As of the beginning of 2020, we think that the word Strategy has come to be out of favor with executives. Why? Hundreds of different definitions of strategy, failed strategic planning efforts, “fads of the month” and the like have caused some cynicism in our view. However, we feel that properly viewed, your firm’s competitive strategy with links to operations excellence are two of the most important areas of work for you as CEO and your top management team to drive increases in your firm’s valuation.
For us strategy in today’s business world is not just a strategic plan created at the beginning of a fiscal year and the new initiatives the plan outlines. These are necessary but not sufficient. Competitive strategy in our view is the continuous decision making over a year or five years (or whatever time frame makes sense) of what your firm should be doing to win against rivals and secure longer term competitive advantage and wealth creation. Thus the phrase should be “competitive strategy making” to put it in a verb form, not a static noun form. In addition, for us competitive strategy making is decisions that need to be in almost continuous dynamic alignment with your various external “environments”. These environments include your industry, the general domestic economy, trends in international issues, issues and changes brought on by domestic national and state governments and of course changes in your customers’ priorities and needs.
And for the established firm we do not think competitive strategy making is only about the current products and services you offer. This may sound like blasphemy. The revenue from you current products and services are the life blood of your firm. But it is not sufficient in our view. We think the foundation for competitive strategy making are the valuable resources and capabilities sets you have honed or should hone to produce torrents of new products and services in the mid to long term future. Valuable resources and capabilities are things your firm owns, possesses or controls that are very difficult for a competitor to copy. Examples are a great physical location. Think of Tobassco Sauce’s salt domes which produce the finest hot peppers in the world. Or think of a brand that has tremendous favorable attribution like Harley Davidson. Or think of proprietary R&D and new product development processes at Nestle or other firms in the Top 100 Innovative Companies in year after year polls. Or think of unique and strong corporate culture like Southwest Airlines, the WD-40 Company and IKEA. These valuable resources and capabilities sets are very difficult for any competitor to copy and given the firm its “economic moat” of profit protection as Warren Buffet has state.
These resource and capabilities can take ten or fifteen years to fine tune for a winning formula. Without sounding self-serving, this is where an outside resource can help greatly. Many times in incumbent established firms things have gotten so very much status quo that the team has trouble architecting and developing new needed, winning resources and capabilities sets. These aspects are almost always seem to be “counter-culture”. Many others have expressed this view over the years so we are not claiming it is original to us. But I was one of the first to comment on this reality in my 2001 article and 2004 book of the same title The New Science of Strategy Execution: How Established Firms Become Fast, Sleek Wealth Creators.
I could go on but hopefully I have convinced you we have something worth talking about with you. As I mention several places in this website, we would be glad to schedule a no-cost to you several hour conversation to see if we can add value for you and help you with your strategic management accountabilities.