Good Thinking
Ideas for becoming more strategic
I keep an old-fashioned paper file into which I place articles which make me think. I am selective in my selection, so the file is not too big, even though the habit goes back to the early days of our consulting firm. I like to take a look through it every six months or so and use the exercise as stimulus for my own creative thinking. It gets me away from the day-to-day rigours of running the business and looking after our clients.
My other free style thinking favourite is to sit at the back at conferences, which I attend from time to time if I like the sound of a speaker. Sat in the dark with a notepad I take the opportunity to work through some new ideas, perhaps my thoughts stimulated by a particular remark, helped by a different physical environment. I recommend you do this every now and then, no matter how busy you are.
I took time out last week to peruse the file and came across a couple of old articles, one from some years ago caught my eye. It was a McKinsey article entitled, ’Becoming more strategic,’ and contained three tips for every Senior Executive. In the article they made a point I concurred with then, and still do, which is that: ‘At a good number of companies, corporate strategy has long represented the bland aggregation of strategies which individual business unit heads put forward.’ They continue, ‘Rare is the company where all members of the top team have well developed strategic muscles.’ I think that too is quite true.
They go on to offer three tips which any Executive can act on, ’To become more strategic.’ I hadn’t copied the second sheet that listed these but thought it would be interesting to come up with my own set instead at the end of this article.
A separate article in the file I came across was from the FT written several years ago. It quoted Michael Porter, with whom I agree on a lot, even if the five forces leave me a bit cold. The passage which really resonated with me read: ‘Porter has argued that many companies do not really understand what strategy is. They confuse it with operational efficiencies. Operational effectiveness consists of things like better inventory management and processes, like business process reengineering. These can help cut costs but suffer from an important weakness, they can be copied, ‘ (I was reminded of what one of my old bosses used to say, ‘You can’t shrink your way to greatness’). It all made sense.
Professor Porter went on to explain as reported in the article that, ‘Companies need to look for a sustainable advantage that others will find it difficult to imitate. The best companies think about what they can do better than anyone else.’
The last sentence describes the most fundamental analysis which we carry out with every corporate strategy client. The exercise is not easy. In a surprising number of Boardrooms there is not consensus around what the point of difference might be. Perhaps not so surprising when you consider that those Executives are usually mired down with the challenges of dealing with the operational side of running the business in a fast-changing environment and making this year’s numbers.
Stimulated to consider my own thoughts by this combination of articles, I considered the four top tips we might offer the strategically inclined Senior Executive today. I came up with four, because I felt unable to leave an important one out. They came to me with great clarity.
Tip One
Be clear and agreed as a team on your Vision for the business. You can’t have a strategy to achieve the vision if you haven’t agreed on what it is! Once agreed, leverage your proposition to drive towards the vision. (See next)
Tip Two
Review the business in competitive context and agree on the one thing you can offer of value to customers better than anyone else. If not yet clear on this, think about what you would like it to be. Tip, it needs to be something which you have a good chance of delivering on. This is commonly seen as an organisations’ value proposition.
Orientate everything in your business to better equip you to deliver on this point of business consistently. This will guide your investments in people, systems, data collection, culture, brand activation, acquisitions. In short, every aspect of your organisation. This is your ‘Organising Intelligence.’
Tip three
Think on your Intangible Assets. At forward thinking inc we choose to bundle these under three headings: Human, Relationship and Brand Capital. These are the assets which make you valuable and hard to copy. They require investment and are appreciating assets if invested in wisely. Find a way to track your progress in strengthening them, using data. There are ways to do this, but their very intangibility makes it harder to get your hands around than sales or costs. Persist, it is worth the effort.
Tip Four
Seriously think about and invest in your Relationship Capital, in particular. This is arguably your most valuable asset. It sounds old fashioned to say that ‘business is about relationships,’ but there is truth in it. Relationships need to be worked on. Acting with integrity and consistency are probably the keys to building enduring ones. Of course, Relationship Capital developed over many years, can be destroyed in an instant by a wrong move or even an offhand comment. For us, the risks to your Relationship Capital should be set right towards the top of your risk register, and you should have relationship strengthening strategies around them.
I’m rather sceptical of ’Top Tips,’ but for those interested in strategy, these four are worth thinking on. Let us know if we can help. It’s what we do.