Hot Topic: Future-looking in a disruptive world

In an Institute of Directors masterclass, Tej Parikh and Janhavi Dadarkar shared expertise on setting long-term strategy in an ever-changing context. Sarah Wild reports.

As technological and demographic change transform business and economic models, organisations must become better at planning long-term strategy and making strategic decisions.

This was the theme of a masterclass run by Janhavi Dadarkar, programme lead for governance and role of the director at the Institute of Directors (IoD).

Tej Parikh, from the Institute’s policy unit, began by discussing business productivity and the skills required in an age of automation.

Honing in on the need for institutional agility – “a sub-set of productivity” – he explained that to remain competitive, businesses must invest in technology that is no longer simply “replacing human brawn, but replacing the human mind”, reskilling and retraining staff to absorb and implement this, and supporting lifelong learning.

“The essence is that we’re going to need to be thinking more strategically: 5-15 years ahead”

“The problem is that only one in four businesses has actually devised or implemented a strategy to assess the potential impact of future business models and technologies on their workforce,” he said.

Skills challenges and time constraints mean “many are circumventing the trial and error phase when devising strategies for the future”.

“Business models are changing at speed and HR directors must understand how technological advancement affects their workforce,” he said. “There needs to be better mapping, looking at which roles need innate human talents, and which require human oversight and decision making. The essence is that we’re going to need to be thinking more strategically: 5-15 years ahead.”

Setting strategic direction

Addressing this requirement, Dadarkar advises us to get back to basics. “What is strategy?” she asked, admitting “I don’t think there’s clarity within organisations. I’m talking about long-term ‘where do we need to be’ direction.”

Ownership of strategy must lie with the board. “The ‘how to’, the auditing, the feeding into it can, and must, sit at all sorts of levels; but ownership rests with the board,” she stressed.

“Who’s making this decision? Do we really have the right people deciding on strategy?”

“It’s about the right people, with the right information at the right time with the right processes and skills. How we ensure that happens is the challenge. And you probably have the hardest part of that challenge: the right people,” she acknowledged.

When looking at strategy, the first question to ask is “what is the driver?”, urged Dadarkar, to avoid “strategy for strategy’s sake. Second, what’s happening in the market? That’s another important thing that boards don’t look at enough.

“Finally, and this cannot be underplayed, there’s board composition. Who’s making this decision? Do we really have the right people deciding on strategy?”

The danger of blind spots

In a constantly changing world, business strategy must be flexible and adaptable. Using the acronym G-PESTLE-D, Dadarkar highlighted the external influencing factors to embed into strategy processes: globalisation; political; economic; social; technical; legal; environmental, and digital.

“Where’s the analysis around how any one of these things could impact our business?” she asked. “The two big disruptors now are digitisation and globalisation.”

Where high-profile companies have faced “ripples” caused by a significant event (think Volkswagen), the common denominator is “blind spots”, according to Dadarkar.

“Awareness of blind spots has to be ingrained from day one in your culture,” she said. “Have we got the right culture to empower people to bring bad news to the right people? To challenge the dominant people? Are the right people doing this?

“How much does the board look at risks around these [G-PESTLE-D] areas and where does that discussion happen?”

“Women will see different blind spots to men because their experiences are different”

Managing risk from a siloed perspective is unhelpful, she added; boards tend to think “that’s not board-level risk. We’ll get the CTO to look at this; the CHRO to look at that… that’s not what I want boards to be doing”.

Diversity of perspective, and particularly cognitive diversity, becomes invaluable when negotiating external challenges and managing risk. Why?

While participants indicated “the relationship between diversity and increased innovation”, Dadarkar encouraged them to flip this on its head.

“The innovation piece is one side of this,” she said. “But the bigger thing is that it reduces the blind spots. For example, women will see different blind spots to men because their experiences are different.”

Diverse perspectives may also help mitigate against the dangers of human biases, which cannot be fed into the G-PESTLE-D strategic model.  

Educating directors

Providing education for directors “around what they need to be looking at” requires emphasis, Dadarkar advised.

“The skills for a board are different to the skills for operational matters,” she explained. “The whole journey to becoming a director is one of those things I’d love people to think about from graduate level.”

We only have to look at the logos of some of today’s biggest and best-known organisations, from Meta and Uber to Amazon and Apple, to see “the world is completely different to 35 years ago”.

“The likes of HMV and Kodak… they had strategies. But did they have future-looking strategies? Most corporates are flying blind,” she cautioned.