Business strategies for the new normal
It is always good to adopt strategy pit stops and to audit opportunities and threats, strengths and weaknesses, but now organisations need to learn to use a wide-angle lens, recognising that competitive sets are changing, as is consumer and buyer behaviour.
With a new socio-economic and business environment as a result of Brexit, Trump, the potential Italian default etc., it is a perfect opportunity for organisations to update their skills and capabilities in strategy development and implementation so that they can remain competitive. It may actually mean it is time for businesses to upgrade their business models! Companies will need to commit to a ‘next generation’ model so that they can build value and provide compelling customer experiences at lower costs.
More than ever, companies need to be attuned to changes in the market place – setting up a political, economic, social, technological, environmental and legal (PESTEL) surveillance group is a good starting point; linking, validating and updating information contained in the business strategy, on an ongoing basis, and re-evaluating strategies when necessary.
Who would have thought oil could drop to $25 a barrel? When analysing threats and opportunities, scenario planning becomes a priority when trying to predict what the business could look like under different conditions; it helps an organisation react rapidly to both what it can leverage and what it needs to fall back on if cornered. To be competitive, the degree of agility and capability of redeploying and reprioritising resources needs to increase so opportunities can be exploited before they are missed.
Be better and faster
This means faster and better use of information, driven by the digital economy and the adoption of technology as an enabler. A simple way to view this, and to knock down the internal silos, is to describe customer and client journeys and their experiences to identify waste, optimisations and potential for collaboration. Move from running uncoordinated efforts within siloes, to launching integrated operational-improvement programmes organised around journeys. Focus on re-imagining the customer experience; this can reveal opportunities to simplify and streamline journeys and processes that will then unlock massive value.
However, as companies move from Operating Expenditure (OPEX) to Capital Expenditure (CAPEX) investments seeking higher returns on capital, the wrong kinds of digitalisation and automation can actually erode profitability by opening up opportunities for new entrants through replicable models. Just as automation reduces costs, it also reduces barriers to entry and can stymie innovation and progressively lower overall returns for the industry.
Engaging your staff
A company should identify where value is created and lost and match resources to the areas that create the most value. The real key, particularly because of the unknowns, will be the engagement of staff, customers and all other stakeholders critical to the success of your business.
To do this your organisation needs to understand the drivers of all the stakeholders and how they are changing, plus be creative in harnessing the power of their engagement. The starting point is having clear goals, and the bedrock of good goal setting is having realistic and compelling goals that allow staff to see where their contribution makes a difference, whilst also linking to their drivers.
The Henley Business School’s Strategy Programme is a great opportunity for senior executives and board members to further develop their skills to meet these new challenges. Old business models may no longer be fit for purpose and strategy becomes essential, both as an analytical and leadership tool. Every senior executive needs to refine their understanding of strategy in today’s environment.
Jeff Callander, Programme Director of The Strategy Programme.