Phil Guerin CMC
Management Consultant - implementing strategy, creating capability
Why Strategy Matters Now
If you planned for a ski trip by putting winter tyres on your car then the blizzard has just hit and the rubber you fitted meets the road right now. If you ventured out with bald tyres and worn wipers you are probably already in a ditch by the side of the road. New Zealand’s Government has reacted promptly to the immediate threat of Covid-19 with restrictions, subsidies and tax relief with more to come. All of that will help cushion the economic and social impact. It will not ensure the medium to long term survival of your business. That requires a strategy that is fit for purpose. Right now, that purpose is survival, recovery and growth through the biggest economic shock we have ever seen.
Businesses in New Zealand have recently faced increased competition from earthquakes, an eruption, floods, online sales, digital disruption, borderless commerce, lean start-ups, fewer barriers to entry to industries, disintermediation, rapidly changing customer demand and an increased expectation of environmental sustainability in all aspects of the value stream.
New businesses have arisen and thrived amid this environment. Some existing businesses have read the signs and rapidly adapted their strategies to meet the market. Some businesses have failed. Many businesses have continued with strategies that ignore the changing environment or respond too slowly to it. These businesses have had their foundations undermined and have become vulnerable to any economic downturn, natural disaster or market shock. A long period of growth and prosperity means that their weaknesses have not been exposed – until now.
A key problem is that strategy often ends up as one of the following:
- A succinct expression of the status quo – summarizing what you already do;
- An executive wish list – what you want to do, not need to do;
- Aspiration without execution – fine words with no clear delivery plans;
- A catalogue of activity – a list of projects/activities covering many areas;
- Buzzword bonanza – hitting every word in the market research word cloud;
- Ineffective compromise – everyone agrees but strategy is incoherent and inconsistent.
Strategy is about deciding, communicating and resourcing the key things you need to do to secure a prominent, sustainable and differentiated market position. Once you have done that, you know what you need to stop doing (or do better) to release the resources to execute that strategy. That is not an easy thing to do because you have to come to grips with an uncertain future, you have to trust each other, you have to give things up and you have to take calculated risks. If you don’t make those tough calls you will have limited success in good times and when the bad times come you won’t have a business at all.
“You need to be uncomfortable and apprehensive: True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success.” - Roger L. Martin The Big Lie of Strategic Planning Harvard Business Review Jan-Feb 2014
Take a long hard look at your business. If your strategy is not fit for purpose now then throw it out. Create a new one right now that makes the hard choices and sets you up to survive, recover then thrive. Look at your market, talk to your customers, have honest discussions with your team. Address your immediate cashflow concerns in whatever way you can but look at your strategy too.