How to Avoid the Agility Trap

Authors: Jianwen Liao and Feng Zhu

Suning, once a market leader in China’s retail sector, was a poster child for agile strategy. While many traditional retailers hesitated in responding to new technologies and evolving consumer preferences, Suning repeatedly pounced on digital trends and other opportunities.

In 2009, Suning embraced e-commerce, pioneering an integrated online-offline retail approach. In 2012 it began to expand its market presence significantly, moving into multiple sectors beyond its base in appliances in order to compete with e-commerce giants. One of its first acquisitions was Redbaby, a leading online seller of maternal and baby products. Setting the ambitious goal of becoming “Walmart + Amazon,” the company planned to establish more than 300 Suning.com Stores and 50 Suning Plazas by 2020.

Meanwhile, video streaming was taking off in China, attracting major players like Baidu, which launched iQiyi in 2010 and later integrated it with another service, PPS, which it acquired for $370 million in 2013. Suning quickly responded, investing $250 million in PPTV, a competitor to PPS, jumping into the market even before Alibaba did. In 2015, inspired by Alibaba’s launch of its financial arm, the Ant Group, Suning introduced a financial division, Suning Finance, and in 2017 it established a digital bank. About the same time, the company also entered the sports industry, investing in Jiangsu Football Club and acquiring a majority share in Inter Milan Football Club. In 2019, copying Alibaba’s introduction of an omnichannel retail approach, Suning bought Wanda Department Stores and took a stake in Carrefour China, with the aim of becoming an omnichannel retailer too. In sum, Suning set out to aggressively diversify its business model while integrating its retail operations with businesses in various complementary sectors, extending its market reach, increasing its data-gathering capabilities, and enhancing customer engagement.

But its continually evolving strategy did not enable the company to thrive. In the face of sustained losses, Suning had to begin withdrawing from noncore retail ventures in 2021, aiming to streamline operations. It now confronts a challenging path to regaining market leadership.

Suning’s experience is a wake-up call for the many companies that proactively adapt to market shifts. The firm displayed remarkable agility by continually responding to changes in the business landscape and seizing new opportunities—and in doing so, was following the conventional wisdom of numerous scholars and industry experts. However, as our study of many firms shows, that wisdom is faulty. We have repeatedly found that in a highly volatile environment, firms anchoring their strategies in enduring factors, rather than transient ones, are more likely to achieve sustainable growth. We call this approach strategic constancy, and we believe that companies that practice it often turn out to be more resilient in times of adversity than companies that aggressively practice agility.

Idea in Brief

• The Problem

Companies that try to respond to every market shift often find that their performance plunges—and have to sell off their “strategic” investments at a loss.

• Why It Happens

The landscape is evolving so rapidly today that companies can’t keep up with every change. Attempts to do so weaken the focus on existing competitive advantages, foster a short-term strategic mindset, and create serious organizational problems.

• The Solution

Build your strategies not on what changes but on what remains constant, such as customers’ most fundamental needs. Begin by identifying a desired end state, what will be required to achieve it, and the enduring forces in your industry. Then match your capabilities to those constants and anchor any adaptations in them.

The Problem with Agility

Let’s begin by revisiting the assumptions underlying the theory that agility is always good for a firm’s strategy.

Agility—the ability to quickly react to rapid change—is all the rage in strategy circles these days. Its popularity is rooted in the belief that organizations must constantly respond to technological advances, new market dynamics, shifting consumer preferences, and other external developments. That sounds like a sensible proposition, but in practice continual strategic adaptation is almost impossible to pull off, because the business environment is evolving so fast that firms can’t keep up. The consequences for those that try to are stark:

Erosion of competitive advantages

Attempting to adapt to every perceived shift or threat can spread organizational resources thin and weaken the focus on core competencies. Building a competitive advantage is a gradual process and often requires concentrating on a select group of synergistic activities over a long period. Suning took just the opposite tack: Its overemphasis on adaptation led it to diversify too much. Many of its new ventures shared few synergies, and it didn’t have enough time to establish a competitive foothold in new sectors before transitioning to other opportunities.

Strategic myopia

A preoccupation with adaptation can foster a short-term focus. When change is swift and numerous opportunities arise at once, companies driven by an agility mindset may chase them all simultaneously and succumb to the temptation to lean hardest into the ones that offer the quickest returns. Firms may overlook the need for coherence in the business portfolio and search constantly for the next big thing. As a result they may neglect to develop the vision and long-term capabilities they need to achieve sustained success.

