So what is strategy? Oxford dictionary describes it as "A plan of action designed to achieve a long-term or overall aim". Cambridge provides a little flavour by saying strategy is "a detailed plan for achieving success in situations such as war, politics, business, industry, or sport, or the skill of planning for such situations".
However, strategy is much broader in scope when taken into context of Organization or (Government) policy. Most written about topic in management in the last 30 years, it’s probably one of the most incoherent topics as well with so many theories and concepts going around. The best way to further talk about this is to begin by taking a pen and paper and writing down your company’s strategy.
The best way to further talk about this is to begin by taking a pen and paper and writing down your company’s strategy.
Read through it once you have finished. Can it be explained in simple and clear words? If you have really managed to write down something meaningful, consider it a good start.
Many people confuse strategy for profitability or their long term objectives like "to be the biggest", "to be the best", or "to be the leader in innovation" etc. Profitability or objective is the product, result or end goal which will be achieved through strategy, not the strategy itself.
Research has proven that companies with a good strategy have a much bigger chance of success and do well compared to their peers who don’t have one. It’s surprising then why businesses often don’t have a winning strategy. When talking about Business Strategy, it's important to list its major components.
Does your strategy talk about who do you want to sell, or which segment of market you want to operate in? This is linked to another element which we will discuss later- capability. As Porter himself likes to tell, "there is no best product".
For different people, the definition of best will be different. Talking about phones, can we say iPhone is the best phone? It is no doubt a very good phone, but for someone like me, good old blackberry was better. Someone looking for ease of operating may swear by Samsung while a billionaire may only be interested in a diamond studded Vertu. Different phones mean different things to different people. Are you clear on which segment you are catering to?
Consider asking yourself if your strategy is closely aligned with your capabilities. Distinctive capabilities puts a company in a good position to win. Something which only you can do or you can do it differently (& better) than others. Think apple. Their capability to build state of art devise with an equally good user interface has put them where they are today.
Does your company have a distinct personality? Your capabilities should help you develop a distinct personality. A personality which is not easy to imitate is one of the components of a sound strategy. Think Royal Enfield. It's capability to build strong, powerful looking machines which effuse the manly charm has helped them to be associated with adventure, self-respect & pride. They have restricted themselves from getting into the lighter motorcycle segments. This meant making a choice of not getting into that segment even if it involved foregoing the opportunities available there, hence preserving their identity. It’s not easy for competitors to imitate their positioning entirely while continuing to cater to other segments (eg. sub 150 cc bikes).
Most important of them all, a strategy has to be economically viable. It needs to be clear on how and where the profits will be generated from and if they will be enough to sustain in the long run.
Strategy has to think of different components as a whole. Each component has to reinforce each other. It’s like a general fighting a battle on different fronts. Every single front is important and can be ignored at its own peril.
The global furniture giant IKEA is a good example. IKEA sells low cost trendy furniture for middle income people. They have an ability to imagine how their customers live in their homes and an in-house design capability to bring those ideas to life. Their stores follow a self-help model with enough stock to ensure immediate purchase. (you would have to wait for 2-4 weeks in any other furniture outlet for your design of choice). These stores sell furniture which come in standard boxes and are easy to carry and easy to (self) install. Their stores have space for children’s play area and restaurants so that people can spend whole day there and are even open at odd hours to accommodate working individuals. All these capabilities complement each other to give the customer a unique experience.
Speed, agility, adaptability
With a rapidly changing landscape, any position can’t remain unique for a long time. With advent of globalisation coupled with a booster of digital, boundaries are getting blurred. It is important that a strategy is flexible and is evaluated and re-evaluated from time to time. How IBM positioned itself as a cloud, analytics & IT Infrastructure business to shift from its legacy hardware driven model became critical to its survival after changes in customer preferences. Is your strategy flexible enough? How often do you re-evaluate your strategy?
You need to get back to the drawing board if any of these critical components are missing in your Organization's strategy. At Bombay Center For Business And Strategy, we will help you get a winning Strategy. Write to us to know more.