Category: Strategy

In the ever-evolving landscape of business, some voices argue that the concept of strategy is becoming obsolete, overshadowed by the rapid pace of change. Yet, beneath this assertion lies a reluctance to engage in deep, thoughtful planning—a sentiment that betrays a certain intellectual inertia. How can we reshape this perspective, sparking a transformation in those who seem trapped within it?

Imagine participating in a 5k race. At the starting gunshot, you witness young runners dashing forth with an incredible burst of speed. A mile or two later, however, you find them struggling, on the brink of exhaustion, while you maintain a steady jog, passing them by. They fell into a common trap: assuming a long-distance race can be conquered by a series of short sprints.

The truth is, successful long-distance running requires a series of well-informed decisions. Every step carries consequences, and a misstep can lead to failure.

This analogy seamlessly mirrors the distinction between tactical maneuvers and strategic planning in an organizational context. To prevent confusion, businesses must delineate these concepts clearly.

Distinguishing Between Short-Term Tactics and Long-Term Strategy

Modern tendencies have led to the casual labeling of everything as “strategic,” a practice that dilutes its significance. Consider the phrase “strategic goals for the week.” Yet, placing a fancy veneer on a shrub won’t yield a salad.

Challenge this tendency, as I did in a Gleaner column on January 23, 2022, titled “Why Short-Term Strategy is a Misnomer.” I explored the incongruity of coupling these two words. The essence: tactics span a few years, while strategies encompass a much longer horizon. In this article, let’s assume the cutoff point to be five years.

With this test at hand, a stark truth emerges: most companies lack written strategic plans.

Yet, both tactics and strategies remain essential in a thriving organization. However, their demarcation extends beyond time frames. They stand as separate disciplines, and interchanging them can lead to an unsustainable sprint, endangering the future. To avert this, let’s scrutinize their individual roles.

Strategies: The Architects of Transformation

The concept of BHAGs—Big Hairy Audacious Goals—commands attention. Defined by visionaries Jim Collins and Jerry Porras, these goals entail transformative results, forming a roadmap for a company’s metamorphosis. The Sustainable Development Goals set by the UN for 2030 in 2015, and Jamaica’s Vision 2030, forged in 2007, stand as prominent examples. Echoing through history is President Kennedy’s 1961 moonshot declaration, propelling humanity to the lunar surface within a decade.

Strategic plans are purposely designed to realize such audacious visions. But modernity demands them to be credible in new ways. Why?

An attainable plan provides a solid foundation, a platform of trust that validates visionary aspirations. In a world numbed by the barrage of daily promises from advertisers, credibility is paramount. Mere proclamations hold no sway; substance is demanded.

Additionally, the translation of grand plans into immediate actions is pivotal. This is where tactics come into play.

Tactics: The Craftsmen of Incremental Change

Execution of any long-term commitment mandates swift short-term actions. These actions exist independently from ingrained habits and routine, daily processes.

Realizing BHAGs necessitates altering these operational elements. These micro-transformations constitute tactics, to be executed by your team.

However, this is easier said than done. Overcoming inertia to scale these long-term commitments is a formidable task.

Case in point: If a company is perpetually reactive, progress is hard to sustain over years.

Similarly, if an organization’s status quo has endured for eons, kindling enthusiasm for BHAGs seems to be an impossible pursuit.

The crux is that achieving long-term aspirations hinges on tactical modifications, demanding adept change management.

While strategies and tactics are distinct, they must remain united without being confused. This unity is the compass guiding an organization toward its envisioned future.

In summary, the narrative of a road race underscores the vital distinction between strategic vision and tactical maneuvers. By untangling these concepts and skillfully blending them, organizations can chart a course toward their ultimate goals. As you reflect on your organization’s journey, remember, it’s not about doing either the sprint or the jog—it’s about the seamless, synchronized dance between the two that propels you forward.

This article is based on a similar column published in the Jamaica Gleaner. It’s available behind the newspaper’s paywall.

You have heard of the Corporate Sustainability Reporting Directive or its acronym, CSRD. You know that it has something to do with the EU which means that you haven’t paid it much attention. It’s far away.

However, this could be a mistake. This new standard for disclosure reaches into some unlikely places for all companies who do business with the continent. In this article, we’ll look at the impact on your corporate strategy.

Recently, the European Commission reaffirmed its commitment to “Net Zero 2050.” Inspired by the Paris Agreement, their goal is to be climate-neutral by 2050 – an economy with net zero greenhouse gas emissions. Lest the world relax, an interim target was set to reduce emissions by at least 55% by 2030.

CSRD makes it plain that big companies must play their part in accomplishing these goals. As such, they are required to report their progress annually via certain templates. But what does this have to do with a large company in Jamaica?

Well, your firm may not have a European subsidiary. And it might never reach the E40m turnover or 250 employee lower limit for inclusion. However, it may have wholesale customers on the continent. If so, it will probably be required by them to report on your conduct as a member of its supply chain.

But this is already happening.

Last week, I browsed Booking.com for a holiday stay in Ocho Rios. Now, there’s a new badge for each property to earn: a “Travel Sustainable Level”. According to the website, the programme was “introduced in 2021 to provide travelers with transparent and credible information to make more mindful choices for their trips.”

