CONTENTS
1. The Perfect
Chaos
2. A strategy –
how to manage the chaos
a. How to
prepare for strategy development
b. Strategy
development
THE PERFECT CHAOS
Some
companies do not understand the importance of strategy it seems. My personal
experience with such a company made me aware of some worrying tendencies which
one should absolutely avoid if the company is to survive on the market.
First,
it seemed that after a relatively recent merge between the company and another
company operating in the same general market segment nobody had bothered to
evaluate the results in terms of qualifications, working environment, customer
relations, company and business structure, etc. Nobody noticed that the company
had turned from a small to a middle company. Then nobody understood the
necessity of changes in terms of policy, structure, synergy, strategy, consumer
segments, competition, market development, and so on.
The
problem was that everything was driven on an emerging basis: we stumble upon
it, so we should deal with it. However, that resulted in confused customers,
dealing for more than a year with a double entity (both companies co-existing
under one management); no clear concept about business structure or heading; no
vision, mission or image which usually means problems in terms of finding a
niche or a stable customer base; no visual image – no business cards, no logo,
no presentation materials.
The
worst mistakes though came in the form of lack of understanding of strategy. Chaos
was created by trying to centralize the control and the administration even
though there were two offices operating on different tasks with different
customers and with completely different needs. The lack of marketing strategy (and
business strategy for that matter) resulted in financial pre-crisis at the
smaller office and absolute confusion about how to handle the insufficiency of
clients.
The
biggest problem though, was that the HQ management did not develop a strategy
managing the issues on hand. The understanding and inclusion of all key
elements characterizing the business and giving it a fighting chance seemed
mission impossible. No wonder there – managing a small office is different than
managing two bigger offices. Furthermore, strategy is a specific field and
requires competences. You should not believe that knowing your field qualifies
you as a strategist.
That
is why, before everything falls apart, please understand:
A
STRATEGY SHOULD BE DEVELOPED BY A STRATEGIST.
In
line with that comes the last paradox in the story. Buried in problems, the
small office had a great core competence that clients were interested in.
However, not understanding what a strategy implies and what the business logic
requires, development suggestions given by splendid professionals in their own
field included ideas as offering a predefined service to customers (instead of
learning to listen and adapt to clients’ needs) and mixing the successful service
with different unconnected activities to ensure revenue (thus risking an image
that has a chance to be established). Last but not least, one can even argue
that the relative success so far has only been a coincidence as the
short-termed action strategy – contacting possible customers – cannot ensure
the achievement of any of the typical business goals – sustainability, growth,
prestige.
A
STATEGY – HOW TO MANAGE THE CHAOS
How to prepare for strategy
development?
A
strategy is crucial, as shown above.
Preparations
for strategy development include full analysis of the available resources, of
the market, the consumers, and the competition. Resource analysis should
include:
1. Personnel –
number, location, qualifications, network, image (in some cases);
2. Buildings –
what does the company own or rent, how much does it cost, what is the location,
what is the use of the buildings, what are the eco-characteristics of the
buildings, etc.
3. Management –
what is the managerial structure, who are the managers, which are their
qualifications, what network do they have and how good they can use it, what is
their public image;
4. Partners –
qualifications, resources, CSR, public image, financial state, contracts and
agreements, network;
5. Supply chain –
companies, CSR, qualifications, resources, public image, contracts and
agreements, network.
6. Finances –
what is the current state of the company, debts, interests, investment, how are
the resources managed;
7. Image – how do
our stakeholders see us and why, do we manage to broaden and retain the
customer base, what is our strongest feature, what is negative about us, are we
known, have we promoted our core competences effectively, have we reached all
the stakeholders we needed to reach.
8. Core
competences – licenses, limited knowledge, special type of a service or a
product difficult to copy, innovation, etc.
9. Product – expected
frequency of use, demand, price, quality, development, stage in the product
life cycle, primary target groups, etc.
After
finishing the internal corporate analysis, an external research should be
launched to get a detailed picture of the market situation. It should
absolutely include:
1. Competitors –
bench marketing, consumer segments, core competences, possibly future strategy,
types of products, financial state and public image.
2. Market –
rules and regulations, supply and demand, financial stability, customers’
ability and desire to buy, market tendencies and branch tendencies, etc.
3. Political and
social situation – development and freedom of the market, legal systems and
necessary steps to legalize the business, expectations of local communities,
political interests and cross-border connections, war, etc.
4. Consumers –
brand dependency, expectations regarding product quality, price, socially
responsible practices, levels of consumer awareness in connection to the
product’s characteristics and the business practices, local communities, customers
of other brands/companies, etc.
5. Other
stakeholders – mapping of all groups or individuals with an interest in the
business or interest affected by the business or affecting the business.
Those
factors do vary depending on the type of company, on the branch, and the
country you operate in. The important part is to analyze comprehensively all
factors that have impacted, are impacting or might impact the company. Only
then you are ready to talk strategy.
Strategy development
Strategies
are developed in close collaboration between the company’s finance manager,
business administrator, marketing manager, development/innovation managers,
sales managers and possibly stakeholder representatives. It might be that a
smaller company will hire outside help if not housing all the needed experts,
but it should not happen that any of the core business areas is overlooked.
After
establishing the status of the company, vision and mission should be defined.
At first they would typically encompass only the financial and growth goals but
in the formulation process they will come to encompass everything from
resources and company interest to marketing, communication and stakeholder interests.
Mission and vision are closely connected to the existing (if any) image of the
company and to the desired one. That is to say that setting goals should not
only be based on perceived abilities but also on stakeholder expectations.
With
the appropriate choice of mission, vision and image goals the first major step
in strategy development is over. From here on follows the development of a
company-specific operative plan meant to lead the way to realization of the
corporate goals.
A
very important point here is that mission, vision and image have the purpose to
channel the company’s efforts, thus maximize outcomes. However, this also means
failure if mission, vision and image are chosen inappropriately. Last but not
least, a note which one easily can find in any management textbook – the strategy
must be a process, not a campaign with a clearly defined deadline.
DIDI
No comments :
Post a Comment