No longer 'business as usual'

2008-11-07 00:00

The global economic and financial crisis is already having an impact on how companies do business. The murmurings about consolidation in the global car and airline industries, to name but two, are an indicator of the measures that many companies are taking to reduce costs, remain competitive and still provide their shareholders with a good return on investment. For some business organisations, navigating a safe passage through the stormy seas that lie ahead will require an overhaul of their strategic thinking.

The notion that strategy is about putting one’s organisation into a more favourable position in the marketplace relative to one’s competitors now carries an addendum. Companies also need to ensure that existing and potential customers don’t just perceive, but actually believe, that their products and services are both different and substantially better than competing offerings. This in turn demands a more creative approach to strategy, one that perhaps takes a different route in identifying what markets will be served and how those customers will be satisfied. As the world enters a period during which expenditure on certain products and services is likely to be curtailed, creative thinking will be of paramount importance.

Many companies invest much valuable time and effort (not to mention cost) on an annual strategic planning process. The goal of such an exercise is to develop what their management teams believe to be a strategic plan, worthy of taking their organisations successfully into the future. Research that I have conducted suggests that in many instances this process ends up being nothing more than an update of the current strategic plan. Many managers (including CEOs) responsible for developing the company strategy are averse to taking risks. They do not want to put themselves into a bad light should their ideas be rejected. In the current economic climate, as the global economy heads into recession, a company’s strategy needs to reflect an even higher level of creative thinking. That in itself requires a certain element of risk taking. Yet many strategic planning sessions get hijacked by the financial attendees who are intent on crunching the numbers and discussing budgets and financial targets. The result of this is that the crucial element of outmanoeuvring the opposition gets either neglected, or at the very least relegated to secondary status on the agenda. Strategic planning sessions need to avoid this and the prudent CEO will arrange two demarcated sessions with the goal being to couple the strategy and the financial meetings into an ongoing annual cycle. This gives the right strategy a good chance of being developed, with the proper focus being given to identifying the means by which customers can be better served and competitors better out-manoeuvred.

Fundamental to this are two practices which CEOs must ensure exist within their management teams. Firstly, all attendees at any strategic planning session must understand what strategy is. Debate can then be encouraged within one strategic paradigm adopted by the company to suit its size and maturity. This avoids the situation where, for example, some managers may prefer the Porter methodology, while others belong to the McKinsey school. While expertise in different strategy schools can add value to the process, everyone needs to be reading off the same sheet. Secondly, those self-same delegates must be prepared to improve the innovativeness of their company’s strategy.

Creative thinking and problem solving are the keys to ensuring that the right strategy, addressing the right goals, provides the right results for company management and shareholders. Updates on existing strategic plans simply will not do. Business as usual in today’s global environment is no longer an option.

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