The greatest fortunes are made when the cannonballs fall at the harbour, not when the violins play in the ballroom. – Nathaniel Rothschild.
”In rapidly evolving systems, permanent competitive advantage does not exist; there is only continuous effort to create new sources of temporary but sustainable advantage.”
Superior performance is not possible without a clearly designed and executed strategy that creates and sustains an advantage for the firm. This strategy is defined by the uniqueness of the choices the company makes across its value chain, the consistency of those choices and their sustainability.
Determining the right choices to be made usually depend on a clear understanding of the environment where this business will operate in terms of the key players that have the exact influence in the environment and have the power to determine the profitability available in the environment.
Superior performance thus depending on understanding the structure of the business environment or industry and the position of the company in question. This is what gives the company the advantage in competition. This is what separates the company from the pack and guarantees superior performance.
Without a clear advantage, a business has no basis for expecting superior performance, the forces of competition will determine what happens to it and it has no guarantee of even remaining in business.
Strategy is such an important subject in business literature and this is underscored by the results of a search of the academic literature using “strategy” as a keyword: More than four million citations were listed. Amazon lists more than 49,000 books with strategy in the title and a broad Google search shows 800 million hits
Two obvious conclusions can be drawn from this interest: First, strategy is clearly important; and second, given the disparate approaches, there does not seem to be a consensus about “how” strategy works—in spite of the fact that there is good consensus on the definition of the term itself. Yet, superior performance is not possible without strategy.
Given the definition that strategy is the positioning of a firm within its competitive environment, it does follow that the company must be repositioned when there is a shift in that competitive environment.
This repositioning first entails the understanding of the industry and what has really changed, what kind of change it is and to what extent the industry changed. The company is then in a better position to make the right choices based on the options the new industry structure now presents.
The outbreak of the coronavirus has changed the world and shaken the foundation of many industries. Supply chains have been shaken, policies have been adjusted and just about everything that makes competition work has been challenged. Most of all the world has slipped into a recession. CNBC reports that the business travel sector will lose $820 billion in revenue on the pandemic. That’s a loss of over 50 percent for a sector worth just a little over a trillion dollars.
How should you respond in a period like this? That’s a million-dollar question and a situation which definitely requires making hard choices. As a guide I will recommend the following:
Review your corporate values and ensure you stay true to it. In periods of difficulties as it is, you need a compelling reason to stay in business and thrive in the midst of difficulties. Sit with your team and yourselves, ask why you got into business in the first instance. Why do you have to do this? Just for the money? That’s not good enough! You will need a compelling reason that inspires everyone and that should come from your value. ‘We are here because our society needs security. 2000 clients nationwide currently depend on us for this need and through the difficulties we will find a way to stay on and thrive. We believe in resilience!’ That’s how values can inspire. The more you stay on this the more you see options you never knew were there.
Understand the exact impact on your industry.
Review your critical assets.
Review your value chain and reconsider your choices.
Remain strategic in the face of difficulties.
Organisations that will thrive in the post coronavirus business world will largely be those guided by ideas such as the ones I have identified here.
No organisation can afford to ignore just one of the steps and expect to thrive.
In the post coronavirus world, survival will depend on responding appropriately to the changes the pandemic presents, thriving will depend on taking advantage of the chaos the pandemic has brought to control the structure of your industry to some extent.
Chaos is an important strategic tool in changing the competitive structure of an industry because it throws people out of balance and destroys competitive advantage. COVID-19 is the biggest chaos in recent history and could leave new phone industry champions in its wake. Any organisation that wants to thrive must prioritise its strategy review and reassessment.
To understand how to change the competitive structure of your industry email firstname.lastname@example.org and request for the training material – CHANGING THE GAME. For free Strategy assessment tools email email@example.com with the subject STRATEGY TOOLS.
Dr Reuben is one of the most sought after thought leaders on the subject of Strategy in Nigeria. He speaks at business events globally.