environment. Companies identify
the most pressing strategic issues and regu- Leading companies are experimenting with
larly engage senior leaders in formulating various aspects of always-on strategy, but
a response. And they carefully monitor the we have yet to see any company take a
progress of strategic initiatives to increase comprehensive, systematic approach. This
the speed and impact of execution. articleusing examples drawn from our
interviews with executives across indus-
Although the benefits are clear, companies triesoffers a review of best practices and
are often uncertain about how to intro- outlines a comprehensive process.

For more on this topic, go to bcgperspectives.com

 The Case for Complementary cycle, when the long-term strategic direction
Strategic Processes is set; at a midyear review, when options are
A best-in-class approach to strategy making validated; and at the end of the cycle, when
includes both annual and always-on com- strategies are approved and fed into the
ponents. (See Exhibit 1.) budget process. Outside of these fixed win-
dows, executive teams rarely block time for
The annual strategic planning process at discussing strategy; as a result, the process
most large companies follows a familiar cy- for adjusting it is ad hoc and inefficient.
cle: corporate strategy is defined in the sec-
ond quarter of the year, business unit strat- Always-on strategy complements the annual
egies are formulated and aligned in the process by giving senior leadership a regular
third quarter, and budgeting and communi- forum in which to monitor and discuss is-
cation occur during the fourth quarter. De- sues that warrant continual attention, in-
spite their prevalence, annual planning cluding those identified during the annual
processes have few fans among executives. process and during the course of the year.
Many executives criticize those processes The always-on process is particularly well
for being overly bureaucratic and poorly suited to addressing issues that span multi-
suited to todays fast-changing markets. ple business units (such as a common tech-
Many also complain that participants in nology platform), lie outside the scope of ex-
the strategy-setting process tend to elevate isting businesses (for example, growth into
form over substance, investing time fulfill- adjacent markets), or are too far-reaching to
ing procedural requirements at the ex- address at the business unit level (such as
pense of rigorous content discussion. downstream integration). However, compa-
nies must apply always-on strategy systemat-
Companies can improve their existing icallyto ensure that executives focus on
strategy-setting practices in several ways. the highest-priority issues, push for issues to
(See Four Best Practices for Strategic Plan- be resolved, and effectively coordinate the
ning, BCG Focus, April 2016.) But even a activities of the annual planning process
well-designed, question-driven annual pro- with those of the always-on forums.
cess does not give executives a chance to
monitor and discuss strategic issues and
iterate on solutions throughout the year. A Systematic Approach to
The annual process typically provides, at Always-On Strategy
most, three main opportunities to discuss Always-on strategy, as integrated with the
strategy decisions: at the beginning of the annual process, has three components:

Exhibit 1 | A Best-in-Class Strategy Process Includes Complementary Approaches

ANNUAL STRATEGY MAKING ALWAYS-ON STRATEGY
A process that sets the overall strategic direction A process and a toolkit to identify and resolve
of the company and aligns strategic stakeholders issues and manage the implementation of
(business units and functions) specic strategic initiatives

Builds on existing strategic plans Brings deep understanding

NATURE Provides broad coverage; keeps full of individual issues
strategy in view Addresses disruptive events
Consolidating decisions and plans made Treating individual issues
STRENGTHS throughout the year Making decisions
Aligning business unit strategies Driving implementation
Not eective in preemptive issue If not applied systematically, can
CHALLENGES identication and resolution result in a chaotic, piecemeal strategy
Does not allow for iterations

Streamline the annual planning process ...and complement it with always-on strategy
by applying best practices...

Source: BCG analysis.

| Always-On Strategy 2

 strategic scanning, decision making, and support the scanning effort. For example, a
implementation management. (See Exhibit software company has created a team of
2.) The company must create a strategy leaders and analysts from its marketing
board comprising the CEO and members of and strategy functions to ensure that mar-
the executive team to lead this approach. ket insights inform strategic discussions.

