Competition is the very essence of success or failure of organisations.
Strategic Planning assumes a competitive environment. An organisation has no need to engage in strategic planning if it does not have (or expect competition). It may undertake resource and development planning but without competitors it can only measure success in abstract terms. Competitive Strategy is the search for the best competitive position in any industry. It aims to establish a profitable sustainable position. (Here “Profitable” can be exchanged for any Primary Objective an organisation has – not all organisations have “Profit” as an objective)
Strategy can be defined as the way an organisation sets out to differentiate itself (positively) from its competitors, using its relative strengths to satisfy market needs.
Taken as a map, what is important for the strategist, is to plan a position which takes into account all of the players. Firstly the strategist must achieve superior performance to the competitor. At the same time the strategy must be in line with the strengths and weakness’s of the organisation and must also meet the needs of the market. Further, without taking into account the needs and pressures of the other parties in the firms environment(s) it will be impossible to achieve the best competitive position.
A successful strategy is one which gives a stronger matching of organisational strengths with market needs than that provided by the competition.
Forging ahead without a plan is like driving in a fog. Real success can only be found with the aid of a plan. Anything else is luck and luck is not sustainable. Furthermore luck is something that happens to other people.
Corporate performance is the result of combining planning and successful execution. In the construction of the business strategy, there are 3 main players;
– The Organisation.
– The Market.
– The Competition.
There are also many subsidiary players involved in the environment who can at times exert undue influence;
– Government Bodies
– Action Groups
Most strategic planning is based on rational linear techniques. Today’s world of strategic planning is dominated by planners who do it “by the numbers”. The attempt is to plan for the future based on some set of planning rules. This method has not worked in the past and will never work. The reality is that we operate in a stochastic environment. That is our processes are driven by random events. The reality of change will resist any attempts to plan for it in any form of detail.
‘One does not plan then try to make circumstances fit these plans. One tries to make plans fit the circumstances.’ – George Patton.
The best strategies are flexible and allow for innovation. They are based on information, which gives us a series of probabilities to work with.
Strategy is vulnerable to reality. One cannot totally predict the future. All business decisions are probabilistic. There is always a (high) chance of the plan failing, even if you have analysed all the input incessantly.
As much as we don’t like to admit it, we are not and cannot be in total control.
Good strategies must be broad, directional and have room to move. Complicated, long range plans rarely work and require constant adaptation and change – usually into another detailed long range plan. We must remember that any strategic plan is based partly on historic information and partly on future prediction. Once written it also becomes part of history.
Complex strategies are largely exercises in self and organisational delusion. Effective competitive strategies need to be simple, giving basic direction and based on a small number of concepts.
In reality the completed strategic plan may not be the most rewarding aspect of the process. The processes used to arrive at the plan and how the plan is implemented are of considerably more importance. The key to strategy is not knowledge of strategic planning but knowledge of the process(es). The keys to the process are insight, creativity, adaptability and intuition.
What gives a strategy its competitive impact is the creative element and the will of the mind that conceived it to make it work.
Most institutions today are not organised for innovation. Their systems are based on logical step by step improvements. Adaptation is at a premium, there is little incentive to innovate. Success is often based on the ability to conform. The cry is for logic and rationality.
The starting point for the establishment of any strategy is an outline of goals – the beliefs and needs of the organisation, why it should exist. The second step is that of analysis.
One needs a clear understanding of the character of each element of the situation. The objective is to define the critical issue(s). Strategy is the attempt to plan actions and responses to a set of conditions to bring about a situation favourable to the organisation.
Corporate strategy is an attempt to better a company’s position relative to competitors activity.
The three main weapons in the armoury of the successful strategy are;
(1) knowledge and information;
(2) the skill to perceive and take advantage of relevant opportunities; and
(3) the flexibility to take advantage of both information and opportunity.
Contrary to popular conception, opportunity often knocks more than once. However it may knock more softly the second time or use a different door. The greatest executive talents are therefore:
– to recognise that opportunity in its current form and to recognise it before the competition does.
– to be able to act on that opportunity before the competition.
“Chance favours only the mind that is prepared” – Louis Pasteur.