Framing the right strategic question
NEVER BEFORE have there been as many business opportunities as today. The only reason many cannot take full advantage is most likely not because they can’t find the answer – but they don’t know how to frame the question.
Speaking at the University of Pretoria’s Gordon Institute of Business Science (GIBS), GIBS Director, Professor Nick Binedell, together with lecturer, author and consultant Tony Manning, claimed the key to creating a business strategy was this ‘framing of the question’.
It is 60 years since the first authoritative book on business strategy was published, said Manning, however the issue still rated the greatest challenge by corporate managers is how to implement a company strategy.
Usually when a subject appears to have no solution, it’s because the subject matter has never been adequately defined, said Manning. Managers not talking the same language are therefore incapable of taking a strategy to its conclusion. When it fails, primarily because it never had any widespread agreement or buyin from staff in the first place, then the very idea of strategy falls into disrepute.
As many as 90% of strategies do not meet their objectives, but Manning believed not enough research exists as to what strategic tools companies use and therefore where they go wrong.
Possibly, any one of the many strategy models could be workable if management persisted with it to a conclusion, but Manning felt models were seldom given the chance to succeed through weaknesses in their implementation.
He therefore felt the process needed to be undercut, with the starting off point being the simplicity of laying down some definitions and common terminology, as well as including all the company staff in the process.
“At the early stage of strategic planning it’s the buy-in you want to get, as it’s the start of an ongoing conversation. The products of today would never have been dreamed of 20 years ago had companies not involved all their people both in designing the right strategy and in its implementation.
“Ordinary people are the ones most likely to identify the reasons why a strategy is unlikely to get off the ground, and the most common problem is that strategies are unclear. Staff who have to implement that strategy will tell their line manager whether it’s unclear or unworkable, whereas senior management often will not.”
On the other hand, whereas broad definitions are good, sometimes the strategic targets can be too closely defined, forcing people to function in silos “and lose sight of the hill”.
Binedell suggested the less formal the process the better: the biggest mistake companies could make was appointing dedicated ‘strategists’. “Once this priesthood is ordained, other staff feel relieved of involvement and your most important source of innovation is crippled.”
Binedell said where exactly companies look for their strategic model needed to change, as Europe, the US and Japan no longer offered the only solutions. He said one of the key macro issues facing all businesses today was the rise of emerging markets as a force in the global economy. This was being accelerated by the current global financial crisis.
“ The population of developing countries is about 5,5bn or 70% of the world’s total, yet it accounts for only 30% of global GDP. Fully 80% of growth in the next 20 years is projected to come from emerging markets. So the ideas of the future will come out of India, China and Africa, which will also undoubtedly produce extraordinary individuals who embrace new models. Innovation will come from these countries finding solutions that match their unique development needs,” said Binedell.
He said 20 years ago nobody would have credited that South Africa would eventually have so many world-class companies – possibly more than any other country as a ratio of GDP. “ The role of imagination in a frontier country is not to be underestimated,” he said.
Strategies, once agreed through an inclusive process, also need to have their assumptions tested, said Manning. Otherwise, autocratic managers can introduce hearsay