The economic environment rapidly emerging from the recession will force business leaders to look at their opportunities for growth, competitive differentiation, and cost controls in a new way. A pattern-based strategy will help leaders harness and drive change, rather than simply react to it, according to Gartner.
A pattern-based strategy provides a framework to proactively seek, model and adapt to leading indicators, often-termed "weak" signals that form patterns in the marketplace. Not only will leading organisations excel at identifying new patterns and exploiting them for competitive advantage, but their own innovation will create new patterns of change within the marketplace that will force others to react.
"Most businesses and governments today are so invested in traditional processes and thinking that they can't hear or sense new signals," says Val Sribar, group vice-president of research at Gartner. "Many are not even trying to identify signals of change. If they are, they are unable to get executives to pay attention, model the impact, or discuss how their organisation must adapt.
"The few organisations that are seeking and modelling new patterns continue to struggle to get their people, processes and information to adapt in ways that drive a measurable business outcome."
Yvonne Genovese, vice-president and distinguished analyst at Gartner, adds: "It's not enough to just seek changes in social, economic, political and environmental landscapes. Organisations need a way to evaluate what they are hearing and act appropriately. They also need to seek patterns, not just from information, but also in activities of people, such as the collective on social media platforms."
Pattern-based strategy requires both existing and new technologies. There are existing technologies that will continue to evolve – business intelligence, rules-based engines, performance management, service-oriented architecture, business process management, recommendation engines, etc.
A pattern-based strategy will also require integration of these existing technologies and the emergence of new or enhanced technologies: those that identify patterns of change to indicate opportunity or risk, those that model the effects on the enterprise and those that enable an organisation to consistently adapt to these patterns and drive measurable results.
Most business strategy approaches have long emphasised the need to seek better information and insights to inform strategic decisions and the need for scenario planning and robust organisational change management. Few have connected this activity directly to the execution of successful business outcomes. According to Gartner, successful organisations can achieve this by establishing the following disciplines and proactively using technology to enable each of these activities:
* Seeking in new ways and beyond traditional places – Business and IT leaders have historically focused on information that exists within traditional, well-structured sources — usually reinforcing what they already know and validating their current strategic direction. But to ignore new patterns that form from weak signals, or to misclassify stronger signals to fit within the norms of a current business strategy, risks losing sight of exceptions that provide valuable leading indicators of market changes. "To get beyond the type of seeking they may have performed in the past, organisations must break down traditional silos of information to proactively seek signals across existing and emerging sources of information," says Sribar. "This will enable business and IT leaders to identify, characterise and assess patterns that both support and contradict existing strategy and operations assumptions."
* Modelling for pattern analysis – Once new patterns are detected or created, business and IT leaders must use collaborative processes, such as scenario planning, to discuss the potential significance, impact and timing of them on the organisation's strategy and business operations. The purpose of modelling is to determine which patterns represent great potential or risk to the organisation by qualifying and quantifying the impact. "Successful organisations will focus their pattern-seeking activities on areas that are most important to their organisation," says Genovese. "Using models to do scenario planning will be critical to fact-based decisions and the transparency of the result."
* Adapting to capture the benefits – Identifying a pattern of change and qualifying the potential impact are meaningless without the ability to adapt and execute to a successful business outcome. Business and IT leaders must adapt strategy, operations and their people's behaviours decisively to capture the benefits of new patterns with a consistent and repeatable response that is focused on results.
According to Sribar, the ways that Amazon and Netflix apply recommendation engines are examples of organisations leveraging pattern-based strategy concepts. These companies seek new patterns in behaviour as customers browse and purchase. Amazon and Netflix evolve their customer models dynamically in order to adapt promotions as the customer navigates through the site.
In many cases, this has led to increased revenue through cross-selling and upselling, as well as higher customer loyalty. Most importantly, the results of various adaptations are fed back into how recommendations seek new patterns and model potential future adaptations.