Long-Term Thinking in an Busy World
The future appears to be increasingly uncertain, while at the same time, the everyday business of management seems to be getting more hectic. Senior managers recognise the need to have a long-term strategy, but have difficulty keeping attention on it when daily problems require immediate action. The process of creating a long-term plan for the organisation can easily get pushed into second place.
Meanwhile, markets and technologies are changing. The strategy of an organisation needs to evolve to reflect these changes in the external business environment. Strategy needs to be a living framework that informs the decisions and language of the whole organisation and which is subject to regular change to maintain its currency.
So there is a need to take time out to think about strategy. But when the management team get together to develop a strategy, the result is often disappointing. Creating the strategy takes too long, and yields unsatisfactory results. The strategy process often seems abstract, time-consuming and remote from “real-world” decision-making.
The solution to this problem is to anchor the strategy process in concrete problems, rather than allowing it to become complex and abstract.
One way to do this is to evaluate opportunities – What opportunities are available to the organisation and how should it choose between them?
The organisation cannot simply wait for opportunities to present themselves – it has to be active in creating strategic options for the future, for example by developing new products and considering new markets. There is a tendency for managers to feel they should concentrate on how to create these new opportunities, but in my experience most organisations are pursuing too many opportunities rather than too few. The organisation must be ruthless in pruning the tree of opportunities, or its resources will be spread too thin.
Choosing the right opportunities requires a careful mixture of tools and intuition. A purely logical approach to decision making doesn’t create competitive advantage, since competitors can come to the same conclusions by using the same logic. But a purely intuitive approach relies on unstated assumptions that may be untested, and it will not lead to consistent decision-making across the organisation. Making the strategic decisions explicit is vital for organisational learning.
Strategy = Goal + Plan + Context
A strategy provides a goal, a plan to reach the goal, and a context for every-day decision-making.
At the heart of strategy lies a model of the future business environment and a compelling image of the successful organisation within this environment. This description should specify, for example, the organisation’s role in the market, its competitive position and its key resources.
This picture of the desired future situation – the goal – must be accompanied by a concrete plan showing how to get from here to there. The strategy must lead to action, or it is no use.
The strategy should also create a clear and consistent framework for every-day decision-making.
Every decision to hire a new employee, to choose a supplier, to grow a channel, to change a process, or to re-design a product is an investment decision, which will have an effect in the future. The sum of all these investment decisions, big and small, determines the success of the organisation.
Ideally, everybody in an organisation should understand where the organisation is going, how it plans to get there, and how he or she can play their individual part.
This all sounds very logical, but in practice it is quite hard.