Saturday, December 21, 2013

What is the Most Transformational and Profitable Corporate Strategy?

Transformational and profitable strategies would imply "out of the box" thinking, but mostly it takes system thinking.

Some say there’s a 'strategy hype’-the variety of theories or best practices, books or white papers brainstorming about strategy, still, we have to admit at today’s VUCA-(Volatile, Uncertain, Complex and Ambiguous) business dynamic, strategy is more critical, not less for business’s long-term success.There’s also a myth upon what’s the most transformational and profitable corporate strategy, and how to build an effective and executable strategy?

1. The "Classic" Choices of Strategy 

Agile Strategy:
With continuous changing circumstances, organizations must be proactive in keeping short term and long term strategy goals clearly in sight, agile strategic planning is a living process, not a static shelf-ware. It has characteristics such as:
-Cascade: Strategy Planning becomes a "living process" with regular evaluation, scanning, listening, revisiting and potential course correction. There is no "predictable future", but there are many possible ones. Long term planning has its place, but linearity and over prescriptive-ness don't. 
-Context: Strategic corporate goals are sacrificed at the expense of reactively adjusting strategy. A proactive, agile strategy has updated context and accurately established strategy and goals should serve as general "borders" within which businesses utilize problems as opportunities for fine-tuning strategy.

Capability based Strategy:
A business capability is a specific ordering of Processes, People, Resources, Information and Technology aimed at creating a defined business outcome, capabilities are often developed reactively to competitive threats, strategic opportunities, and environmental changes, so all businesses have certain capabilities, what matters is maturity, the high-mature set of business capabilities can make organizations more adaptable and agile, to fulfill their strategy. 

Diversified strategy:
Diversified strategy aims of diversification should be to create value or wealth in excess of what firms would enjoy without diversification. The reasons for firm’s diversification include:
-To grow
-To more fully utilize existing resources and capabilities.
-To escape from undesirable or unattractive industry environments.
-To make use of surplus cash flows

Sustainable Corporate strategy" 
A strategy and a company become sustainable through conscious and deliberate efforts. Leaders of such companies take a long-term view when making decisions. Such drive and commitment are what can make a strategy sustainable. The sustainable corporate strategy ensures there are no gaps between the sum of the divisional strategies and the corporate strategy. Usually, a strategy is done either at an organization-wide level or at an SBU level. Or with divisions or regions that have unique or core area and ensure these are aligned to the corporate strategy

Concentrated Growth strategy:
Concentrated growth is the strategy of the firm that directs its resources to the profitable growth of a single product, in a single market, with a single dominant technology. The main rationale for this approach sometimes called a market penetration or concentration strategy, is that the firm thoroughly develops and exploits its expertise in a delimited competitive arena. 

2. Transformational and Profitable Strategy 

Transformational and profitable strategies would imply "out of the box" thinking, but mostly it takes system thinking. You might add "opportunity seeking strategy" which can be any of the above, or none of the above. More often than not, it’ll well mix the different styles of strategy to fit in purpose and build for changes.

This calls for the implementation of strategic management frameworks that enhance the decision-making of a company. Start with the creation of building blocks - understand business/enterprise architecture, document systems portfolio, align TCO by function, determine ROI, and get a real picture of what business functions are most profitable, scalable, etc. Establish continuous monitoring (reporting) along these lines.

Being socially competent, adapting to change and being able to solve problems: It means managing and thinking differently because the old way doesn't work well. It means putting decision-making back with the work, then we can have accountability. It means getting organized and creating a vision, crafting a transformational strategy and defining the practical goal to achieve business growth. It means the well-defined goal that is written down and planned so that you know where you are going and you become self-assured that you will get there. It means real leadership, responsibility, and accountability. 

Put in place an executive governance process (business, tech, etc.): Then embark on transformation - which will likely result in discontinuing some activities or business lines, building out others, finding more competitive approaches to yet others. And out of this new and exciting structure, It means getting rid of reward systems that drive up costs and customers out. it will come strategic, responsive and accountable results.

Transitional times often call for transformation. To debunk the strategy myth, organizations have to walk the talk, to apply the theories to the business reality; and to leverage best practice and next practice, in order to build up high mature, transformational and profitable strategy.


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