Wednesday, September 03, 2003

How should you choose a strategy?
Many companies in the current environment are unhappy with their performance. Most are asking the question: "How do we improve our performance?"

A less frequently asked question is: "How should we choose between potential strategies and projects, tactics and methods of implementation?"

Arguments about these issues can lead to firings of the right people of the wrong people, short term improvement and long term improvement or short term declines and long term declines. So what should a leader do?

My guess, from listening to and working with many companies is that there are a couple of basic ideas that people are relying on:

1. Things are going to get better. And when they do, we will do better, so we just have to survive.

2. We are going to lower our breakeven. If that means cutting costs and outsourcing, that's what it takes to survive.

3. We are just at an early stage in our life cycle. If we just get those early buyers, we will be OK. The market will grow.

But what if these ideas are not the best way of thinking about the future? What if the future is not going to be the like past? And rapid drops in the price of computing, telecom, lower barriers to entry, internationalization, terrorism, disease overpopulation, break down of health care systems, rising government debt levels combined with demographics do suggest problems or as a very minimum new challenges.

Cathleen Benko and Warren McFarland write in their book, Connecting the Dots, that the future is so uncertain, that companies should position themselves to adapt to the future as it unfolds rather than assuming it is predictable. If you buy their view of the future, then both of the three ideas listed above don't really work very well.

Benko and McFarland go further - they argue that companies need to think in terms of building capabilities or Traits as they call them, that will allow companies to survive an uncertain word.

They identify four traits in particular - though I suspect there may be others and they may vary in importance by industry:

1. Eco-trait: instead of trying to do everything internally, your organization needs to be part of a virtual coordinated value chain where you take advantages of other's superior capabilities.

2. Outside-in trait: instead of focusing on how the world looks from the inside, companies should thinks of themselvese as a collection of processes that represent the way in which suppliers, distributors, customers and stakeholders maintain relationships with you.

3. Fighting trim trait: companies need to focus on being able to react quickly to changing markets instead of assuming and relying upon the inertia of markets and relationships.

4. House in order trait: companies need to make sure that there systems and procedures are flexible and integrated able to power the other three traits.

It's an interesting perspective. The analogy is that character is more important than skills for the individual. As a parent, you hope to give your offspring the character that is necessary for them to learn, adapt and gain the skills necessary for success and happiness.

So, how do YOU choose your goals?

Alistair Davidson

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