Implementing Global Business Strategy
I hear, and I forget; I see and I remember; I do and I understand.
Confucius (551 BC-479 BC ).
Philosopher, poet, politician.
As he roamed the world seeking inspiration and support for his theory of evolution, Charles Darwin had to suffer the ignominy of squalor at sea and on land and also to endure a variety of diseases, only to be branded heretic on his return. This was poor payback for honourable endeavour.
Those of us interested in the natural selection of successful commercial organizations are luckier than Darwin. We need only relax at our desks with the Financial Times or the Wall Street Journal to see the ‘survival of the fittest’ in action. These newspapers provide a communication channel between the chief executive officers (CEOs) of public companies and their sponsors, the investment community. Read one at random and witness corporate evolution in real-time.
‘Explanations’ of Poor Business Performance
Over the last few years, the annual reporting season has been an embarrassing time for many CEOs and their lieutenants who count the beans and crunch the numbers, the CFOs. Explaining away poor business performance, low growth or reduced dividends they seek solace in factors that they claim are beyond their control, a trusty ragbag of pass-the-buck factors. The following list offers a sample of genuine examples taken from the Financial Times between March and September 2018 (our interpretative subtext in parentheses):
“We’ve had a bad year because …
- General economic recession (boohoo)
- Brexit (we’re leaving)
- Cost inflation (bloody minimum wage, bloody unions, bloody OPEC etc.)
- Brexit (we’re staying)
- Taxes (bloody government)
- Brexit (we don’t know if we’re staying or leaving)
- Volatile exchange rates (we don’t have an effective treasury department)
- Brexit (bloody foreigners)
- Sluggish demand (bloody customers)
- Brexit (erm)
- Fierce competition (it’s not fair, they’re so good at what they do)
- Brexit (umm)
- Weather (it was too hot for winter)
- Brexit (?)
- Weather (it was too cold for summer)
- Did we mention Brexit?
… but it’s not our fault”.
Interestingly, but unsurprisingly, what we do not hear the CEOs saying to their investors is, “Oh, and by the way, we’re poor at innovation, strategic marketing, global brand management, supply chain management, blah blah blah!”
The reasons for this are obvious but so are the implications. The factors listed above are not explanations. They are excuses for poor performance and ‘explain’ nothing other than managerial mediocracy. Consider the first excuse, general economic recession. Recessions are an economic fact of life and have a history that comfortably predates the industrial era. Every recession which there has ever been has had a wide variety of antecedents and consequences. One factor alone has been a constant: they all end! It is the companies that are well-managed throughout the recession which go on to thrive in the upcoming upturn.
The Lessons and Benefits of the Strategic Planning Process
The Key Lessons of Strategic Planning.
- Be unrelenting in applying the central principles of strategic marketing for long term profitability and growth: (i) Customer Value; (ii) Environment Sensitivity; (iii) Market Segmentation; (iv) Sustainable Differential Advantage; (v) Strategic Marketing Mix.
- Maintain a tight strategic fit between the business environment, company strategy and organizational capabilities (see Chapter Ten, Theories of Organizational Behaviour and Strategic Management).
- Maintain deep awareness of buyer behaviour and align your value propositions and integrated marketing communications to it (see Chapter Six, Strategic Marketing and Global Brand Management).
- Use market-based segmentation criteria and target the most attractive country markets and segments (see Chapter Seven, A Practical Framework for Global Business Strategy Success).
- Audit your rivals thoroughly and select competitor targets with care (see the discussion on the Competitor Intelligence Process in Chapter Five, Analysing Global Markets and the Intelligent Company).
- Audit your company thoroughly and adapt as the environment changes.
- Audit your differential advantage position often and improve it via the value chain and brand positioning.
- Apply effective product life cycle and portfolio management strategies (see Chapter Five).
- Build your share of customer-spend and enhance company performance via developing trusting, long-term customer relationships.
- Develop clear competitive advantage via cost leadership, differentiation or niche market specialisation.
The Key Benefits of Strategic Planning.
- It highlights strategic imperatives and priorities.
- Scenario analysis and contingency planning prepare the company for multiple possible outcomes, essential in a context of discontinuity and ‘disruption’. As no less an authority than Mike Tyson has observed, “Everyone has a plan until they get punched in the face”.
- Clarifies multiple strategic objectives.
- Reduces financial risk.
- Greatly increases the probability of market success.
- Strategy guides operational decision making, not vice versa.
- Provides a strong sense of purpose.
- All stakeholders are likely winners (see Chapter Twelve, A Stakeholder Perspective on Global Business Strategy).
In this chapter we have aimed to reinforce a claim that we have repeated throughout the book: if a strategy cannot be implemented, it’s not a strategy at all. We have combined a discussion of key scholarly debates with a description of a proven method of working. We have returned to our common theme of praxis: A way of thinking, a way of working. And we conclude this chapter with an observation on inspired leadership from Mahatma Gandhi:
Your beliefs become your thoughts, your thoughts become your words, your words become your actions, your actions become your habits, your habits become your values, your values become your destiny.
In Part Three of the book, Creating Organizational Advantage, we explore the complexity of achieving an appropriate organizational approach to global business strategy in the context of unprecedented change on multiple criteria.
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All content © Colin Edward Egan, 2021