Bolstering Business: It is strategy that ultimately matters
Dr B K Mukhopadhyay
We are now living in a chaotic transition period of a new age defined by global competition, rampant change, faster flow of information and communication, increasing business complexity, and pervasive globalization. The pace of change has become so rapid that it took a different type of firms to be domint and to be marked in an entirely new era of business. This new environment is also characterized by ‘more far-reaching technological advances, and a consumer who has adjusted to this quicker pace and whose fickle preferences are revised with the speed of a television commercial.’ Charles Darwin was quite right in saying that it’s neither the strongest nor most intelligent of the species that survive; it is the one most adaptable to change. In the world of business this is applicable in the same way.
In fact it is jet speeded changes in competition, technology, and workforce values that are compelling organizations to search for new and more human ways of increasing productivity and competitiveness. The biggest changes have been due to the impact of information and communication technology. The ability to access vast information resources within a matter of minutes and to communicate across huge distances at ever lower costs and improving quality and convenience is transforming the way people and companies interact. Virtually, it is becoming harder to achieve market leadership and to stay on top.
Undoubtedly, business space, technologies, processes, business models as well have turned out to be more complex - new characteristics are added frequently [subtracted infrequently]. The dimensions of business space keep increasing, adding complexity, while at the same time furnishing attractive new opportunities for those who can successfully vigate in the new environment. This complexity, in turn, also inhibits greater size and greater value creation.
Side by side, in the emerging era of over communication and hyper-competition, people are overwhelmed by choice – choice of information, ideas, products, and services. Information is becoming readily available around the globe at an unprecedented pace. Customers, competitors, and innovators have instant access to each other. The result - technological change, especially change in information and communication technology, delivered the Information Age and converted it to the Knowledge Age.
In this age of innovention (innovation plus invention) the structure of trade vis-à-vis competition has been changing at a fast and consistent rate, where one technology is being replaced by the other treating the globe as an extended village. Intense competition has become a way of life simultaneously with the implicit and explicit risk factors. On the one hand the challenge is there to retain the customer, while on the other the fears of unexpected loss arising out of the complex risk factors loom large. turally, it is increasingly more difficult to keep the head above water. It is also crystal clear that the same strategy cannot bring success over passage of time.
Business processes must become more mature and the Institution must be able to deliver higher performance-spatially, temporally, hierarchically and functiolly. Obviously, to achieve the same the starting point is designing [the comprehensiveness of the specifications as to how the process is to executed]; followed by the performers [people executing the process based on skill and knowledge]; owner [persons shouldering the responsibility for the process as well as the results]; infrastructure [information/MIS that support the process]; and of course the metrics [the measures the company uses to track the process’s performance].
That is why: enterprise capabilities are the crucial factors for the ultimate achievement – leadership [executives who support the creation of processes]; culture [values of customer focus, teamwork, persol accountability and of course the very willingness to change]; expertise [skills in / methodology for, process design]; and governce [the very mechanisms for maging complex projects and change initiatives]. For developing high performance processes, institutions need to offer the very supportive environments.
It is very pertinent to refer here to the alysis Roger Martin made [“There are still only two ways to compete”] nicely glancing at the chronological changes - in the early 1960s, the great Boston Consulting Group founder and strategy theorist Bruce Henderson asserted there was only one way to successfully compete and gain a relative market share advantage over competitors so as to have lower costs than all of them. The payoff is that it puts the firm in a position to drive those relative costs lower as competition unfolds due to the learning curve advantage. Then, in 1930, Michael Porter pointed out there is another way to compete: differentiation. His view of the generic strategies for advantage gained traction both in classrooms and boardrooms.
To Roger Martin [who preferred to term himself as a micro-economist by training] the idea that all competition can be classified in terms of these two generic strategies corresponds well to the fundamental demand dymics that companies face. ln the world of business generally there are only two demand conditions a firm can face with respect to an offering: a flat demand curve or a downward sloping one. Accordingly, in cases where for some luxury goods in some situations, demand can rise as price rises, it is the exception that proves that there increasingly finding their competitive advantage comes from collaboration with other firms and individuals rather than solely through their own efforts (“ecosystems”). So, it’s important not to lose sight of the fact that there are still just two fundamental forms of competitive advantage.
So, the question boils down to the fact that appropriate strategy has to be formulated to move on the path of success over time. This, in turn, demands leaders willing to make these choices, drive their execution, and bring the organization along. Michael E. Porter and Thomas H. Lee in their very recent alysis [Why Strategy Matters Now] referred to the example - leadership in health care organizations has tended to be more about stewardship than choices, and leader selection has often been based on research credentials, leaving the clinical enterprise reliant on momentum and reputation. But future success depends on the ability of organizations to create value for patients. Accordingly, Leaders must ensure that all activities are aligned around this goal. In the emerging competitive marketplace, only organizations that truly understand strategy will thrive. They reminded that though success comes from operatiol effectiveness: working hard, embracing best practices, and burnishing reputations, yet In the new era, strategy must reflect an organization’s fundamental purpose; what it is trying to achieve and for whom. Fincial margins and growth targets will be the results rather than the drivers of strategy. Side by side, attempting to serve every need of every customer is a recipe for failure, leaving organizations vulnerable to rivals that choose to concentrate on specific conditions or complexity levels.
So, the need is for selecting the strategy that best suits the environment and thereafter going for adaptation to changing situation.
(The Writer, a noted Magement Economist and an Intertiol Commentator on contemporary business and economic affairs, attached to The West Bengal State University, can be reached at email@example.com)