Strategic Scanning The chief strategy officer (CSO) and the

By continually scanning internal and exter- strategy team are ideally positioned to iden-
nal sources, a company can quickly identify tify issues from the top down, both in the
potential strategic issues. Although it is business units and externally. They can also
most important to be alert to signals relat- provide a structure and tools to capture and
ed to the companys strategic themes, the filter information from the broader organi-
scanning effort should also target develop- zation, such as data from the customer or
ments that could indicate industry disrup- supplier interface. A telecommunications
tion. To avoid a fishing expedition, the company, for instance, shares its watch list
company should focus on factors that are of strategic issues with local strategy teams
vital to its competitive advantage. For ex- and solicits input on the topics.
ample, executives might gather informa-
tion to forecast how specific megatrends Decision Making
will affect customers economics and prior- To assess the signals detected by strategic
ities, examine patent and venture-funding scanning and decide on the appropriate re-
data to reveal emerging technologies that sponses, a company must create a strategic
could complement or substitute for existing issues list, examine the issues through ded-
technologies, or survey the sales force in icated projects, and iterate on solutions.
developing markets to identify startups
that could pose a threat. The strategy board vets issues for inclusion
on the list and ranks them so that execu-
Various approaches can uncover emerging tives can direct their attention to the issues
issues, including crowdsourcing initiatives that matter most at a given time. Saturat-
and cross-functional forums. A committee ing managements attention with too many
of external and internal experts can also issues often results in an ineffective, piece-

Exhibit 2 | An Always-On Process Should Be Integrated with the Annual Process

Q1 Q2 Q3 Q4

Set long- Corporate

Set Challenge Approve
term center
ANNUAL targets plan plan
direction
Strategy
STRATEGY development
MAKING Business Propose Fine-tune
units plan plan

Strategic
scanning Scanning for issues

Decision Prioritizing and resolving strategic issues

ALWAYS-ON making
STRATEGY

Implementation Monitoring and steering implementation of strategic initiatives

management

Strategy board
meetings

Source: BCG analysis.

Note: Monthly strategy board meetings provide opportunities for iteration and decision making.

| Always-On Strategy 3

 meal approach to strategy and may lead to dedicated project, the company allows the
poor decisions. examination of each issue to proceed on its
own timeline and to include the iterations
Issues can be prioritized according to the needed to define a solution. Each project
value at stake, their degree of uncertainty, should receive the necessary resources and
and the challenges of implementation. The staffing, including the relevant line exper-
most important topics are those that relate tise. In addition to ensuring that expertise is
to the key risks, challenges, and opportuni- available to support decision making, in-
ties highlighted in existing strategic plans. volving the line organization makes it more
For example, an industrial goods company likely that the initiatives emerging from a
prioritizes its issues list to reflect the must- project will be implemented. To comple-
win battles specified in its overall plan. ment and challenge the internal under-
standing, the strategy team should selective-
A company can also conduct interviews ly involve external stakeholders (such as
within its organization to reveal the princi- clients, suppliers, and experts).
pal threats and opportunities, both internal
and external, and identify the main indus- During its regular meetings, the strategy
try trends. Additionally, a company can de- board should assess the progress of each
velop scenarios of possible industry devel- project, remove roadblocks, and decide on
opments and then identify the most urgent the next steps. Depending on the project,
issues that would arise from them. Poten- these steps might include another iteration
tial changes warrant more urgent attention on solutions or implementation of a strate-
if, for example, the expected impact on the gic initiative.
company and its strategy is high, the chang-
es are hard to predict or are unfolding at a The issues list evolves as new issues are
rapid pace, or the related implementation identified in the scanning process and old
efforts promise to be complex and costly. ones are resolved through the dedicated
projects. (See Exhibit 3.) Companies should
For each issue, the strategy board should expect some issues to remain on the list for
designate a sponsor, ideally someone from many meetings as stakeholders explore the
the executive team, to lead a project that ex- issues, track their evolution, and iterate on
amines the topic in detail. By establishing a responses. To avoid overloading the agenda

Exhibit 3 | The Evolution of the Strategic Issues List

EXAMPLE FROM A GLOBAL HIGH-TECH COMPANY

Month 2: Four issues on the
list, and all are discussed
in the meeting Month 18: Five issues on
Issue the list, but only two are
1 discussed in the meeting
2
3
4
5
6
7 Issue 5
8 remains on
9 the list but
Short-term is discussed
10 issue on only
11 the list for intermittently
12 only two
13 months
14
15
16
0 6 12 18 24 30 36
Months
Issue discussed at meeting

Sources: Peter Kunnas, Systematic Management of Emerging Strategic Issues: Organisational Attention
Allocation and Strategic Issue Management System Performance, 2009; BCG analysis.

