Dynamic consistency vs Strategic change

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The importance of dynamic consistency

Dynamic consistency refers to decisions being consistent and reinforcing one another over time. Consistency over time is an internal role of strategy – it is important that actions taken by a company build on past areas. Many strategic moves take many years to implement, so it is important that the firm has a long-term perspective when making decisions.

The opposing need for strategic change

While strategic consistency over time is important, firms also face pressures to change. The environment that a company operates in may change, or competitor actions may necessitate actions by firms.

In many ways strategic change is opposing to dynamic consistency. At the extreme, dynamic consistency would imply that the firm never makes any changes to their strategy – which could potentially create miss-alignment with the external environment of the firm. 

Balancing consistency over time with the need for strategic change

It is important to recognize both the importance of consistency in decision making, but also the need for change. There ideally should be alignment, however; even when considering change, the firm’s past does matter. It influences what resources the company has, as well as market expectations about the company. Such past expectations and decisions place limitations on how easy it is for the firm to change.

The key is for firms to consider where adaptations can be made, that better align the firm with the external environment, without being inconsistent with the past. Rather than radically changing the approach taken, look for adjustments that can help better align the firm with the new conditions faced, while also not undermining the past success of the firm.