Take a zoom out, zoom in approach to business strategy

The five-year strategic plan may no longer deliver the best results in today’s fast-paced business

In this age of instant information, change in business happens fast and frequently. Nonetheless, many companies remain loyal to the five-year plan as a strategic framework. While this type of planning has been useful in the past, it may not be viable today, as it forces executives into a reactive mode when responding to business events.

As a result, executives may wind up pursuing a broad range of initiatives with diminishing returns. According to a study from Deloitte’s Center for the Edge that tracked the performance of all U.S. public companies for the past half-century, performance—measured in terms of return on assets—has declined on average by more than 75 percent since 1965. If the goal of strategic planning is to at least maintain financial performance over time, the findings suggest current methods may not be working.

It could be time to adopt a new model— one that keeps one eye on the long term and another on the present, also known as the zoom out, zoom in approach.

This strategy, which has been used by many successful digital companies, focuses on two timelines working in parallel. The first timeline looks ahead 10 to 20 years, eyeing market changes and potential disruptions. The other targets a six- to 12-month period, seeking to build areas that could support the longer-term view and shed those that do not. Executives alternate their focus between the two.

The zoom out, zoom in method assumes that if long- and short-term plans are closely aligned, the midrange will fall into place. Taking this approach, executives can free themselves from thinking driven by quarterly earnings and combat a tendency to spread resources too thinly across initiatives that may not pay off. It also can reduce the risk that executives will be blindsided by a development that appears trivial today but could fundamentally redefine the market.

Zoom Out for a Long View

Predicting the future is not an easy task, nor is it realistically achievable. Preparing a long-term, 10- to 20-year strategy is less about knowing what will happen, however, and more about having a shared view of how the business landscape could look.

Focusing on a distant horizon is not easy either; it may require executives to step out of the comfort of their corner offices to shed short-term thinking. “Learning journeys” to centres of technology innovation—such as Silicon Valley, Tel Aviv, and Shenzhen—can help executives experience concrete examples of accelerating change. It may also be helpful to begin by imagining alternative futures shaped by present-day developments. Companies might consider bringing in outside provocateurs to challenge business leaders’ assumptions.

It is important to resist the tendency to envision the future by concentrating first on how the company may change. Instead, executives may want to take the opposite approach, looking at how customers and key external stakeholders may evolve. By understanding outsiders’ developing and unmet needs, leaders can work backward to identify opportunities that can create value down the road.

The goal is not necessarily to create a blueprint, but rather to build alignment on a “most likely” future and gain clarity on trends and opportunities that could frame short-term priorities.

Zoom In to Identify Opportunities

Once aligned with a long-term view, the next challenge is typically to agree on a limited number of near-term initiatives that can lead to that future. This task can also be difficult, requiring a level of focus and communication unfamiliar to many companies. When evaluating the short term, traditional companies can consider these three steps: 1. Identify and begin to scale the part of the company that could drive the transition required to become the zoom-out business. 2. Determine the one near-term initiative that would have the greatest ability to strengthen the business’ existing core. 3. Determine which marginally performing activities the company could discontinue in the next six to 12 months to free up resources for initiatives in the other two areas. As they develop these initiatives, business leaders may encounter some pitfalls. There can be a tendency, for instance, to cluster many small efforts into one umbrella project. Instead, consider focusing on one near-term action with the highest potential. For projects that require more than a year to complete, consider identifying one meaningful, achievable milestone.

Because it includes short-term initiatives, the zoom out, zoom in approach often requires commitment from company leaders to regularly pause and reflect on what has been learned, accounting for both external developments and internal initiatives. Regular sessions to evolve short-term strategies may be required every 6 to 12 months. Including discussions of both horizons throughout the year can keep things on track.

The goal is not necessarily to create a blueprint, but rather to build alignment on a “most likely” future and gain clarity on trends and opportunities that could frame short-term priorities.

Heading Off Potential Objections

A zoom out, zoom in approach is nontraditional, and leaders who adopt it may meet with resistance. Some common objections – and the arguments to refute them – include:

“The future is too uncertain.” Yes, anticipating the future can be challenging, but looking forward is important. Organisations that lack a clear sense of direction can run the risk of losing their competitive edge.

“Investors want short-term results.” While some investors focus on quarterly earnings, the anticipation of longer-term earnings can also play a role in determining stock price. Clear communication about significant upcoming opportunities – coupled with evidence of present-day progress toward those opportunities – may even strengthen stock prices.

“Payoff will take too long.” A clear view of the future can enable executives to reduce vulnerability to near-term disruptions and can help guide decisions about shedding underperforming business areas. ***

Zoom out, zoom in is a way to combine and amplify two competing goals: preparing for the future and achieving greater near-term impact. In an environment of accelerated change, an effective strategy may be less about position or movement and more about mapping a trajectory that includes a clear destination and a commitment to accelerating progress through specific short-term steps.