What we can learn from Peloton about creating a resilient strategy
The idea of creating a resilient strategy seems to come up in conversation again and again these days. It’s certainly a sign of the times that Optimizing Strategy for Results, my latest book co-authored with Ron Price and Professor Timothy Waema, is launching two years after COVID-19 lockdowns began in the U.S. People and organizations are now looking for ways to move forward and prepare for the next disruption.
With the pandemic and the ever-increasing complexity of the world, many companies are developing and executing strategy in volatile, uncertain, complex, and ambiguous—or VUCA— conditions. Organizations are discovering that stability and predictability are not guaranteed, and the current environment plays a huge role in strategy creation. Disruption can happen at any time, so companies and their strategies must be resilient.
Despite continuous change and unpredictable environments, there are ways to prepare and strategize for periods of disruption. A resilient strategy is detailed and anticipatory—you must be ready for anything and everything. This means you cannot simply prepare one strategy for one possibility. Your team has to strategize around many possibilities so that when the time or opportunity arises, you are prepared to act.
Looking at the past two years, you can learn from the businesses and industries navigating constant change. Peloton is an excellent example of a company prepared for the disruption—but unprepared for the aftermath.
The Peloton Story
Peloton was a very futuristic company before 2020. When the gyms closed due to the pandemic, their products were suddenly in high demand—company shares soared 400%. To some, this was the blessing of disruption, an unexpected boom in business. But it wasn’t perfect. There were other concerns to consider, such as demand outpacing the supply, supply chain interruptions, and factory closures due to the pandemic.
Now, as vaccines have circulated and the pandemic wears on, those who were forgoing the gym for workouts at home are returning. What was once just want consumers needed—live, at-home workouts during a time of isolation—is no longer the best option when people are tired of being at home, being virtual, and are more comfortable spending time around others.
Unfortunately for Peloton, they didn’t prepare for this “return to normal,” and the consequences are apparent. The company is cutting jobs, sales outlooks are down, and CEO John Foley stepped down in February. What could the company have done differently to prepare for yet another kind of disruption to their strategy?
Strategy Lessons from Peloton
During VUCA, you can never land in a predictable place. You have to be ready for both the highs and the lows. To survive, your organization has to be intentional in embracing change, making decisions quickly, and focusing on the future. There are four things to learn from Peloton’s story that you can do to prepare for future disruptions and build more resilient strategies.
Define the highs and lows. What could be the high point of a disruption for your business? The low point? What could you do when those occur and what are the risks? Keep asking yourself until you can come up with strategies and resolutions for as many possibilities as you can think of. Peloton did not anticipate their lows, and it led to a swift change that was not in their favor.
Create a communication plan. Everyone is on edge during disruption—employees, customers, shareholders, even your competition. When you offer clarity to these stakeholders, it allows them to see your point of view, to understand the macro- and micro-impacts on your business. Share your thoughts on the potential highs and lows to offer clarity and a path forward. Peloton mostly spoke of how business was booming, so when it was no longer thriving, stakeholders did not know what to think or what was coming next.
Prepare multiple strategies for many different scenarios. You can never have just one. Thinking of the many paths you could take and all of the branches off those paths creates flexibility and allows you to make brave decisions. For example, if Peloton had thought of other revenue paths and purchased physical gym locations rather than simply expanding their product, they might have recovered some of their risk. This is the challenge to overcome: most often during periods of disruption, people bury their heads and don’t think bigger. They just want to make it through. You have to have the discipline to think of all possibilities.
Review your strategy often. Consistently review and tweak your strategy or strategies, as often as monthly. The time for multi-year strategies is gone. Whatever your long-term strategy may be, how you execute it should be based on iterative monthly, quarterly, and yearly strategies. Build in the time and discipline for review.
Creating a successful and resilient strategy for disruptive times is not impossible. You can learn from this time to be better prepared for the future, knowing that change will inevitably come again and again.
For more on how to prepare for, create, and optimize your strategy, order Dr. Baiya, Ron Price, and Professor Timothy Waema’s latest book Optimizing Strategy For Results: A Structured Approach to Make Your Business Come Alive. Learn about the book's authors and more here.