Anchor Your Company In Long Term Strategic Thinking

The stronger and healthier the root structure of the tree, the greater your chance of harvesting the desired fruit over the long term on a sustainable basis. Strategy is the “root structure” of Your Company. The resilience of your Company against the ongoing competitive “onslaught” in the market will ultimately depend on the health and creativity of your strategy and your ability to tactically implement the activities that support your Strategic “root system” successfully. In considering Global brand “giants” it is remarkable how they have remained consistent over decades and this is where the true genius of a well anchored strategy presents the long term value for the Company, its customers and consumers. At a tactical level however these brands transcend generations through creative thinking to retain their relevance to both old and new consumers.

The word Strategy has its origins in the military and clear distinction is drawn between Strategy and Tactics. Tactics refer to the conduct of engaging the enemy whereas Strategy is concerned with how the different engagements are linked. (Source: Wikipedia) In our experience we see the confusion between these two concepts in business on a regular basis. Strategy aims to ultimately achieve the long term goal – the Vision and forms the “invisible root structure” of the organisation. Tactics are the visible activities deployed in the organisation to enable the strategy.

I had the pleasure of having dinner with the CEO of a Japanese Brewing company in London recently and I pushed the conversation towards the very topic of the long term nature of Strategy. He proceeded to tell me that his company was at that very time busy with their 100 year plan! It took all my poker skills to keep a straight face but unfazed he explained that the company was 168 years old and that they prefer thinking in the longer term about their business! It is also our view that Strategy should anchor itself in the long term future of the Company provided the process is robust, utilises the best available thinking and has the organisation clearly aligned around the Strategy through the relevant tactics and actions.

Tactics provide the “nutrition” for the strategic “roots” and the actions required to meet the strategic objectives. The action plans that flow from the Tactics direct the organisation’s activities and must be subjected to rigorous ownership, measurement and evaluation. This is where we learn what actions make our strategic “roots” strong.

If these plans exclude any employee in the organisation, such an employee is excess to the organisation. In so many cases we experience poor connection between strategy, tactics and people in the organisation. Successful implementation will always only be as strong as the weakest link.

So then, what are the success factors of a well conceived Strategy? In our view the following components are crucial for the development of a robust strategy:

Environmental Intimacy – clearly a crucial success factor is having a “deep” understanding of the environment that you will be doing business in. This will include the capabilities and capacity of your own organisation, the market history, size and potential, the demographics and psychographics of the targeted consumer base, customer base and route to market, your competitor/s market position and profiles, political impact, legislation, community issues to name but a few. Please note that this is not an S.W.O.T. analysis but a factual “deep dive” to establish a superior understanding of your operating environment. In the absence of factual data or information one could use a hypothesis for as long as it is qualitative. This “wisdom” is almost always available in the organisation and it’s a matter of “tapping” into what we call the Organisational Intelligence (OQ).

Perhaps Sun Tzu describes environment best in Art of War (also today a Chinese idiom) “So it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss. If you only know yourself, but not your opponent, you may win or may lose. If you know neither yourself nor your enemy, you will always endanger yourself.”

“Big Bold Goal” (BBG) – the person/s tasked with the development of the Big Bold Goal or Vision should not lack ambition. The ability to rally the organisation around the BBG or Vision will depend on the simplicity and power of the message. In the late 80’s the current CEO for SABMiller – Graham Mackay made a statement that SAB wanted to be the No.1 Brewer in the World. This was certainly a BBG for a little Brewer on the south point of Africa! SABMiller is now No.2 and still working towards their Vision some 20 years later. Their strategy I would guess is still the same but at a tactical level they had to make many adjustments over the years. This clearly demonstrates the long term nature of a BBG and the strategy that supports the BBG.  The DFSI process of assisting companies on this journey is based on a concept that we call “Top to Bottom Thinking” or T2BT.This process allows the organisation to think beyond their current reality and strive for what they are capable of over the long term. By starting this process from the current reality more often than not improvement is only incremental. It is almost inevitable following the T2BT process that a “gap” will be exposed between desired position and current reality. The objective is to “manage” this gap away and align desire and reality against key milestone tracking.

“Root your Strategy” – Identifying the key “roots” of your strategy is the task that management teams often find challenging. In reality if the detail is crystal clear in the two points above, identifying the key strategic issues becomes a lot easier. It is also important to remember that your main “roots” will develop “off shoots” over time that will further strengthen the main “root.” An example of this would be if one of your key strategies is Growth and your current market position allows for the desired growth through market share gains and momentum growth, that might meet the short/medium term desire but over the medium /long term the ultimate growth might have to be satisfied by mergers or acquisitions. These activities will now become an “off shoot” of your growth strategy. This exact point is clearly illustrated by the SABMiller example mentioned earlier. It is crucially important not to dilute focus by having numerous strategic “roots” and we recommend the 5-7 “giants.” It never ceases to amaze me how simplistic successful companies think about their “roots.”