In other words, the intent of CSRD is already being realized. It seeks to give stakeholders knowledge about each large company’s progress on goals such as Net Zero 2050.

This new standard is likely to be seen by some as a nuisance. But for others, particularly in the area of strategic planning, there lies an opportunity.

How CSRD Can Help Shape Your Strategy

Essentially, the new standard mandates your company to tell the world how its strategy for topics related to Environment, Social and Governance (ESG) are faring. It expects you to address this explicitly in your short, mid and long-term strategic plans.

However, if you are like most companies, you don’t have anything more than a five-year list of tactics. But you aren’t alone. As a result of upheavals since the 9/11 Terrorist Attack, firms have argued that they don’t have time for long-term thinking.

Instead, their energies have focused on basic survival…short-termism.

CSRD says that if you continue to indulge in this dangerous practice, you will be required to highlight this fact to your stakeholders in your ESG disclosures.

While this sounds like a threat, some are seeing it as an opportunity, or at least an excuse to do the right thing.

The Optimal Response

In essence, your company has two choices to meet the directive.

1) The Compliant Low Road consists of sticking to an approach of only keeping short-term business tactics. This means that you will need a separate strategic plan for all matters ESG-related.

While some firms have hired sustainability professionals to do this very task, some are calling it out as a form of greenwashing. Said differently, it’s probably just a way to be compliant without making fundamental changes.

2) The Transformational High Road means crafting mid and long-term strategic plans for your business, if they don’t currently exist. Ideally, they should reach as far as 2050 to be completely aligned with the Net Zero aspiration.

If your company already has a written long-term strategic plan, then this may just be an exercise in adding a few different dimensions. The CSRD is actually developed for companies like yours. The adjustment should be easy.

However, if it’s never had an interwoven short/long-term strategic plan, this might be the perfect moment to begin. You do have some time before this becomes a requirement.

But your free paper is being burned up. The SEC in the United States and the IFRS are expected to recommend similar reporting standards, in line with existing requirements for financial disclosure.

It’s not too late to start getting your company ready. Schedule time to prepare the right kind of interwoven short/long-term strategic plans.

As you do so, be prepared to answer the questions raised by CSRD. Even if the process you follow is sound, these may not be central concerns. But they will fit in with the thinking the EU Commission wants you to do.

When the time comes to complete the forms required for your CSRD reporting, you’ll be ready.

The original article was published in the Jamaica Gleaner.

Your business offers a product or service. Regardless of how well your offer sells, you wonder whether or not you are leaving money on the table. In other words, are you charging the best price possible?

This question is often left to opinions, chance, or comparisons with competitors. These choices unfortunately indicate the lack of a defined philosophy.

Alex Hormozi’s book, $100m Offers, provides a simple way to think about the challenge of setting prices. If you have a sense that your company should reconsider its thinking, keep reading.

Your Business Should Charge As Much As Possible

Here in Jamaica, we equate high prices with robbery. Those who list exorbitant prices are disparaged as thieves. Unfair. Rapacious. Wicked.

However, part of being a successful leader means transcending such sentiments. A company is not a charity. It must do what it can to become sustainable so that customers, employees, shareholders, suppliers and even tax authorities can benefit in the long term.

As such, Hormozi argues that companies should charge whatever they can, subject to their customers’ willingness to say “Yes”. Unfortunately, only a few organisations perform this balancing act effectively.

In this context, being “fair” is beside the point. It’s definitely a juicy argument for verandah conversation, but not a strategic consideration. What matters more is customer behaviour, not popular sentiment.

For example, many think that the new Krispy Kreme donut craze is ridiculous. However, should the naysayers’ sentiments be considered in the pricing of the product? Or should the company pay more attention to those who drive by, wishing the line were shorter?

Hormozi argues that every enduring organization charges a big multiple of its unit costs. A company spends pennies to make a donut. But it’s not unusual. Internet service. Concert tickets. Hotel rooms. Restaurants. They all offer highly marked-up products or services.

Your company should be no different, he explains.

After setting guilty thoughts aside, he recommends you focus on “value” – the only thing an actual customer cares about.

Value is Primary

The author quickly establishes a fact we all know: customers exchange their hard earned money for value. But it’s not a fixed quantity of anything. Instead, they focus on *perceived* value.

For example, the volume of metal, rubber, glass and other materials in a Kia is about the same as a Porsche. Yet, the desirability of each could not be more different.

But that’s an everyday observation. More importantly, how does your company increase the value it offers customers? Hormozi’s book shines when it introduces a new formula.

Customer’s Perceived Value = Their Dream Outcome x Likelihood of Achievement / Waiting Time x Effort*Sacrifice

Above the line are the items most companies focus on, including your competitors. At first, they prioritize the dreams and aspirations your customers are trying to fulfil. It could be a pleasure they seek, or a pain to be avoided.

Unfortunately, you may be in a sector in which all the players are promising big things. So no-one is responding to hyperbole.

The other item above the line measures the confidence of your customers in accomplishing their outcome with your offer. In other words, a teacher who is famous for gaining government scholarships for PEP will provide more perceived value than a first-timer to the classroom.

