A few years ago, I had the opportunity to undergo a study program on Sun Tzu – The Art of Warfare which largely dealt with the art of ancient war adapted to modern day business. The course had been very revealing and has impacted me hugely in terms of my approach to areas in marketing, management and other related skills.
Extrapolating the concepts of Sun-Tzu, one could build huge relevance of the current doctrines of military strategies to today’s business world.
For any military, the major current area of focus is finding ways to reduce the time that it takes to plan operations while, at the same time, disrupting the enemy’s ability to plan. It is a ‘rule’ that a strategic plan is out of date immediately after it is drafted.
Businesses today rely on various strategic information sources. It has been researched that some of the perceived critical sources are:
- Financial performance trends
- Internal analysis of profitability of individual service areas
- Evaluation of success of current / previous strategies
- Formal benchmarking against competitors
The “average” business strategy process is clearly heavily skewed towards what has worked in the past and how the firm’s financial performance compares to other firms. Though this is important, it is more score-keeping than actual ‘strategy’.
In a rapidly changing world, strategy needs to be more sophisticated, focusing outwardly, with an element of forward-looking dynamism.
As per recent surveys done my multiple agencies, the market trends, economic data and information about what other firms are doing are of lesser direct strategic importance. Yet it is exactly this data that provides critical indicators on how the firm needs to change course to anticipate emerging trends. Not just react to the past.
Today, it is imperative that businesses develop better forward vision and master the art of thinking through the “what if” scenarios and incorporating processes and tools to assess the progress.
Looking only at the past may prove to be disastrous. Like somebody once said: “If we drove our automobiles the way that we manage our firms, with our eyes firmly on the rear view mirror rather than out of the windscreen, then there would be wrecks on every corner.”
The most common tools that businesses use to formulate their strategies are:
- Strategy retreats
- SWOT analyses
- Market positioning analysis
- External consultants
- Employee surveys
But unfortunately, more sophisticated strategy tools such as analysis of the firm’s culture, balanced scorecard systems and sophisticated comparative empirical analysis of the growth potential and profit drivers of individual service areas are largely absent from the average strategy toolbox.
The major strategic issues that business leaders face today can be summarized as:
Increasing client demands and increased pressure on margins; difficulty of balancing long-term growth with short term profitability; increasing levels of competition within the profession; finding new ways to outplay the competition and lack of management / business expertise amongst the firm’s leaders.
The extreme heavy emphasis on financial performance, though appropriate, is not enough. Applying another military correlation, most firms seem to be focusing on how well the last battle went, and what tactics worked best but not on what the enemy is doing now and how the battle turf is evolving. This absence is as dangerous in business as it is in warfare.
Businesses need to increase the rapidity and the value of any strategy process. For this, the leaders need to take the following steps:
1. Know the trends that influence their markets that might impact on either (a) the continued relevance of their firm’s strategy or (b) their ability to execute.
2. Determine what critical sources of information they need to track, in order to monitor these. Then put in place a process to collect this data and feed it to the people that need it, in the format makes best sense.
3. Educate themselves about the range of strategy tools that exist and decide which best suit the needs and culture of their firm.
4. Refocus their efforts on developing the capability to reach decisions and plan, quickly and effectively whenever necessary, and also to execute strategy under a range of conditions.
5. Build personnel ‘Skill Maps’ to ensure continued awareness of peoples capabilities – the availability and the needs for better planning and control.
As Charles Darwin once wrote: “It is not the strongest of the species that survives, nor the most intelligent, but the most responsive to change.”