A lot of work has been done on Strategy. And somewhere Strategy correlates to Competition but not limited to it. There are various aspects to this word “Strategy” and it could mean differently for different situations.
Let’s live a mental situation to understand this further.
Imagine yourself and another random person being locked up in a room with limited supplies of food and other survival resources.
Initially, you guys might talk, bond, and share. But soon the food and resources will approach perishment.
What do you think will happen then?
Depending on your competitiveness quotient, two things are possible:
- You will continue to bond and share with the other person till death do you part
- Compete, where either of you will have to overpower the other for survival
The latter is nothing but “Competition” and is known to the world as Gause’s Law of Competitive Exclusion where two entities that compete for the same resources can’t survive together.
Had it been a dog you were locked up with, you’d have been provided with different resources for survival and things would have been different.
So, let us understand that in business and life we have to compete. That is natural.
And this hasn’t started recently. Time and again the recorded history of this world has witnessed competition, victory, and defeat.
So, What Strategy Is?
I think it is a way to compete in the market with whatever resources are available to us. (This is especially relevant to the Business Management world)
But for most of us, Strategy could be much simpler. For Example, a well designed daily plan is a perfect example of Personal Strategy for Growth.
We think very highly of Strategy and pertinent consulting done to businesses. Indeed, the role demands a thoughtful outlook in the future and defines the way forward.
But I also feel there is much more to it than just this. Today, we take a look at it beyond the definition. By this I mean let’s talk at a granular level.
Do we really understand what Strategy is and how it may impact us, our lives, businesses, and society as a whole?
Think of Strategy as a Direction
We know, Strategy is something that looks into the future. It is difficult because none of us know the future and we must still guage it as accurately as possible.
The direction is what determines the destination, and so if a company is not going in the right direction, it will fail to be where it wants to in the future.
Let us take a look at a classic example of how Pepsi Co. changes it course to be a company it is today.
Pepsi Co. Example
For businesses, it defines the direction of where the firm wants to be in the next 20-30 years. And there is no better example than Pepsi Co. to understand this.
Under the leadership of Indra Nooyi, Pepsi changed its course from being known as a beverage giant back in the early 2000s to the much snack company it is today. But this did not happen overnight or even over months. It took years!
The important thing to understand is that the CEO looked into the future and reckoned that the world would move towards healthier food options and sugar would be discarded pretty much from the human lifestyle.
All of us know how the fitness industry evolved in the last couple of decades. And Pepsi is still alive today as a company. In fact, it is highly profitable and reputed.
So, Lets all just agree that the company’s strategy that was formulated a decade ago worked over all these years for the betterment and brought it where it is today.
Note: This is just one of many examples where we see a kind of business transformation strategy employed to change directions for a company.
Planning and Execution must go Hand in Hand
They say, “Failing to Plan is Planning to fail”. In 2016, as per a study done by HBR, it was found that around 70% of well-formulated strategies in place fail due to improper execution!
So? Having the right strategy is not the problem, but the Execution of the same usually is.
Most of us want to work in areas that formulate Strategy for a company. Have you ever thought of the impact, when your formulated strategy doesn’t get implemented properly within that company?
Will it work?
I don’t think so. 🙂
And this is why I feel that Strategy goes beyond just formulation. Planning, Execution, and Monitoring are equally or rather more important.
Here are 5 main reasons I think Strategies doesn’t work for a lot of companies:
Lack of Planning
Ok, so the strategy is in place but what about the plan to execute it? Most times, this is missing. And this costs the company.
A well-thought-out plan must be in place for the execution of the strategy to begin. Without this, the job of the team isn’t even over.
I recommended going through this list of Why Strategies fail to understand the importance of execution furthermore.
Have you heard of the game Chinese Whisper? More often than not, it happens in companies. Leadership communicates a message and it is understood differently by different individuals.
As a result, the perfect strategy gets misaligned within the organization only to fail in the future.
This is why communication is very important to both internal and external stakeholders of any business organization.
Lack of Culture
As Peter Drucker rightly said, “Culture eats strategy for breakfast” – He indicated that not having a culture was a sure shot way to ruin any strategy that an organization might have developed.
As we know. not every company has a good culture. This is true especially in firms that are new or have not been growing for many years. But culture holds its own good importance that can’t be ignored or overlooked.
And I feel that wherever there is a lack of organizational culture, the execution of strategy as a whole would fail. The absence of togetherness won’t let people feel a sense of belonging.
Do you think that every strategy is perfect? Do let me know in the comments, please.
But, I don’t think so. Sooner or later many companies may realize that their strategy is not working. And then comes its ability to adapt and change course.
This sense of being flexible to changing market conditions, economic drivers, customers, and competition often drives organizations away from success.
Nokia is the best possible example of this inflexibility.
No Departmental Alignment
Ok Good, so we have a promising strategy in place that is intended to capture 10% more market share in the coming years.
But the Sales and Marketing teams continue to function as they were before, without bringing about any change in their local level strategy is not the way to go right?
To capture more market share, the company has to sell more, market more, and acquire more customers. And so, departmental alignment with the overall vision and strategy of the company is important for the execution to not fail.
Strategy is Competition Driven
We are operating in a marketplace. And our strategy can’t be independent of our competition. Every company must acknowledge the presence of good competition and formulate strategy accordingly.
What do I mean by this?
Well, Market conditions and competition are key indicators for a company to design its future.
I am not hinting at copying strategies of the competition, that would, of course, be stupid. But what I mean is our strategic thoughts must also include our competition and market sentiments.
For Example, a company X wants to become a market leader for a particular item but what if the product it sells is approaching the end of its life cycle?
Should it still continue with its desire or change focus towards new product development based on customer needs?
I think the latter makes more sense.
A very simple example of undermining competition is of Yahoo’s when in 2002 it could have bought Google for just $3 Billion dollars! But because it lacked vision and continued to acquire more companies non-strategically – It did not do well for very long.
I would call it sheer negligence of market and competition.
I feel that What Strategy is doesn’t have to do anything with Strategy. It is more about what you and I think it is. Isn’t it?
I believe Strategy is above and beyond boardrooms and big discussions and is rather something that lives at a much smaller level within an organization. Multiple factors play roles to make or break the Strategy. And the leadership still remains responsible and answerable to the world.
But the game of strategy is very interesting and is clearly capable of spelling success or failure for any organization.
What do you think of Strategy? Do you have interesting examples of how strategies have worked or failed for companies? – Please do share in the comments below.
Author: Ranjeet Mukherjee
Author is the founder of Strategy Weekly & an Alumnus of NMIMS.