| Always-On Strategy 4

 of the strategy board meetings, the strategy for its meetings. To provide enough time
team should remove low-value items for in-depth strategy discussions, the board
promptly. Feedback processes should be in should meet for at least a half a day every
place to integrate the management of the month. Each of the three components of
issues list with strategic scanning and always-on strategy should receive its fair
implementation. share of time, with an emphasis on content
discussions that address the full issues list
Strategy Implementation or touch on specific issues. Only a limited
Management amount of time should be spent discussing
To capture the benefits of always-on strate- process.
gy, following through on implementation is
essential. We see many examples of for- Governance and Organization
merly great companies that accurately pre- The CEO should own the work of always-
dicted changes but lacked the fundamental on strategy, just as he or she owns strategy
ability to implement a new strategy in re- in general. The CEOs ownership ensures
sponse. Because executing a shift in strate- that strategic issues receive the required at-
gy typically requires major changes to an tention and resources. Moreover, the CEO is
organizations design and capabilities, the only person with the formal authority
implementation often falls short. to prioritize issues. The CSO should assume
operational leadership of both the annual
By regularly monitoring and managing the planning cycle and the always-on process.
implementation of initiatives, the strategy For the always-on process, this should in-
board helps to identify problems or devia- clude an active role in identifying and pri-
tions that require corrective action and, in oritizing issues and in setting the agenda
general, helps to promote the success of ini- for strategy board meetings. For some com-
tiatives. The board should use KPIs, specific panies, these responsibilities may require
milestones, and other easy-to-apply criteria enlarging the mandate of the CSO and the
to facilitate its work. The board should also strategy team. The CSO and the team can
escalate issues back to the companys stra- also provide valuable help to strategy proj-
tegic issues list, if necessary, so that the plan ects, including staffing to support division
can be reviewed and potentially revised. heads and their line organizations with
analyses and project management.
A multinational hospitality company has
set up a dedicated strategic business man- The same governance model can be used
agement team at the corporate level to act to apply the always-on approach at region-
as a program management office (PMO) al, functional, and business unit levels. A
and, on a monthly basis, monitor initia- units head and strategy leader take on
tives progress against KPIs. The team also responsibilities analogous to those of the
manages the strategic issues list and re- CEO and CSO. For example, a leading tele-
moves or deprioritizes issues as needed. communications company has cascaded
The company is instituting a similar PMO the always-on model down to its product
approach to strategy implementation in its and sales and marketing units.
regional and functional units.
Integration
with the Annual Process
Putting in Place the Enablers To institutionalize the complementary na-
Always-on strategy is not a complex pro- ture of annual and always-on planning, the
cess, but to succeed it requires a few key company should align and coordinate the
enablers. processes and allocate the roles related to
each activity. The strategy board can make
Strategy Board individual content decisions and plans
and Meeting Cadence during its always-on planning meetings
In addition to creating a strategy board, the and use the annual process to consolidate
company must establish the right cadence them. This allocation reduces the number

| Always-On Strategy 5

 of decisions required during the annual timely and value-maximizing decisions and
planning windows, allowing the executive ensures that the decisions are fully imple-
board and board of directors to use these mented. Always-on strategy is not a com-
periods to review comprehensive plans. plex process, but it brings a fundamentally
The outcome of the annual planning cycle new mindset to strategy making. To get
can then feed back into the always-on strat- started, the CEO must make the decision to
egy process, either as issues for further set aside a half a day each month to focus
analysis and decision making or as initia- on strategy. The return on the time invest-
tives to be monitored through strategy ed can be significant as companies respond
implementation management. more quickly and effectively to major
changes in their markets.

T he turbulence in the business envi-

ronment shows no sign of abating. To
survive and thrive, companies need an
approach to strategy making that promotes

About the Authors

Nicolas Kachaner is a senior partner and managing director in the Paris office of The Boston Consulting
Group. He is a member of the leadership team of BCGs Strategy practice and the global topic leader for
strategic planning. You may contact him by e-mail at [email protected].

Peter Kunnas is a principal in the firms Helsinki office and a core member of BCGs Strategy practice.
He holds a DSc in strategic management from the Helsinki University of Technology and is a frequent
speaker at leading strategy conferences. You may contact him by e-mail at [email protected].

The Boston Consulting Group (BCG) is a global management consulting firm and the worlds leading advi-
sor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all
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visit bcg.com.

The Boston Consulting Group, Inc. 2017.

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| Always-On Strategy 6