The business world is changing rapidly. Companies must respond to the constant changes with new digital business models. To do this, they require direction from management. At the same time, employee initiatives should be promoted and implemented as soon as possible to remain competitive.
In the age of globalization and digitization, only the two or three largest provider of a product or service will survive in the long term because they are already known to potential customers, which alone gives them a great advantage.
Today, every company should strive to become a digital leader and to be in a position where they can manage digitization. It is the only way to secure long-term business success despite disruptive technologies and extremely agile start-ups. But it also means that companies must have the flexibility to make strategic decisions that quickly respond to changing environments.
Ever shorter product life cycles give way to significantly shorter planning horizons. Companies must adjust their strategy development process to respond to the new business models of their competitors. To this end, they must integrate new digital trends and developments into the strategy and implement the same.
From top-down to bottom-up
The classic top-down approach of strategies specified by management is no longer sufficient because it is based on two basic assumptions:
- First, the person formulating the strategy possesses all knowledge about the environment, and enough expertise.
- Second, the environment is sufficiently stable and predictable.
But today, these requirements often no longer apply as new competitors, technologies and business models are constantly changing the business environment. This increasing volatility makes systematic and strategic planning more difficult. Classic strategic decision-making systems fail in these unstable conditions. Hence the increasing importance of emerging strategy elements, which are initiated bottom-up by employees in unstructured and quickly changing contexts. In this way, tactical decisions are often made outside of strategic planning processes and are subsequently integrated into the business strategy. This allows companies to respond more quickly to novel opportunities or risks.