Saturday, September 12, 2009

Too much action without enough strategy is a sure route to bankruptcy!

As a management consultant, I would like to respond to Simon Cooke's blog post that there is too much strategy and not enough action. I read with interest his blog and was interested to see that he started his argument at the point when the goods and the place of exchange were selected. Selecting the goods you want to sell (the market you want to be in) and the place of exchange (the distribution channel(s)) are two key elements of strategy and if you get them wrong you will find yourself in an unattractive market, trying to sell products that nobody wants in a way that will not reach the intended customer, assuming there is one in the first place. So, whilst his friend may need to focus on tactics, that could be because he has already done the strategic leg work.

There are many definitions of strategy. The one used at my old firm (The Monitor Group) was the following: "Strategy is an integrated set of choices about what market opportunities exist, or can be created, that are organisationally and economically practical for your company to capture." This is a longer way of asking five questions:

1. What are my goals (market position, financial targets, non financial aspirations, etc.)?
2. Where should I play (product lines, customer segments, geographies, etc.)?
3. How will I win (distribution channels, pricing, brand, make vs buy, etc.)?
4. What capabilities must be in place (skills, resources, etc.)?
5. What systems do I require to manage (IT, decision making, cost management, manufacturing, governance, etc.)?

Question One is a heartland corporate strategy question. Questions Two and Three get us into the realm of marketing strategy. Questions Four and Five are about operational strategy. In an ideal world, executives start at the top and go to the bottom, moving from corporate strategy to operational strategy in a linear fashion. Practically speaking that is rarely possible because companies are living, breathing organisations that are impossible to freeze whilst we answer all of the above and the world changes around us. The important thing is that all the questions should be answered so that executive have integrated and robust corporate, marketing, and operational strategies that re-inforce each other and are difficult for the competition to copy.

As for strategy consultants charging you more than other consultants, let me reassure him that I will charge him just as much to do a marketing project as I will for doing a strategy project!

1 comment:

  1. You caught me at a good moment to respond - suspect our differences are more terminological than substantial! Here's a little response to keep the old pot boiling debate-wise!