As firms and organizations roll out their plans at the start of 2008, Interim Dean of NUS Business School, Professor Kulwant Singh, and three Alumni, Dr Peter Alsop (APEX-E MBA 2004), Project Manager, Shell EP International Ltd (Singapore Branch), Mr Henry Kwok (BBA Hons 1972), Global Partner, Haines Centre for Strategic Management and Mr Robin Speculand (APEX-E MBA 2000), CEO, Bridges Business Consultancy Int., share their perspectives on business strategy.
Business Strategy – The Game Plan
Business strategy, recalls Dr Alsop of what he had learnt as an undergraduate, “is what a firm aspires to achieve, and how it intends to do it. It is about addressing how a firm will apply its resources and competencies to provide value to its customers (current and intended) in the face of challenge from competitors, constraints in what it may do and changes to the environment in which it is operating.”
To have a business strategy means to have a “game plan or a road map that lays out action plans to attain desired goals”, as Mr Kwok puts it simply.
Adds Mr Speculand, “Strategies are created to win market share, improve operations and service, beat the competition, launch new products and leverage technology, amongst others.”
Importance of Business Strategy
In today’s competitive world, having a business strategy is important to help firms focus on their goals. Key Performance Indicators (KPIs) and tools such as the Balanced Scorecard help firms monitor their performance on a regular basis so that action can be taken on a timely basis to correct or adapt to the situation at hand.
“Without a business strategy, firms will basically be muddling along in a day-to-day tactical problem solving sort of way,” highlights Dr Alsop.
Business strategies, if successfully implemented, also bring about a positive environment “that’s a pleasure to be part of”, Mr Speculand adds. “When a strategy is implemented successfully, and the right results are achieved, the cobweb-like difficulties encountered along the way become distant memories.”
Having a good business strategy is fundamental in any business to tackle multi-faceted challenges posed by an environment that is increasingly characterized by more demanding, diverse and disloyal customers; competent competitors; emerging economies; greater demands on resources, competencies and innovation; and increased globalization.
“These trends increase the need for strategy to serve as the key link between an organization’s aspiration and its operations,” points out Prof Singh. Many small firms have visions that suggest they seek global leadership, reflecting the desire to aim high and the common recommendation to set stretch goals. A good strategy process and the resulting strategy will help firms establish more realistic stretch goals and offer feasible alternatives for achieving them.
Characteristics of a Good Business Strategy
A good business strategy is one that allows a firm to use its competencies to distinguish itself from its competitors. It is one that builds on strengths, reduces the risks of weaknesses, while encouraging growth to fulfill or exceed its potential.
However, formulating a good business strategy does not ensure success. As Mr Kwok rightly points out, “The formulation of the strategic plan is the easiest part. It is in the implementation and sustaining the strategic plan where many companies fail.”
“No matter how good a strategic plan is, it is useless if it suffers from the ‘S.P.O.T.S.’ Syndrome – Strategic Plan on the Top Shelf. It is only a showpiece, where nothing in it is implemented.”
A long-term study by Newcastle University, UK (1973 – 1989) showed that business success is governed more by how well strategies are implemented than how good the strategy is to begin with. Bridges Business Consultancy Int. surveyed businesses across Southeast Asia over a five-year period and found that 90 percent of strategy implementation failed to deliver desired results.
When implementing business strategy, communicating the strategy throughout the firm is important. “It has to make sense to the people throughout the firm,” Dr Alsop points out.
Keeping in mind the rapid, constantly changing and competitive business environment, business strategies also need to be robust and holistic to react to these challenges.
Translating Business Strategy to Success
Three factors that would translate a good business strategy to success are: a well-developed strategy. effective implementation and most importantly, leadership that develops and implements the strategy.
Says Prof Singh, “Many managers focus on developing strategy, and assume that their subordinates will implement that strategy. An effective leader understands that firms have only one strategy – the one that is being implemented; the strategy on the shelf is merely a distraction.”
Business strategies also have to be continually reviewed. Adds Mr Kwok, “Companies have to be ruthlessly honest and recognize very early whether the strategy is working. If it is not working, it has to quickly be decided what needs to be corrected or changed.”
Mr Speculand, in his book “Bricks to Bridges – Make Your Strategy Come Alive”, offers the Implementation Compass, a framework for implementing business strategies successfully. It comprises eight different directions companies need to focus on: People, Business Case, Communication, Measurement, Culture, Process, Reinforcement and Review.
Making the Right Moves
Running a successful business thus entails making the right moves in developing, implementing and reviewing a business strategy. It entails one to differentiate from others, not just by following, but by understanding.
Adds Dr Alsop, “If you are succeeding, try to see why. Don’t just assume that you have the Midas touch; and if you are failing, also try to see why. Stop or work out how to fix it.”
In a competitive global market, Mr Kwok feels that a better strategy is working towards a win-win collaboration. This benefits not only yourself but your competitors as well, leading to a more sustainable business model.
More importantly, results are gained by taking action. As Mr Speculand rightly sums up, “You need to walk, not just talk. Decide, don’t just reside. Act, don’t just react.”