Peloton’s CEO and founder, John Foley, resigned last week after missing an important shift in consumer behavior. The company’s once-raving fans apparently tired of taking live exercise classes at home and started returning to the gym, to be around -- get this -- other human beings! Result: Peloton’s stock plummeted amidst sharply declining sales, and investors are livid.
Peloton’s sudden reversal calls to mind a new axiom that’s taken root during covid. Goes like this: “In today’s business environment you can’t even be sure about next week. Why bother with next quarter or next year?” Strategic planning is said to have become a fool’s errand, a worthless exercise.
I'm not so sure about that. Maybe, on reflection, the old axiom that if you fail to plan, you plan to fail still holds true. Perhaps the process just needs to be reinvented, made relevant to the post-covid world of hyper-change. The unarticulated need is for a system that identifies sudden and abrupt changes needs to get better at it. Trends, technologies, and shifts that could spell boom or doom depending on how we deal with them, need to be noticed, thought through, and acted on in a much more sophisticated way.
I’ll be the first to acknowledge that coronavirus has repeatedly offered jaw-dropping twists and turns. It has, like a natural disaster, created devastation and surging demand for certain categories of products and services. At times, even the most sophisticated models failed to tell us what would happen next. Repeatedly, the forecasters and experts were as clueless as the rest of us.
But to dismiss the value of planning would be a big mistake. Maybe Dwight Eisenhower was on to something when he said, “Plans are worthless. But planning is everything.”
Instead of chucking our strategic planning processes, we need to reinvent them for the accelerated age. For too long, strategic planning has been practiced as a rote annual exercise. In more than a few organizations it consisted of dusting off last year’s PowerPoint deck and changing the date and adding a few paragraphs. This will no longer do, as external threats and disruptions can appear that require attention overnight.
New and homegrown approaches to planning are emerging. While diverse and often unheralded, what they have in common is that they link trend-tracking and strategic foresight with risk management and the firm’s innovation apparatus. And they do it in an opportunistic, holistic and cross-functional way.
One practitioner of foresight-based planning is Wisconsin-based Trek Bicycles.
Before covid struck, Trek created a forecasting unit to track emerging trends and serve multiple business units with data and insights and thought leadership on emerging technologies. At first, when Covid struck in early 2020, Trek rolled out its recession playbook and began to hunker down and cut costs just like its competitors did. But because Trek’s product managers were steeped in the latest forecasting methods and use the best forecasting software, they continued to talk with dealers and lead users, and conduct ongoing market research. What happened was they soon spotted a countertrend, and they paid attention.
Six weeks into Covid and sales were showing a slight uptick. What was going on? Isolated consumers that hadn’t ridden their bikes in years were realizing it was a safe form of exercise and repairing their old bikes. Trek was soon ringing up sales not only of bikes, but of ancillary products like helmets, seats, and tires. Because Trek’s hard-charging CEO John Burke and his key lieutenants are avid trend-trackers, they were willing to challenge preconceived notions about what a pandemic might do to consumer behavior.
The result was they were able to see a developing boom and place bigger orders with key suppliers like Shimano and Bosch well ahead of their competition. Meanwhile, Trek’s forecasting unit was encouraging product managers to think out farther into the future, they were able to see that e-bikes would reach a tipping point, and the pandemic hastened that moment. Trek speeded up production to match surging demand and enjoyed increasing sales.
But never did they think the surge would last forever, once covid subsided. That was Peloton’s mistake. And they are paying a heavy price.
To consider how your strategic planning process is serving you in the Age of Acceleration, ponder these key questions with your top team:
- How well have we dealt with strategic planning during Covid, and what has it revealed about the effectiveness of our process?
- What new models of strategic planning out there might help us reinvent our own?
- What are the most important workplace, demographic, consumer, technological and social trends that we need greater insight into going forward?
- How are our strategic foresight efforts linked to our innovation roadmap, and how do we create greater linkage?
My study of the plight of disrupted firms reveals that most often the root cause of their demise is a failure to react and respond to rapid change. They consistently fail to spot the change. They fail to marshal a creative and effective response. And they think they have more time than they do. Thus, the most important question of all for today’s leaders is: does our existing process prepare and enable us to outthink disruption, and seize the opportunities that change brings?