What is strategic flexibility?
Strategic flexibility is the idea that you can keep certain options open, to allow you to quickly pivot your strategy in a different direction. This can be useful if the environment changes, your run into technological issues, or customers are not as receptive to your offerings as you expect.
The advantages of strategic flexibility
The clear advantage of strategic flexibility is that it allows you to adapt should you need to. Being aware in advance of the possibility of the need for change allows you to avoid pre-emptively making commitments and irreversible decisions in areas that have the possibility of not working out.
Especially in uncertain or changing environments, there are clear advantages of being flexible. No matter how much strategic foresight you are able to develop over the environment, it is impossible to know exactly how the market will evolve. Having some flexibility built into your strategy can avoid you becoming overly dependent on any one situation occurring, allowing you to quickly change approach should you run into issues.
The limitations and disadvantages of strategic flexibility
However, while strategic flexibility brings significant benefits, it is not without costs. Strategy requires making decisions: accepting tradeoffs and committing resources to a particular course of action.
Attempting to keep your options open can prevent difficult decisions from being made. Strategy requires focus, and you can’t be everything to everyone. Attempting to do everything will naturally result in you performing each area worse than if you are focused on a particular direction.
A danger of attempting to maintain strategic flexibility is that, rather than commit to a particular option, you may decide to push off the choice, under the justification that it keeps you more flexible. Other firms that are able to make resource commitments may be better placed to capitalize on opportunities.
Final thoughts: Consider the important areas where flexibility may help
Possibly the most important question to ask when considering strategic flexibility is not should you be flexible or not, but rather, where in your operations does it make sense to maintain flexibility. Strategic flexibility shouldn’t be a ‘choice’ that allows you to put off making other more difficult choices.
Instead, it can be useful to consider the areas of your business where i) there isn’t significant costs associated with keeping your options open, and ii) there is great uncertainty in how the environment will unfold, so you benefit from maintaining some flexibility to change your approach should you need to.
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