Strategy is the step-by-step removal of removable constraints. Competitive strategy means deliberately choosing a different set of activities to deliver a unique mix of value. This classic advice from Ivor Kenny written in 2003 holds true as much today.
Looking beyond the present in order to see the kind of organisation we would like to be can be an optimistic and cheerful exercise. It lifts managers’ eyes beyond the horizon, instead of focusing on day-to-day problems. If a strategic discussion begins and ends with the present reality, the number of disagreements among different departments can end up as a blame-laying situation. Focusing on what we want to be has a more subtle benefit.
Strategy, gives managers a context for the decision-making process and help them with the allocation of resources to create a competitive advantage. Strategies should not be developed because they are “the right thing to do” they need to be based on the organization’s culture. Without the vision and the drive to win, there is no reason for a company to try to clarify a strategy. If an organisation is not clear about where is it going, there is no need to advertise the fact.
Budgets are the strategy’s coffin
Ivor Kenny considers that the death of strategy is to get it mixed up with budgets. “Budgets are coffins”. It has always seemed that the number of man-hours used on detailed budgets for the following year is never enough. Micro-management has been encouraged even by enlightened managers, however these strategies do not consider the long view. What is needed instead, in broad brush-strokes, is the financial envelope within which the company must operate.
Kenny also considers that budgets hi-jack the time available to discuss the really important strategic issues during management meetings. The result is that strategies are then discussed, in smaller portions instead of an overall perspective. A good strategy is a comprehensive strategy. An incomplete strategy can lead to bad surprises.
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The Strategic Cascade
Strategic Cascade is the name of the process of outlining the correct questions in order to have a reasonably complete strategy. For example, instead of using the common question, “How are we going to solve this problem?” we should ask, “Why is this problem at present insoluble?”
Without a strategy, valuable resources are diluted, work is unfocused, and distinctiveness will not be achieved. It is necessary to re-frame the frequently asked questions in the business environment, in order to design strategies that will highlight the company’s competitive advantages an accomplish the main business goals.
THE STRATEGIC CASCADE
|Entry to the process is interactive / at any point / not sequential||Environment||Rapid and continuous change – social, political, technological, commercial, values. Do we really know/understand what’s going on?|
|Vision||What do we aspire to? What inspires us?|
|Mission||What business are we in? What is our unique legitimacy, our USP? Where are we going?|
|Strategy||How do we get there? What are the obstacles? How do we overcome them?|
|Structure||What is the best way to organise/distribute power and work? What kind of engine/structure do we need to overcome obstacles, to get things done?|
|People||What kind of attitudes, skills, knowledge,, energy and motivation do we need? Do we have them now? Do we develop and reward people appropriately?|
|Standards||Against what criteria/benchmarks do we continually measure ourselves?|
|Control||How do we know when we’re off course or need to change direction? Do we have accurate and comprehensive information freely and continually communicated?|
|Leadership||What kind of leadership will make all this happen? Do we have it?|
Competitive strategy is about being different. It involves choosing a different set of activities in order to deliver a unique mix of value, which will make the company outstand from its competitors. As Brier’s First Law mentions:
At some time in the life-cycle of virtually every organisation, its ability to succeed in spite of itself runs out.
The competitive advantage of a business depends on a company’s ability to identify a customer’s or niche’s current or potential needs, and package its product or services to meet those needs in a superior way than its competitors. However, as time passes by, customers’ needs may disappear due to different reasons, therefore, companies need to be able to adapt easily and fastly to change. As Will Rogers said, “Even if you’re on the right track, you’ll get run over if you just sit there” here is where the importance of resilience in a company relies.
Strategy is about managing change and reducing uncertainty, that is why companies need to be aware of the current trends in order to predict upcoming changes and in that way, be able to adapt to them in a more efficient way.
For example, some years ago it become evident that that autocracy would not work over the long term. Therefore, innovative organisations just like Google, Facebook or Amazon, made of the the job an experience in itself, instead of continue rewarding their employees with promised future promotion or rewards.
Another example is the current demand for management to demonstrate competence and co-operation, instead of depending on hierarchic authority. Companies are flattening their organization charts, which makes the communication and decision making process faster and more efficient, while their employees feel more involucrated in the operational process.
In order for a company to get from its current situation to the situation it would like to be, teamwork, creativity, originality, inventiveness, intuition, imagination and courage, are utterly needed, and by so, managers need to see beyond the horizon to drive its team to design accurate strategies and accomplish the cooperative goals. This is one of the main factors that differentiate a true leader among other managers.
Extracted from CAN YOU MANAGE? by Ivor Kenny, published by Oak Tree Press in 2003 and available from www.SuccessStore.com and good bookshops.