Fortunes Won & Lost Based on Strategy

 

On the conference presentation circuit, I like to open with the following dramatic but true statement - fortunes are literally won and lost based on an organization’s ability to plan and execute strategically. Evidence for this statement is all around spanning centuries. For example, a central doctrine of Sun Tzu’s masterpiece The Art of War was to “…know your enemies and know yourself...” While in fifth century BC China the objective was principally to gain territory, in modern day business tactics this equates to knowing your external environment and knowing yourself. Expansion of this point is supported by a few illustrative examples of disruptive technologies that changed the strategic playing field.

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During the 1970’s to 90’s Eastman Kodak was a household name due to their film photography business and ubiquitous presence in millions of stores around the globe, ranging from specialist photography to convenience outlets. However, this changed with the development of solid state flash memory by companies like Samsung, Toshiba and SanDisk that resulted in the demise of mass market film photography, thereby driving Kodak into bankruptcy in 2012. Western Digital, themselves at risk of being disrupted due to their focus on hard disc drives, demonstrated the ability to respond to the disruptive threat of flash memory by acquiring SanDisk in 2016. So you have the tale of two different responses – Kodak and their apparent reliance on internal development and IP, and Western Digital opting to acquire a leader in flash memory, resulting in very different outcomes for the fortunes of these companies and investors.

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In a related technology thread, January 2017 marked the 10th anniversary of Steve Jobs announcing the Apple iPhone, leaving the rest of us to witness the ripple effect throughout the mobile phone industry. Established companies such as Research in Motion and Nokia have been struggling to catch up ever since, while others like Samsung have fared better by rapidly evolving their product portfolio offering to meet the disruptive innovation of “smart phones”. Other examples abound from all industries – look at the effect on the car rental business and the disruptive competition traditional companies like Avis and Hertz are facing with the arrival of Uber and Lyft; Blockbuster driven to bankruptcy by Netflix; Barnes & Nobel [among others] vs. Amazon.

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These examples illustrate how it is incredibly important for companies to have a formal systematic process for reviewing the external environment, to compare with internal capabilities, and translate into appropriate strategies and tactics such as internal product development road-maps, or M&A actions when the benefit and capability gap is significantly large. All of this can be succinctly summarized as knowing your external environment and knowing yourself with the appropriate activities prioritized. The question I'd encourage you to ask yourself is how confident are you with your own organizations strategic planning & portfolio management process? Contact us to learn more.

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