The need for strategy

Thoughts on the need for strategy by Mario Cabeza – Strategy & Business Development and Crisis Management at P&L Global

In the current environment, in which changes take place on a fast pace and uncertainties grow, do companies need to have a strategy?

chess 3

We hear some people arguing “strategy is not necessary” or “downplaying the definition and implementation of strategy“. Among the reasons for this is that in today´s world the environment is barely predictable in the short-term or that the resources used in analyzing and implementing the strategy must be focused on the market while paying attention to the context changes to be able to react quickly and accordingly (instead of defining strategies).

communicating

Sometimes, strategy is mentioned to be an “inflexible medium-term plan” and therefore a hindrance. [That reminds me of when Mistushita -Panasonic Corp.-, exposed his corporate plan for 250 years to employees in the year 1932 ].  – Wrong! Defining and correctly implementing the strategy -objectives, path to follow and resources- doesn’t hinder flexibility or adaptability, but is a rather powerful tool for the alignment of the organization.

In this changing environment to which we refer, the same applies to companies. The correct definition of the strategy, challenging goals, successful actions for its implementation and finally a good communication, puts companies in an advantageous situation. It allows allignment and synchronization of the efforts of the whole organization, firmly focused on its purpose. A strong strategic allignment can only be achieved when the organization clearly recognizes and understands the strategy and its purpose. Given this, leads to a great capacity to guide the company towards new challenges or opportunities, whereby taking advantage of these and standing out from competitors.

dominoA very current study by the Boston Consulting Group, named “An Algorithm for a Successful 21st-Century CEO(1) -published in June 2018-, identified 5 components systematically linked to the success of senior management. Firstly, in line with the above, it’s to have a clear, convincing, fact-based and well-communicated description of the strategy. [An inadequate communication – downstream is the reason for a high – percentage of failed strategies.]

Some years ago, I met a renowned construction and real estate entrepreneur who was very skeptical about strategy and planning its utility. His vision was that the real estate market sales are unpredictable and additonally, each construction work changed daily. However, he had a marked strategy but was not conscious of its powerful purpose. It was this, his strategy, that allowed him to be flexible and respond nimbly to those “unpredictable” changes in the environment. [Perhaps, we leave it for another day to explain his strategy in more detail].

formula 1The same happens in F1 racing: Multiple contingencies or incidents (or accidents) are frequent, but all teams prepare each race in accordance to a specific strategy. Afterwards, they vary and adapt according to what is happening in the race.

*(1) https://www.bcg.com/publications/2018/algorithm-successful-21st-century-ceo.aspx
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