Friday, August 12, 2011

There are no golden rules in Strategy and in Management

There are no golden rules in Strategy and Management

Originally written: December 2001 (in Greek)
words: 616


One could argue that business is like a chessboard, on which each "player" has its own "army". But the analogy with chess might lose its relevance in markets where the opponent (whose movements the player is expected to foresee) is not one not even a few.

The number of "players" (firms) in each market ("game") clearly affects the type of game. Maybe business is more like an "arena" in which many 'gladiators' compete against each other under the gaze of "referees”, and the audience (customers, analysts, investors, etc.). Let us adopt this metaphor for the purposes of this analysis.

In relation to the recent past, in the modern business "arena" the battles have more and more fronts, the weapons are more and more complex, the role of "referees" is getting smaller. New “gladiators” enter the game from all over the world.

Other gladiators are limited to one of the corners of the arena (ie local or regional markets), others move across the field. In parallel arenas, there are other industry/sectoral "battles" and moves from arena to arena (or the simultaneous presence) is allowed by the game.

In these "multi-fronts" conditions, strategy is particularly important.

Policies or actions such as cutting costs, or general measures to improve productivity are not "strategic." Neither is planning per se.

Corporate strategy is a broad and very demanding exercise. Even fundamental business questions should come under review, including:

  • What are (as a company) my skills (core competencies);
  • What is my market or markets (market definition)?
  • What is the product or my products and what is/are not (my products)?

Are strategies, tactics or procedures in Marketing, Sales, Communication, Finance, Human Resources, Production and Logistics, IT, etc. compatible with (or serving) the overall corporate strategy?

What is the rate of change of the parameters in the external environment of my company and what is the impact on strategy?

Strategy is no simple process anyway. But especially nowadays, it must combine intensive analysis with creative thinking.

We must be mindful of the external environment and the internal situation. .

Eg a strategy that is perfectly suited for a competitor is not necessarily appropriate for one's own company. The reasons may be many. The main one is that the strategy should among other things also fit the capabilities (competencies) of the company that will follow this strategy!

Undoubtedly, in the context of a strategy new competencies can be developed or acquired from the market.

This is obvious in the context of a dynamic (rather than static) strategy. But that does not mean that these new competencies are compatible with new strategy.

Matching conditions (opportunities and threats) of the environment with corporate competencies and weaknesses is a delicate process.

But the strategy, much like management, is both science and art. As an art, it requires creativity, especially in times like this.

Eg whether a trend in the environment is a threat or an opportunity depends on one's perspective. In the conception process of a new strategy, nothing should be a given. Ultimately it all depends on creativity and a thorough analysis and of the external as well as intra-company environment.

It is worth noting (though obvious) that no company is identical to the next (neither is any person).

So what can be achieved does not depend only on the characteristics and abilities of the company but conditions in its environment. No factor or parameter is the critical (decisive) one.

This is probably the magic (beauty) of business and entrepreneurship: At the end of the day, there are no limits to the available strategic options! That is why both rational analysis and creativity are needed.

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Nick

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