Organisational Strategy and the way that the strategy is defined, based on the strategic process can be a key competitive advantage for any organisation. A strategy is a plan of action that should consider long and short term external and internal factors to ensure that the organisation remains long term competitive. One part of strategy is determining the plan, the second part is the execution of the plan which should be done by every member of the organisation. Typically, most companies only manage to execute a third of their strategies and this is where the opportunities lie. In order for people to own and execute strategy, they should be involved in determining the strategy they need to execute on. This means, strategy determination should be a cascaded process involving the right levels at the right time.
Companies often correctly look at the greater PESTEL factors (Political, Economic, Social, Technological, Environmental and Legislative) as well as their product or service positioning when determining strategy. They most often fail to develop a strategy to transform their organisational system which includes leadership, culture, structure, people & process, skills, talent etc, which is needed in order to execute the required actions. As the old saying goes, culture eats strategy for breakfast!
The internal analysis is normally done through the Strengths and Weaknesses part of a SWOT analysis. Organisations need to create strategy to build the organisation to be excellent at executing strategy or simply put, focussing on executing the right things. The key challenge is, that it is hard for people that are part of an organisation, to clearly see the changes needed within the organisation, as people unconsciously avoid change even when it’s needed. People develop blind spots over time and pick up cultural baggage that often stops staff being courageous and sharing the truth. Senior managers end up only hearing the good news, and hence fail to understand the hazards and opportunities they face. Old world hierarchical cultures further impact many of these challenges, resulting in companies that are not prepared and ready for changes in the competitive landscape. I believe that companies that build non-hierarchical organisations, where everyone and their skills are leveraged, will stand a much greater chance to stay agile and competitive.
Another area that is key to strategy, is to understand your service or product positioning in the market. Traditional strategy tools have guided companies to look at the competitive landscape and look at their positioning therein. This would be called a red oceans approach and is all about winning, for a company to grow, another companies must lose. It is very important to understand the competitive landscape, but it is equally important to have a blue ocean approach to strategy. This is about looking at new opportunities and gaps and really focussing on certain positioning areas rather than trying to do everything about everything.
In the case of Uber, one could have argued that, the taxi industry was already overly competitive with not many new opportunities. Uber looked at what consumers needed, attributes such as low cost, convenience, safety, ease etc and used end to end technology to facilitate this. The result has been a highly successful business, that has enlarged the taxi industry by bringing many more consumers to the market.
Southwest Airlines, a long-standing leader in the US low cost airline market, have chosen to focus their positioning on friendly service, speed and frequent departures. They place little emphasis on lounges, meals and seating choices. This focus has allowed them to structure every part of their business and service around these areas which have become clear differentiators and a competitive advantage for them.
Lastly, getting people aligned and focussed is all about change management. A key part of change management is having a purpose, vision and values that people agree will and align by. Purpose has become a very powerful modern tool to align people throughout organisations. In the case of Southwest Airlines mentioned above, their purpose is to Connect People to what’s important in their lives through friendly, reliable, and low-cost air travel. The purpose is used in all facets of their business to keep everyone true to the organisational focus.
A robust and focussed strategy along with a culture that allows people at all levels to contribute and play to their strengths, will determine which organisations step ahead of the pack in this increasingly challenging world.