I had the privilege of working with one of the World’s greatest brands – Coca-Cola for a number of years and it amazed me how simplistic the model was but more astounding was the single minded “madness” for Growth, which today still forms a key strategic cornerstone for the Global model. The brand has been in existence for 124 years and continues transcend generations, retaining its relevance and experiences for each of these generations. The late Roberto Goizueta – a past President of The Coca-Cola Company responded to a question from a journalist on the perceived lack of innovation from the company as follows – “Growing a brand for more than 100 years surely shows no absence of innovation” and that is the true genius of consistent strategy activation.

Quantify and Qualify your Strategic Goals – At the point of a firm strategic “root” structure, the next step involves answering the two critical questions of – What do we want to achieve with each strategic “root” and How will we achieve it? It is a numbers/words exercise with a 3-5 year forward view. The danger in this critical phase is that you develop “Operational Myopia” (short sightedness) and repeat 1 year, 3 or 5 times or perhaps worse, completely over committing. Both scenarios present a real problem for the organisation in the sense of ensuring shareholder confidence in the strategic process and the executive team’s ability to steer the company towards the defined BBG or Vision. This step also defines the first phase of the Implementation process – statistically the activity that most companies fail to achieve. It is almost unbelievable to see that 9 out of 10 companies fail to implement their strategy – Time Magazine.

Tactics and Actions – This activity aims to “operationalise” the strategy and have a short term view of the identified actions required to enable the strategy to the entire organisation. Each “strategic root” will have the appropriate tactics and plans to ensure the journey to successful strategy realisation and ultimately the achievement of the BBG. This also provides the critical link for the entire organisation to the desired strategy. These are the “visual” actions that the organisation, its customers and consumers will experience – the above ground manifestation of your “organisational tree.” This is in essence the Annual Operating Plan (AOP) and Budget. Ownership, accountability, measurement, evaluation and reward are the outcomes of this activity.

Current Reality Assessment – This element of the process is normally the easiest part as you are dealing with the known. It’s always a good idea to carry out this assessment comparing it against the designed strategy and the relevant tactical or budget plans. We have found that this is also the opportunity for honest evaluation of the “hits and misses” in the review period thus ensuring that you clearly understand what to do more of and more important why failure occurred, if it did.

“Gap” Analysis – Assuming that it is the first time that the organisation follows this process, you now in a position to assess the “gaps” that exist between desired position and current reality. If it has been part of your routines already, this will be a progress report. The size of the “gap” will be a good indicator of the transformation required in the company. Transformation is a process and not an event. It’s often better to slice the process into “bite size” chunks and go after the “low hanging fruit” first. At the pace that markets are evolving, continuous transformation/improvement has become a reality in most businesses today and should be embraced. This of course assumes the “gap” don’t indicate a crisis, in which case a total different remedy will be required.

Our experience at DFSI confirm – the more robust and disciplined the strategic process, the greater the chance of success. The key issue however remain the successful implementation of the strategic direction and the ability to captivate the entire organisation in the science and art of implementation.

Companies that have stood the test of time and consistently “delighted” their stakeholders, are those who have clear insights into their markets, well defined strategic “root” structures, a near flawless implementation mentality and an obsession for ongoing extra-ordinary achievement. They understand the need to consistently “nurture” their “root” structure and “prune” the tactical impact to produce the “fruits” their shareholders desire.

The development of a well conceived strategy is “timeless” yet flexible enough to allow for creative enhancement or development of strong “off shoots” from the main “roots” as business cycles might demand. The tactical implementation of the strategy should always be time relevant, transcend generation changes and assist the organisation to retain its connection with current consumers and inspire the development of new consumers. It’s always good to remember that the Global Brand “giants” of today were at one point in time also “fledglings” but were able to elevate themselves above the rest through superior strategic thinking and extra-ordinary implementation!

DFSI facilitate this strategic thinking process (T2BT) with Executive management teams around Africa and specialise in the Implementation of strategic plans.

For a personal interview please contact DFSI at:-
Office Number +27 (0) 11 802 3587 or mail us at:-
enquiries@dfsi.co.za

“Courage and Renewal with a 360° View”

Till next month, enjoy the flight!
(And remember PE=DR²)