Understanding the Competition Should Shape Decision-Making
A recent Forbes article Is Strategy Dead? 7 Reasons The Answer May Be Yes caught my attention, as the writer intended. After all, strategy is a pillar of my business!
I won’t offer seven counterpoints, but I will tell you from a high-level view that this death knell for strategy is premature. All businesses benefit from developing, and maintaining, a well-informed strategy.
Simply put, strategy is the long-term thinking and planning businesses should use to make sure their activities are focused in a beneficial direction with minimal wasted resources.
How far out should strategy look?
I surprise many by recommending 15 years, as they believe three to four years is sufficient and any longer term will be wasting resources. They usually cite the rapid rate of technology change as a reason not to plan so far ahead.
Well, am I crazy?
Perhaps! We can debate this later, but I believe it makes perfect sense for all businesses to have a long-term viewpoint.
Should it be painfully researched, developed, and executed? For many smaller companies, probably not.
That high level of attention, research, and investment is more typical of the largest of companies having both the largest exposure to incorrect direction and more access to resources to minimize this exposure.
Most smaller companies would be better served by developing a less resource-intensive strategy, maintaining it on some set interval (perhaps quarterly or semi-annually) and being flexible enough to make necessary changes when – and if – needed.
Elements of strategy often overlooked
Some obvious aspects of strategy development are often never even considered.
For example, internal strategy topics dealing with people and the company:
• What are the company’s long-term desires?
• How big should the company grow?
• How fast does it need to grow?
• Should it stay focused on the current business products or is it open to change for the right opportunity?
Others fail to realize that aspects of a business’ external environment are fairly predictable for some years. For example :
• Demographic – Future size and make-up of the population (15 years).
• Econometric – Trends in a nation’s economy (10 years).
• Technologic – Mass-market applications for new technologies (7 to 8 years).
Other external factors such as preferences for convenience, speed, reduced cost, connectivity and sustainability are also fairly steady.
What about the competition’s strategy?
I was interested to read the comments of Ian Davis, chairman of Rolls-Royce and a member of the boards of United Kingdom’s Cabinet Office, BP and Johnson & Johnson, in a recent article in McKinsey Quarterly. He urges decision-makers to actively study broader trends outside their own organizations and industries.
Toward this goal, I recommend Competitive Intelligence to provide clues about your competitors’ future direction and that of the industry.
Even when information is available publicly, finding these gems in the sand usually requires specialized resources and the knowledge of how to leverage them. Here is where Pearson Strategy comes in, providing Competitive Intelligence for clients who realize they can’t create strategy in a vacuum.
All companies leave a trail of publicized information that can be used to predict their future directions. Pearson Strategies categorizes this information for research and monitoring purposes into three categories: technology, business/market and Intellectual Property. By using this information and making educated predictions of your competitor’s actions, you can make better strategic moves.
For example, when properly set-up and analyzed, Competitive Intelligence will identify disruptive technologies earlier, creating room for opportunities instead of risk.
Competitive Intelligence for long-term strategy
Of course, predictions in any of these areas will be less certain the farther out they are made, but this due diligence significantly increases your odds for success over competitors not using this research. This is why large companies often devote in-house resources to Competitive Intelligence.
Long story short, there are many resources that can, and should, be used to build a long-term strategy that’s valuable to the company without stirring up an information tidal wave. And the payoff should be worthwhile compared to myopic competitors who are constantly changing direction.
So, what’s right for your company? A three or four-year strategy or a longer look down the road? And how much external research is right for your approach? Or have you buried the idea of strategy, too?
I’d like to know what you think.
1 – David Pearce Snyder, Consulting Futurist, MiniTrends 2014 Conference Presentation on 9/24/2014
Picture credit: Kurhan (Shutterstock)