BLOGS

Is your company strategy tying you down?

Created on 2023-04-24 05:03

Published on 2023-04-24 05:13

Every business has a strategy and with this the company aims to achieve a competitive advantage in its industry.

Michael potter in his book competitive advantage 1980 provides techniques of analyzing industries and competitors. Potters five forces became a book in the strategy gospel alongside other thinkers. It’s now more than forty years and the environment now changes faster than it used to , the speed of change has accelerated. Competitive advantage has a life span, the competitive advantage an organization has can’t last a lifetime unless it’s a monopoly, which have become a dying breed.

Organisations design strategy so as to be able to win a lager section of the market, market share winning has a cost and who pays that cost? The consumer or the business executives? The beneficiaries of winning normally would be the shareholders and the business executives through share dividends and performance bonuses for the two groups respectively.

What exactly do customers gain in the success of a business, considering that their purchase is what contributes to the metrics organizations are interested in, such as profitability, revenue? Are our customers truly customers or they are company hostages? Take your relationship with a telecom company or your bank, do you use their services because you really love giving money for the service or just because that’s the best available option at that point in time? If you answered it’s the best option, you most likely are a hostage customer who if a better offering came up, you would switch without blinking an eye.

The competition today has shifted, competition for many years was considered to come from within the industry, such that banks would view other banks as the competitors, telecoms have existed for less than thirty years (In Africa) and its only in the last ten years that they have become competitors for banks , and in some areas, not entirely in all bank services and in magnitude of service level. A telecom will certainly offer access to finance however not in the same magnitude as a bank. Another industry not spared by competitors dynamics of telecos are the Internet service and all in the industry of offering information transmission. The first one to have felt the effect was the letter delivering institutions.

The unfortunate reality today as far as strategy is concerned, competitive advantage doesn’t last as long as they used to and competitors seem to be all over the war front for business.

The management guru Peter Drucker in his famous quote on the business of business being business rings more true today just as the time it was published. The business of business is to satisfy the customer and eventually the business owner, and based on this ,the business first needs to satisfy the human capital that will provide service to the customer otherwise the whole plot of profitability, divided , service and customer satisfaction falls apart. There is no metrics that are key to the business that will be achieved if the human capital metrics are not first achieved.

Key business metrics that emanate from strategy are achieved by the human capital. The human capital are the cogs that drive the wheels.

Strategy is about imagining possibilities and then choosing those choices which a most compelling argument can be made for. Strategists are becoming a dying breed with the need for making decisions using data. Decisions using data means applying incremental rules. Strategy implies uncertainty, we hope that our hypothesis is right and thus will reap specific rewards.

The exists no data which can tell us how the future will look like, we however have lots of data of how the past looks like, we would want to achieve more based on the past, a scenario that cannot allow for imagination on what to do and not do. Many business leaders want to depend on data to make decisions for the future, this has the effect of killing imaginative thinking on possible futures of the organization and the business.

Do you still have a competitive advantage or you never did know when the advantage stopped being an advantage?  If your strategy is still on the competitive advantage identified ten years ago and this is what you have been exploiting with incremental plans, you need to review the market and the competitive advantage that existed, it may have shifted and you still in the room.

The author, Martin Wanjohi is keenly interested in strategy and Talent development.

Martin is the head of learning and can be reached on martin@iperformanceafrica.com

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