These two items in the equation are taught in Marketing 101. However, the biggest differentiators in your niche are probably lying quietly below the line. They sit outside the control of marketers.

Focus Below the Line

As you see from the equation, maximising value means lowering the items underneath the line. The first, the time delay, is the gap between the moment when the customer pays and the moment when the first benefit is experienced. When you lower this interval, value increases.

To illustrate, back in 2001, cell service via Cable and Wireless took weeks to provide. Then came Digicel with its immediate availability, and it quickly became the market leader.

If your offer must take a while to deliver the final outcome, Hormozi recommends that you set up quick wins along the way. This helps customers see and feel progress.

The other item to be decreased below the line is the effort and sacrifice the customer needs to invest. In the book, the author lists liposuction as a means to lose weight, compared with the typical remedy of diet and exercise.

The personal changes required by the latter are considerable. Why? It’s hard to transform one’s habit patterns, attitudes, scheduling, grocery shopping and more. By comparison, for those who can afford it, liposuction only requires a week or two of soreness.

Increasing value for your customers means focusing on each item separately. Do this in your next strategic planning retreat and your prices could be transformed.

Your company has once again begun to look to the future. It’s shaken off the post-COVID blues and must now position itself in its industry with a fresh strategy. But all of your executives are not convinced that hard choices must be made. How can you persuade them?

A friend of mine was recently confronted with a golden opportunity. Her boss, the retiring owner of the company, offered to sell her a majority share.

But she wondered: “What am I really buying here?”

While it’s easy to think in terms of immediate dollars and cents, or the present value of future cash flows, this thinking is limited. While finance MBAs know how to do these calculations with their eyes closed, that was not the real point.

Instead, we decided that she was being offered a future outcome, the result of a possible company strategy.

In other words, she had to decide whether the organisation could craft a plan that was worth the offering price.

As you may imagine, this was a very difficult decision to make, especially as the company had no long-term strategic plan in place. She would have to create one as soon as possible and use it to determine the future value.

Given the number of assumptions and estimates to be embraced, this made the task a challenge. To illustrate, let’s look at the case study of Intel Corporation, the maker of electronic components for computers.

The company passed through three distinct phases in its lifetime. Let’s examine it from the perspective of a potential buyer in each phase.

Phase 1: Success and Ignorance

In 1974, Intel was dominant in its industry. With an 82.9% market share, DRAM (memory) chips made up around 90% of the company’s revenue.

At that point, it seemed that the firm could do no wrong. It had powerful leadership and a legendary founder, Gordon Moore.

Anyone who wanted to purchase a majority share would have concluded that the future was bright.

However, a deeper analysis a few years later would have revealed trouble. The competition (mostly Japanese manufacturers) was gaining ground for the first time. But historically, their products were an industry joke.

Phase 2: Disruption and a Decision

Jumping ahead to 1984, and Japanese companies were riding a tsunami of steadily accumulating advantages. In no particular order, they benefited from:

• lower costs of capital than Intel could attract
• the long-term investment horizons of Japanese stock traders
• steady investments in spite of an economic downturn
• far greater efficiency based on continuous process improvement

The result?

Intel’s market share plummeted to 1.3%.

At this point, someone thinking about buying shares would have asked CEO Andy Grove, “What is the short- and long-term strategic plan now?”

The fact is, Intel had no strategy to deal with the disaster unfolding. But a fateful meeting between the two leaders in 1985 changed everything.

Grove asked Moore: “If we got kicked out of this company and the board brought in a new CEO, what do you think he would do?”

Moore immediately replied, “He would get us out of memories (chips)”.

Andy, with a surprised look, responded, “Why shouldn’t you and I walk out the door, come back and do it ourselves?”

This conversation marked a turning point. The firm made a complete pivot to a different product altogether…microprocessors. Although they had a tiny operation in this niche, this was going to be a big bet. Almost at once, one billion dollars (US$) were shifted from further investments in memory chips to this new offering. In fact, they decided to phase out production of the old line.

Phase 3: The Strategy Pays Off

Today, in hindsight, the two are lauded for their brilliant decision.

Microprocessors became the number one business at Intel, driving annual revenues from $1.9b to $63.05b. The company’s market cap went from around $3b to $151.1b.

While this high-wire approach to strategic planning cannot be recommended, let’s tie that back to the decision my friend had to make.

In essence, she wanted to know: “Is the company in Phase 1, 2 or 3?” As you may imagine, the price she would have to pay would vary tremendously depending on the answer, and the strategic plan called for in each case.

But let’s forget about her. Take a look around your own organisation. If your leadership team has no consensus view on which phase it’s in, consider it to be in danger. While it may become a lucky winner like Intel, don’t count on it.

Instead of waiting for disaster to strike, create a forum to have the difficult conversations required. You’ll protect your stakeholders from potentially ruinous outcomes with a strategy that fits.

Francis Wade is the author of Perfect Time-Based Productivity, a keynote speaker and a management consultant. To search his prior columns on productivity, strategy, engagement and business processes, send email to columns@fwconsulting.com.