Step one is to detail the environmental or operational impetus for change. This could result from demographic, economic, competitive, technological, behavioural, or regulatory shifts. To understand which environmental forces are responsible for flagging performance, executives and stakeholders should conduct a rigorous performance gap audit to determine the root cause.
Most likely, performance is the result of a combination of internal and external shifts. It may be necessary to refer back to assumptions and factors detailed in your organization's original business planning documents to understand which factors have drifted from the original business vision.
The fundamental performance levers at your disposal to address changing market pressures can be grouped into five categories:
- Changes to your applicable market
- Problem statement
- Comparative advantage
- Competitive positioning
- Resource allocation
Before you decide on a new strategic direction, you must understand your resources and capabilities in each of these areas. This step's completion should include a detailed and compelling vision of the business' future-state following the change.
Business unit impact
Business leaders and team members alike must understand how each business function will drive and be impacted by the business' new direction. To simplify this discovery for mid-sized companies, we classify business units under six business functions:
- Product-market fit
- Governance, compliance, and sustainability
- Supply chain, production, and distribution
- Infrastructure and digital enablement
- Corporate M&A strategy
- Capital, accounting, tax, and performance
Each of these areas must be assessed individually to understand how its resources and contributions reconcile with the new vision. It is also critically important to recognize that while any one of these areas may be faltering in the status quo, it does not mean it is without strategic potential. Digging deep into individuals and teams' capabilities to find hidden gems for the new direction will help retain as much of the value of your current resources for your new endeavour as possible.
For each business unit, we recommend a four-step assessment:
- Document the current-state, historical configuration, activities, and contributions of the unit
- Identify the current trends, impacts, and performance of the unit in your shifting landscape
- Take inventory of the unique accelerators and detractors of the unit for future-state fit
- Define the unit's future-state configuration, activities, and contributions required of your Pivot
Lastly, for each of the business units, prepare a specific migration plan to help guide your business to its future-state together. Each of these should be completed to view how it will interact with the other business functions, and provide positive synergies supporting their common goal.
At a minimum, each migration plan should include specific details on the performance metrics that will measure success in the future-state, a change management plan (call-back to the Lewin Change Management Model) to bring critical resources along, and an ongoing assessment plan to regularly check-in on the progress and performance of each business function.
Use BDO's Pivot Canvas, below, to guide your transformation journey. And please stay tuned for the next installment of our BDO Growth Strategy thought leadership as we explore successful strategies for implementing and assessing strategic plans like the one we have covered here.
For more information on Growth Insights from BDO Management Consulting, please reach out to:
Chris Diepdael, Vice President Management Consulting, National Leader of BDO's Go-to-Market Strategy Practice