An often-heard question and expressed frustration in many boardrooms, C-suites, strategy offices, and program/portfolio management groups is how can our organization improve strategic planning and integrated implementation with current and evolving digital technology to:
- Implement Bimodal* and Agile Strategy
- Determine the optimal product mix,
- Reduce Capex risk,
- Optimize the R&D pipeline,
- Ensure organizational strategy alignment,
- Beat competitors to the marketplace,
- Increase cash flows, or
- Increase sales, earnings, and ROI?
Innovative solutions with dynamic modeling and simulation (M&S) can be used to integrate business and implementation strategy, roadmapping, and project and product portfolio management.
The time is right to engage the power of M&S because of the development of new “front-end” application templates and easy to use graphics tools that make M&S user-friendly and cost-effective for even relatively small organizations.
The science of System Dynamics which underlies M&S tools can dramatically increase the probability of achieving enterprise, SBU, technology, product portfolio, or research goals. Unique strategy and implementation plans can be “stress-tested” under complex and dynamic environments before significant capital and human resource commitments.
As both a strategy development and implementation tool, M&S-aided action plans become agile – “living business models” as the developer of the Sysdea® System Dynamics platform Dr. Kim Warren coined the term. M&S can become an organization’s most powerful decision support tool to increase ROI, reduce investment and managerial risk, and enhance cost and market competitiveness.
M&S capture ubiquitous, real world mechanisms, such as accumulation processes, interdependencies, feedback, thresholds, and intangibles, neglected by traditional business planning and management tools. Linear planning and spreadsheet-type tools are simply not fit to handle the complexities arising from these mechanisms.
Dynamic M&S is becoming the gold standard for strategic planning and implementation as organizations tap digital technology to provide for real-time strategy and tactical management. It is an ideal tool for supporting operational evolution, digital innovation, and the bimodal practice of being simultaneously focused on predictability and exploration.
Static spreadsheet and graphics tools can never keep up with rapidly changing, ever more complex environments. Dynamic modeling and simulation (M&S) software can become management’s most valued decision support weapon in formulating, implementing and measuring business strategy and risks over time.
Models and simulations can direct and track performance to desired outcomes on a real-time basis. It is used to solve complex business issues including:
- Predictive and prescriptive analytics,
- Strategy and innovation roadmapping,
- IT business support,
- Strategic architecture,
- New product launch,
- Portfolio and project management, and
- Competitive product positioning.
Managers can modify any of the external driver variables (e.g., economics, competitors, market shifts, black swan events, SWOT analyses, etc.) and internal process variables at any time and see the likely effect using clear visualizations.
Gartner in its 2017 Cool Vendors in Project Portfolio Management writes “The move to digital really does change everything. Some of the inherent complexity that has always been a part of portfolio management is now being simplified. In a world where many organizations have settled for a simple prioritized list of projects as the standard for their portfolio, it’s hard for firms to remember that true strategy development and implementation involve complex patterns of action and reactions.” (Handler, R. A., Jones, T., Fitzgerald, D., & Murphy, T. E. (2017). Cool Vendors in Project Portfolio Management, 2017 (Rep. No. G00325892). Stamford, CT: Gartner Inc.)
For a more in-depth discussion of the movement to digital and the role of M&S, see the complete 2017 Gartner Cool Vendors in Project Portfolio Management in the recent StratTech Newsletter.
*Bimodal is the practice of managing two separate but coherent styles of work: one focused on predictability; the other on exploration. Mode 1 is optimized for areas that are more predictable and well-understood. It focuses on exploiting what is known while renovating the legacy environment into a state that is fit for a digital world. Mode 2 is exploratory, experimenting to solve new problems and optimized for areas of uncertainty. (Gartner 2017)