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Adaptive Strategy

Your Strategy Needs a Strategy

What

Unlike the classical approach of sustainable competitive advantage, an adaptive approach to strategy rests on the idea of serial temporary advantage. In unpredictable and nonmalleable environments, the emphasis is on continuous experimentation and real-time adjustment rather than on long-term analysis and planning. Since advantage is temporary, the focus is on means, not ends.

How

Strategizing in the adaptive context requires a process of watching and responding to changes in the environment by capturing change signals and managing a portfolio of experiments. Adaptive firms continuously vary the way they do business by trying many novel approaches and then scaling up and exploiting the most promising before repeating the cycle. Successful adaptive firms outperform rivals by iterating more rapidly and effectively than their competitors.

When

An adaptive approach works when the business environment is hard to predict and to shape, and when advantage may be short-lived. Ongoing, substantial changes in technologies, customer needs, competitive offerings, or industry structure may all signal the need for an adaptive approach. Business environments increasingly require this mind-set: today, roughly two-thirds of all industry sectors experience high volatility in demand, competitive rankings, and earnings, making long-term plans obsolete more quickly.

Killer whales, or orcas, exemplify the adaptive strategy of experimenting, selecting, and adopting new practices in response to changing environmental conditions.

Historically, orca populations and even individual hunting packs developed specialized feeding patterns and grounds to avoid competition for food sources. Sometimes they would stay on the same turf for their entire 90-year life span. Think of it as classical territory management. Recently, however, climate change has altered prey distributions dramatically, all but extinguishing some prey species.

In response, killer whales have adapted in two ways. First, they now hunt different prey, adapting entirely different hunting techniques to respond to new prey sizes, like sea otters, instead of the larger marine mammals, like seals, and schools of fish that they traditionally hunted for. Second, they hunt in different locations, experimenting and changing their natural habitat by hundreds of miles. Like an adaptive company, an adaptive killer whale wins by changing what, how, and where it hunts in response to shifts in the environment.

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