Organizational chaos

When a company changes direction, it’s imperative that the operating model—the organization’s structure, processes, personnel, and culture—be realigned with the new goals. The company needs to prepare for the transition, oversee it, and then solidify the new operating model to ensure that it lasts. Implementing such organizational realignments is time-consuming. If they’re continual, they can exhaust employees, damaging morale and productivity and undermining transformation initiatives. The incessant flux of the external environment can also overwhelm managers, leading them to make hasty, poorly thought-out decisions. If companies are perpetually adjusting their operating models in response to environmental fluctuations, they risk descending into organizational chaos.

So what can firms do to avoid these problems?

Embracing Strategic Constancy

Jeff Bezos, the founder of Amazon, once made an interesting observation: “I very frequently get the question: ‘What’s going to change in the next 10 years?’ … I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two—because you can build a business strategy around the things that are stable in time.”

He continued: “In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff, I love Amazon; I just wish the prices were a little higher,’ or ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible.”

Bezos’s philosophy underscores the importance of understanding and catering to fundamental consumer needs that are consistent over time, rather than getting caught up in the transient trends that businesses often chase. By focusing on the strategic constants, Amazon can confidently invest in infrastructure, technology, and processes that cater to unchanging customer desires, ensuring that any investment made today will continue to contribute to the company’s success for many years to come.

This is a classic example of strategic constancy, which requires a firm to maintain a steadfast focus on a long-term vision even as it navigates a dynamic business environment. It’s about recognizing the enduring aspects of a company’s business model—its core values, customer relationships, brand identity, and key competencies—and remaining committed to them despite external pressures. It emphasizes depth over breadth—deepening the company’s competitive advantage in its core areas rather than spreading efforts over many. Because it ensures continuity in an organization’s vision, it also facilitates more-reliable strategic planning and execution.

Strategic constants are few in number. In the retail industry, for example, they might be cost, efficiency, and customer experience. In auto manufacturing, they might be safety, reliability, and design.

Some strategic constants may seem intuitive—online platforms like Amazon will always need efficient fulfillment—but others may be less obvious and require firms to make hard choices. For example, fast-fashion companies such as Zara, H&M, and Shein must figure out whether affordability and trendiness will continue to be the driving forces of their industry amid the growing awareness of sustainability issues.

In contrast to strategic constants, transient factors are abundant, stemming from fluctuating and often unpredictable market trends, regulatory shifts, and technological changes. In retail, transient factors could include evolving formats, like big-box stores, and new e-commerce models, such as group buying, social-media-based sales, content commerce, and internet-of-things transactions. In auto manufacturing, transient factors might include new design trends, supply chain disruptions, fluctuations in interest rates, chip shortages, and government subsidies. The impact of transient factors is temporary, and their low predictability creates challenges for strategic planning. Understanding these distinctions is crucial for businesses.

Costco, a retailer established well before the digital era, epitomizes strategic constancy with its dedication to supply chain excellence. It limits its product offerings to about 4,000 SKUs, which enables it to buy products in bulk so that it can always offer deep price discounts to fee-paying members. That model ensures that it has a strong competitive position, regardless of the changing landscape.

Creating a Strategically Constant Company

Let’s turn now to how to use a focus on strategic constants to build a company that consistently outperforms rivals throughout upturns and downturns.

Step 1: Adopt future-back thinking

This approach entails envisioning a desired future state or outcome and then working backward to the present to determine what actions will be required to realize that future. The focus is on defining an enduring mission and a set of objectives the company can aspire to in any market conditions. Present-forward thinking, in contrast, starts with the current state and looks ahead to the future incrementally. It’s more reactive and adaptive, focusing on immediate issues, trends, and competitive pressures. Strategies developed with a present-forward mindset can change significantly as the company’s circumstances evolve.

Future-back thinking helps organizations avoid the pitfalls of constantly shifting direction in response to every market fluctuation. It encourages businesses to develop a north star that guides decision-making, investments, and initiatives over an extended period.

The Netflix transition from DVD-by-mail to streaming exemplifies future-back thinking. As broadband internet became ubiquitous, Reed Hastings, the CEO of Netflix, spotted a seismic shift for the video rental industry on the horizon. Despite the profitability of the DVD-mailing model, he anticipated a future where streaming video over the internet would predominate. Advocating for that future, he challenged employees to make decisions based on what would serve the company’s long-term interests rather than on what would produce short-term gains.

