A rapidly transforming business environment requires new approaches to strategic thinking. When facing an unpredictable future, organizations are better served by a compass, rather than a detailed road map, argue Japanese academics Ikujiro Nonaka and Hirotaka Takeuchi in one of MIT Sloan Management Review’s most popular articles of 2021. Drawing on ancient Japanese teachings about collective responsibility and righteous living, the authors explain how to base strategy on a set of lived values to thrive in a competitive 21st-century business environment.
To successfully navigate an unpredictable business environment, base your strategy and actions on a shared moral foundation.
Companies face a business environment rife with uncertainty and unpredictability. Traditional strategic planning based on data and analysis won’t enable organizations to adapt and respond to rapid, unpredictable change. Rather, organizations need to be understood as “living organisms” that are constantly adapting based on new knowledge.
The individual workers who make up these living organisms are instinctively driven to seek social connection. Organizations must leverage humans’ inborn drive to work together to create something good. This sense of common purpose is what Tadashi Yanai, CEO of Fast Retailing, refers to as the “soul” of a company.
Soul refers to the overarching values guiding every business decision, while also defining the contribution the organization makes to broader society. Soul is the moral compass of an organization. It describes the future an organization wishes to create. Strategy then translates these values into concrete actions.
Businesses with “soul” share six...