Mastering strategic renewal
What do the European financial services and industrial companies have in common? Large multi-unit companies, in both sectors, must adapt to the conflicting forces of profits for today and flexibility to adapt for tomorrow.
There are scientific articles that explore these conflicting tendencies in the European financial services, whose observations could be extrapolated to any well-established enterprises exposed to the winds of change.
Some studies understand strategic renewal as a targeted change of companies' status quo through the development of new competitive advantages in the pursuit of future profitable growth. Moreover, according to these studies, there are different kinds of strategic renewal journeys that organisations can adopt as a way of coping with increasing environmental pressures.
Mastering Strategic Renewal: Mobilising Renewal Journeys in Multi-unit Firms describes four generic renewal journeys in a pure, idealized form: emergent, directed, facilitated and transformational renewal.
We have to recognize that many of the current strategies apply in organizations are not suitable for the future, while the need to remain profitable and competitive is a must, therefore succeeding in profitable proactive and renewal is hard.
Strategic renewal: Can it be done profitably?
This study finds that success formulas are surprisingly simple, congruence within an organization and collaborative efforts are key elements for strategic renewal. Success relies on an evolutionary approach rather than a discrete move underlining the importance of timing and pacing.
Firms undergoing a successful renewal tend to release obsolete resources, invest in innovations and product development, enhance efficiency in operations, and capture market share in growth businesses. But despite similarities in the pursued strategies, this study shows that there is substantial variation in profitability outcomes and only a few companies were able to renew while maintaining superior profitability.
Strategic renewal is challenging due to the irreversibility of investments and uncertainty over their outcomes. Uncertainty may discourage companies from pursuing said strategies.
Now, lets try to translate this urgent need for clarity, predictability, and confidence into what is happening in at our doorstep. While industry transformation requires strategic renewal at the level of individual firms, revitalizing a whole industrial landscape definitely needs certainty.
The recent signature of the ‘The Antwerp Declaration for a European Industrial Deal’ has kicked off a public debate about how far Europe should go in supporting domestic industries. These collaborative effort is going above and beyond the generic renewal strategies at firm level, we are witnessing a new approach to finding a renewed consensus on balancing support for industry, sustainability, and competitiveness. This is definitely strategic renewal at scale.