Hastings helped employees understand that the enduring value offered by Netflix came not from the physical medium of DVDs but from delivering the best content to customers. The organization recognized that the method of delivery—whether by mail or streaming—was secondary to the core offering of quality entertainment. That strategic insight enabled it to pivot effectively and invest in technology that transformed Netflix into a leading streaming platform.

Step 2: Identify strategic constants

Once companies have envisioned the future, they must solidify their understanding of the persistent forces driving growth in their industry. What factors are relevant today and will continue to be in the future?

The enduring forces can often be evaluated from either a demand or a supply perspective. On the demand side, companies should focus on understanding and addressing the long-standing needs and preferences of their customers. The key is to identify what fundamentally inspires customer choices and loyalty—factors like quality, service, convenience, and brand reputation. Businesses should then tailor their offerings to meet those demands.

Take the retailer Sephora. The chain’s strategy hinges on the idea that personalization is a strategic constant in the cosmetics sector. Recognizing that beauty and skin care products suitable for one individual may not work well for another, Sephora has embraced a “try before you buy” ethos. Its stores offer beauty consultations and personalized image-design courses and provide many variations of the same product to meet a wide range of customer preferences.

On the supply side, companies can concentrate on supply chain and operational efficiencies that enable them to deliver their products and services effectively. Supply side constancy emphasizes a firm’s operational competencies, including production processes, supply chain management, logistics, and innovation in service delivery.

Unlike other e-commerce giants, China’s JD.com has consistently focused on supply chain efficiency and fulfillment excellence, even as the company ventured into new domains and embraced innovative retail formats. JD’s tight control over its supply chain has enhanced product quality assurance. As a result, many consumers, despite encountering a broader variety of offerings on other platforms, still prefer JD for their purchases. (Full disclosure: One of us is an adviser to JD.)

Step 3: Match constants to capabilities

This step demands a careful evaluation of a company’s intrinsic strengths and the prevailing dynamics of its industry. At organizations in which production excellence, operational efficiency, or technological prowess is a distinguishing capability, a supply side constant may be most appropriate. Conversely, if a firm excels at customer engagement or brand loyalty or possesses a nuanced understanding of market needs, a demand side constant may be the best choice.

Firms should initially anchor their strategies in either demand or supply constants. Because of constraints on resources and management bandwidth, it’s difficult to anchor them in both early on. Moreover, strategies focused on one may conflict with strategies focused on the other. Companies pursuing supply chain efficiency, for example, often maintain strict control over their supply chains, sometimes even producing their own products. That can limit their ability to offer a wide range of products.

Amazon resolved those tensions by taking a sequential approach. Initially, it focused on demand side constants like competitive pricing and extensive product variety. But over the years it has also significantly increased its investment in its supply chain, establishing fulfillment centers to serve third-party sellers on its platform and on rival platforms, such as Shopify.

Implementing strategic constancy is not without its challenges. Culturally, a company must embrace the chosen focus. Leaders play a critical role in championing it, ensuring that every major strategic decision reinforces the constancy principle and that the organization is designed to provide the right support and resources.

Step 4: Adapt around the constants

Only once the firm’s competitive advantage is firmly rooted in its strategic constants should it consider adaptation. The main goal here is to leverage changes to enhance the advantage provided by the constants. The constants should set the boundaries for the firm’s adaptation decisions, including which new businesses to launch and which new technologies to adopt.

Disney has long anchored its strategy in a supply side constant: its extensive portfolio of intellectual properties. These properties underpin the company’s film studios, television networks, theme parks, streaming services, and consumer products divisions. In the digital era, Disney has incorporated into its business advanced animation techniques, virtual reality, augmented reality, and interactive entertainment. Those moves have enabled it to create innovative and engaging experiences that expand the appeal of its popular properties in exciting new ways. For example, Disney has developed virtual reality experiences based on Star Wars and The Jungle Book, allowing users to immerse themselves in the worlds of their favorite characters in novel ways.

Likewise, Sephora, which was renowned for its personalized beauty-shopping experience long before the digital era, has embraced digital transformation by featuring virtual AI-based try-ons both online and in stores and creating an online community focused on beauty topics. Sephora’s adoption of technologies has not shifted its focus away from personalized beauty but has instead enhanced its core strength.

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In a rapidly changing environment, companies should establish a firm and consistent strategic foundation rooted in enduring factors while maintaining the flexibility to adapt when necessary. This approach creates both the stability needed to leverage past achievements and the agility needed to evolve. By anchoring strategies in strategic constants, leaders can help their firms navigate uncertainty and ensure that current investments maintain the company’s relevance in the long term, reinforcing competitive advantages both now and in the future.