I started my career as a consultant and strategist in the mid-west of the US in the mid-eighties. I’m also a HBS and NYU Stern Alumni, with an MBA. So, if there is anybody wedded to the concept of long-term strategy, it would be me.
For a consultant, being involved in the development and execution of long-term strategy means many lucrative hours of billing to a client! Till the internet revolution going back 3-4 years, I would have still liked my clients to at least focus on a 3–5-year strategy, unless there was an M&A situation or an Act of God.
The internet revolution has changed all that. If you don’t survive and more importantly succeed in the next 12-24 months, you’re dead. So, for the moment, if you accept this is true, then as a business owner, or leader, you need to change the way you think and the way you operate, so that you win the battle, and the war.
It starts with being Agile. Agile in the way you think and the way you operate. Till a few years ago, the competition was local, regional and selectively global. Now it’s a 1000X of that. A click on Amazon or any global marketplace means that your competition comes from all corners of the earth. It also means that you may have to change your strategy at short notice at the spin of a dime.
If you are excessively committed to your products, your decisions on make versus buy, your narrow perspectives on who your customers are, how you sell or market, an organisation structure that is full of boxes (the only time you should be in a box is when you’re dead), and technology that is owned rather than used as a service, your dead again. Fluidity and agility should be in everything you think and do, but with a clear financial objective in the site.
That brings me to the wonderful world of meeting financial expectations. I’m amazed that in over 100’s of clients I have worked with all over the world over the years, they can’t answer a simple question on what is your financial end game? In my view, there are only 3. You want to grow your revenue faster than profits, and that’s one strategy. You want to grow profits faster than revenue, that’s another strategy.
And lastly, you are not interested in profits, but only market share, and that’s the third strategy. It’s the last one that has flourished over the last few years for young companies due to excessive liquidity in the private equity and debt markets. Well, those chickens have come home to roost. So, I guess it’s back to the old-fashioned principle of needing to be profitable to survive both the short and long term.
GenZ values experience over loyalty
I used to be a big fan of maximising customer loyalty, upsell, and cross-sell, but I’m not sure anymore. The issue is GenZ, don’t believe in loyalty, sometimes even in terms of their personal relationships and even their employment. Experiencing life and all it as to offer is a core value that they cherish. What that means that every time they buy a product or service, they don’t mind trying something new.
What that implies for companies is that product life cycles have drastically reduced, and the need and cost to innovative to retain customer with new variants and products has gone through the roof. It also means that you need to keep acquiring new customers all the time and lose old ones for no fault of yours. Churn may no longer be option.
Ultimately is people and technology that make businesses work. Or now is it the other way around? AI and everything else now will make technology a driver of businesses rather than people. We don’t even have to wait for the robots. 1000s of tech companies are born every day with a new use case. Even if 90 percent fail, there’s plenty of new tech to go around.
So, what about the people? Well, for too long HR managers and weak leadership has made this group of stakeholders (the employee) their priority in life. Work-life balance works great in countries with high per capita incomes, and social safety nets. But what about the rest of the world? Hard work as a core value system still works whether it’s a sportsperson or a working person as a lead indicator to having a good life. It’s time for leaders to actually focus on the two stakeholders without whom, there would really be no business – the shareholders/investors, and the customer.
Lastly, let’s keep it all simple, or you can’t be agile. Simplify. Your business and everything around it. Google Map your strategy. Pick 4 financial objectives around revenue, risk, and cost. Pick 4 customer objectives around Product, Brand and Relationship Management. Pick 4 process objectives around innovation, sales, marketing, and delivery. And lastly pick 4 objectives around technology, and people. 16 objectives, with 3-4 of them have breakthrough targets, 5-7 of them having realistic targets, and the balancing being easy.
And all focused on what you can deliver now. Sorry, it’s now a 100-meter sprint, not a marathon. Welcome to the races!
By
Sanjiv Anand, Chairman, Cedar Management Consulting International
@ Arabian Business Magazine, 2024