Both proactive and reactive business strategies are essential for a business to succeed over the long term. Strategies are proactive when they are based on anticipating future needs or concerns, with actions taken to accommodate those needs before they arise. Reactive strategies are developed in response to external or internal situations that have already occurred, or are currently in progress. Internal reviews and accurate forecasting of trends are needed to determine the right mix of proactive and reactive strategies for the organization, as well as which specific actions should be adopted under each type of strategy..

How the Strategies Work

As the name implies, proactive strategies are enacted before the anticipated situation occurs. This could be in response to an opportunity, such as anticipating an upcoming trend in customer preference and developing a product or service to meet that newly-expressed desire. It could also be in response to a predicted concern or crisis, such as adjusting expenses and staffing to better reflect seasonal periods of low demand. Reactive strategies, which are developed and enacted in response to situations that have already occurred, may also reflect both opportunities and crises. A product line might be retooled to take advantage of a trend that has already been noticed by the public at large, for example.

Developing the Strategies

Proactive strategies are developed by anticipating or analyzing trends and reviewing the organization’s past performance in relation to externally-induced crises or threats. If a certain situation has a reasonable chance of happening again, the company might proactively develop and implement a strategy to mitigate the disruption to prevent such an event from occurring in the future. Reactive strategies are developed to solve problems or respond to opportunities when they arise. There are also reactive strategies that are developed in advance, or proactively, but are not implemented until the anticipated event takes place. This could be considered a proactive-reactive “hybrid” strategy.

Pros and Cons

Proactive strategies, when used well, can reduce the effort the company spends at “crisis management,” thus freeing up resources to focus on the organization’s mission. The proactive approach can also provide a competitive advantage by positioning the company as a leader in satisfying consumer demand. However, too much focus on proactive strategies could be wasteful if the anticipated trends are not accurately forecast, or if the anticipated and planned-for events never occur. Reactive strategies avoid this problem by focusing on a situation that is currently active, thus reducing unnecessary effort or wasteful allocation of resources. However, reactive strategies can slow down the organization’s response so that it misses out on emerging trends or new opportunities. In highly competitive industries, this could lead to loss of market share and other adverse effects on the corporation.