In the world of technology, there are two types of resets: a hard reset and a soft reset. A hard reset reboots the machine to a functioning state, as if you were switching it back on after a period of the machine being off. A soft reset reboots the machine within the software it is running, closing applications and clearing the data in the RAM without affecting your settings. It’s less drastic compared to a hard reset, which turns the clock back to original factory settings and completely erases everything.
This duality in resetting also exists in the world of business. The soft reset is used to realign company activities – including product portfolio, brand marketing, channel strategy, and operations – to relieve companies of certain strategic commitments that they should not have pursued in the first place, or were executed improperly. Soft resets usually fix issues with marketing, brand positioning, or product direction; or it can help fine-tune a company’s approach within other problems or opportunity spaces.
Often, it is a hard reset that companies need in order to move forward. It means refreshing the organizational design, the strategic logic of how a company competes, and the mental model used to drive value creation. It’s basically throwing everything out; even the hardware needs to be part of the reconfiguration. In today’s world, where discontinuities are affecting every industry and threatening their survival, a soft reset alone often cannot solve the problem. What’s needed is a complete hard reset – a full-scale strategic transformation.
Over my career, I have initiated and supported more than a dozen companies, trying to make them into significantly better competitors and even reinventing some in the process. The list goes from large multinationals with over $20 billion in revenue, to small-scale and family enterprises with under $3 billion. These programs have gone under different banners including business reengineering, corporate restructuring, cultural transformation, and strategic reinvention. But, in all cases, the objective has been the same: To make fundamental changes in how business is organized and conducted in order to help cope with a different, uncertain, and more challenging market environment.
Success depends on many factors, but it is increasingly difficult these days because time is becoming the killer factor. Resets need to be done fast; a slow reset is worse than no reset. The market, or your best employees, won’t give you the time. People will jump ship if they can see how slow it is to fix the ship. Beyond its ability to solve problems, resets are also about speed: Speed of decision-making, action, feedback, response time to environmental changes, change of direction, and shedding the people who don’t embrace the change. Slow speed = inertia = failure.
When CEOs and executives think about crafting strategy for a reset, or resetting to craft a new strategy, they are often thinking about a soft reset. As a result, these companies invest significant time and effort in execution – and are failing, because they’ve already wasted their resources before realizing a soft reset is not enough.
These soft resets, in the form of strategy planning, resemble an MBA school reunion, where people boast about their achievements without talking about the big risks ahead. No one is exactly sure why they are doing what they’re doing, and no one is expecting any good or big decisions to come out of it other than an expensive entertainment bill.
Companies need to turn these boring and unproductive annual strategic sessions into offsite reset exercises. Only by examining the dogmas and deep-seated assumptions of the organizations can they see the light.
Part of the answer lies in rethinking the process by which strategy is crafted. A soft reset is good for realignment of tactical initiatives; a hard reset is needed when dealing with disruptive changes. Whether it is needed or not, the value of going through the exercise lies in the company keeping its edge. Strategy does not happen in an annual executive conference. It happens in often-unexpected places and in real time – conversations during a flight, in line at Starbucks, during quiet moments of reflection while on vacation, or when reading a book. The result of a hard reset exercise can fuse these types of thinking, enriching it, providing more context, and anchoring it with a purpose beyond serving their chosen product markets.
An organizational design reset allows us to recognize the forces and energies that naturally flow from individuals and teams, enlightening us to what inspires their social, economical, and psychological growth through how they seek autonomy to exercise their own purposefulness. This way, they are more capable of responding effectively to frequently changing and uncertain environments, having already proven themselves.
Use applied design thinking to encourage imaginative minds. A hard reset strategy is to avoid the “in-the-box” thinking while avoiding being completely “out-of-the-box.” The idea is to create many different boxes that show how external forces can change the shapes of these boxes and their implications on business models. Success is measured by the number of boxes you can create and how each of them can help executives foster a shared understanding of the future environment, challenges, opportunities, and economics, thus laying the groundwork for big strategic decision-making going forward.
Business should not wait till there is a crisis before hitting the reset button. Every year, companies should prepare for a hard reset exercise to heighten their sense of disruptive threats, as well as help develop relevant strategic foresights. These reset sessions should take place in an environment that stimulates change in the marketplace. It needs to include well-developed future scenarios and an overview of how each scenario is powered by specific drivers, their potential industry impact, its structure, as well as implications across the value chain.
Michael Porter believes that “the essence of strategy is choosing what not to do.” I’ll say, the essence of strategy is knowing when you need a reset.
Idris Mootee is the publisher and editor-in-chief of MISC and CEO of Idea Couture. He spends his time between London, New York, San Francisco, and Shanghai.