Strategy Byte - Week 1 : The First Move

The Punch!!

Mike Tyson famously said, "Everyone has a plan, until they get punched in the mouth".

When companies are faced with threats to their profitability, market share or even existence, it is like getting punched & the results show in the numbers - through reduced income, higher costs or lower profitability, lower liquidity, higher non-performing assets etc. What are the main sources of these threats. Some of them are :

1. Existing Competitors
2. Start ups eating into the company's market share
3. New technology or trends making the company's products obsolete
4. Internal issues - Process or people
5. Geopolitical, Economic & Regulatory conditions

It's not only companies. We ourselves get punched by events like job loss, unexpected market conditions, technology making our skills & experience obsolete.

What do we do?

So, what are we supposed to do about these threats? Do we

1. Let the tide of events consume us or
2. Do we stay the course on what we set to do or
3. Change our course of action?

Also, how do we know what we set to do is the right course of action?

In these times of rapid change, it is not easy to keep up with events let alone decide a course of action & stay with it. So what is the solution??

We hear that to ensure events don't overtake us, we need to have a "strategy" to navigate through such events. But every company does have a "strategy", right?

What is Strategy?

What is strategy? Is it

1. The Vision, Mission & Objectives?
2. The annual process done in a retreat typically in the third quarter & combine that with the budget exercise to produce a set of documents describing the direction the company must take over the next one to three years?
3. Forecasting the future?
4. Budgeting or Planning?
5. The exercise done by a new CEO & management with consultants at the start of their tenure crystallizing the future direction of the company?
6. Marketing strategy or Digital strategy or (Take your pick) Strategy?

As part of my finance responsibilities, I was part of the team on various occasions where we had to provide information to strategy consultants breaking down each line item (income statement & balance sheet) by product, customer segment, core, non-core portion of business etc & for the last x number of years.

Then they used to combine these numbers with their analysis on market, peer, competitors etc & recommend action. I used to be fascinated by these analysis & tried to connect the dots. But being in Financial Controls, I was able to get the underlying logic behind the numbers but not beyond that. But I understand there is much more than numbers in a strategy & that fascinated me. It still does.

We still didn't answer the question, What is strategy?

The answer to this question is what we are going to explore together in the weekly Byte of Strategy series.