“Strategy is when you are out of ammunition, but keep on firing so that the enemy won’t know.” (Anonymous)
Strategy is important; it defines how a business intends to secure its vision. Corporate collapses are a result of strategic ineffectiveness more than any other factor. Every business executive acknowledges this. In fact, in a global survey conducted by the Business Intelligence Unit of The Economist in 2013, 88% of respondents say that executing strategic initiatives successfully will be “essential” or “very important” for their organisations’ competitiveness over the next three years. That’s quite an affirmation on the importance executives place on strategy globally.
However, the same report indicates that companies are surprisingly bad at executing strategy. Sixty-one percent of respondents admit that their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation; only 11% disagree. The result of this is poor performance, competitive ineffectiveness and eventual corporate collapse.
The question is why? If executives agree on the essentiality of strategy why would any take its implementation unseriously? Reports indicate many culprits but the chief amongst them is lack of competence.
Theorizing about strategy, Hamel and Prahalad in their 1990 Harvard Business Review article, stressed the expansion of a firm’s skills – rapid product development, high-quality manufacturing, technological innovation and service – and then finding markets in which to exploit those skills. In other words strategy results from a firms core competency.
A strategic vision is the sight, perception and vantage point a business has as a result of its harmonized combination of multiple resources and skills that distinguish it in the market place.
This immediately resolves the dilemma and confusion surrounding both the meaning of strategy and why organizations have difficulties aligning themselves to their corporate strategy as it places more emphasis on a firm’s competence rather than on plans. It shows that effectiveness and alignment to corporate strategy has a direct relationship with the core competence of the business.
In commenting on strategy, Henry Miztbeng wrote that changing external conditions and experience gained during strategy implementation tend to modify a firm’s original intentions. The optimal strategy thus becomes clear over time as necessary adjustments are incorporated.
It would be quite tempting to think that the reported non alignment with corporate strategy in The Economist report suggests that firms follow this emergent strategy but analysis shows this does not stand up to test because the report survey didn’t show any correlation between a willingness to learn and adjust on the go—typical of emergent strategy—and the degree of alignment between strategy and practice.
Rather the data shows a disturbing inability for many companies to understand why they are unable to effectively implement their strategy. This shows that applying Mr Miztbeng’s emergent strategy is subject to the strength of the company. That takes us back to the issue of core competence and its role in effective execution of a company’s strategy. My task here is therefore to help you understand how to link your strategic vision to the core competencies of your company.
Understanding core competence:
A core competence is a deep proficiency that enables a company to deliver unique value to its customers. It is a collection of all a company’s knowledge especially as it relates to the coordination of divers production skills and integration of multiple technologies. Because core competences are hard to copy or procure, it gives a company a decided advantage over the competition. For example, Microsoft has expertise in many IT based innovations where, for a variety of reasons, it is difficult for competitors to replicate or compete with Microsoft’s core competences.
Creating strategies is wonderful as long as management will follow through with implementation. But history has shown us the exact opposite. In this article we have identified the reason behind that as being incompetent to pursue strategy. Management efforts should therefore be focused on developing competence to help it broaden its strategic intelligence. Here is something to understand about strategy, it is the placing of demand on a company’s strength. When firms do not follow through with the execution of strategy, it is because they lack the required strength to do so.
How to develops a company’s core competence.
The truth is that every firm has competence to some degree otherwise they will not be in business. However this competence can only enable it play at a certain level, control a certain percentage of the market and expand its operations to a certain degree. To increase its relevance it has to increase in competence. The following steps will be of help:
- Identify your key strengths and optimize them into a company wide strength. Here you are looking beyond your current performance to what you are capable of. Within your company are abilities you are not even aware of. You may not know what other skills your employees possess beyond their job description. When you put your eyes down and encourage communication within the organisation for the purposes of discovering your capabilities, you will be amazed at what you will find.
- Do a comparison of these abilities with peers that posses them to ensure that yours is unique. Except your strength is unique and impossible to copy by your competitors, it cannot form your core competence. Take Google for instance, It is clear that they possess a special insight in software engineering in content indexing and maintaining scalable hardware infrastructure, and this is a one of the major core competency of Google Inc.
- Understand exactly what skills will enable you provide optimal value to your customers. What do your customers really want? You cannot serve them effectively except you understand it. Depending on your industry, there are unique abilities your customers want you posses, identify them and ensure you possess them.
- Make competence development a part of your organisational goal and then plan to realize this goal. This will include forming alliances, outsourcing non-core capabilities to make room for competence development, making acquisition and licensing arrangement and staff training in order to increase the company strength in core business areas.
BRIAN REUBEN
