Strategy as a compass

Article

Strategy as a compass

‘To survive, you have to adapt to your environment’

In a rapidly changing playing field, companies barely have time to think about their next step. But to avoid being side-lined, a well thought-out strategy is of vital importance, says business strategist Camilla van den Boom of consultancy firm Sturrm. "The laws of nature also apply in business administration: to survive, you have to adapt to your environment."

Camilla van den Boom: “Strategy is not a priority in many companies. Many companies are so busy with their day-to-day operations that they don't have - or take - the time to think about the future of their business. Nevertheless, a well thought-out strategy is vital. The laws of nature also apply in business administration: to survive, you have to adapt to your environment.”

The game has changed

Until now, many companies have been able to keep up by simply continuing what they were doing. But now the world is changing so quickly that entrepreneurs without a strategy will not be able to survive for long, says Van den Boom. “The rules of the game have not been changed, the entire game is different. The world is constantly changing. As an entrepreneur you have to know what your ambition is and what you are going to do now to get there later.”

To define that ambition, you have to ask yourself questions, says Van den Boom. “You have to look inside, outside and forward. You look inside by thinking: how do I create value today? What am I good at as an entrepreneur and what are my weaknesses? Looking outside means reading newspapers, getting information, doing research. Who or what influences your company? What is happening in the market and with your customers? Which competitor does what and who is your customer's customer? Finally, you look forward: what do I think about all this? What can I do with it? What is my dot on the horizon? Based on all these questions, you then determine your long-term ambition and goals. In a world that is changing so quickly, that is your compass.”

Bring the horizon to you

Van den Boom states that we have to work differently with the future. “Today's world is so complex and short-cyclical that we have to bring the horizon closer to us. It makes no sense to set your goals for five years and then write down in detail what you are going to do for the next sixty months. It is quite difficult to predict what will come your way in those sixty months. If your steps are predefined, you are not flexible as a company if something happens along the way. A pandemic, just to name something.” Therefore, based on your long-term ambition, set your priorities in the now, advises Van den Boom. "All that comes after is unpredictable.”

The 3458 Method

Van den Boom developed the 3458 method. This translates your ambition for the long term into the short and ultra-short term. “3458 is the reminder: if you want to be somewhere in x number of years, what will you do for the next three months, four weeks, five days, eight hours? You take action on that basis. After those three months, you and your employees look at how things went and where you are now. Have you met the previous priorities? Has something happened that requires you to make adjustments? Then you determine your priorities for the next 3458 period. In this way you are constantly in control, to eventually get where you want to be. And also very important: it is for your employees much more clear what they need to work on every day, so that they are more focused and more motivated.

The exact length of the long term varies per industry, type of company and sometimes even per product line. “The lead time of investments is relevant for determining the strategic horizon. This may be five, but also fifteen or even thirty years. A company that produces machines is also less agile than, for example, a software company. A new machine still has to last for years, but an interface can be adjusted in one day if it does not run properly. So every organisation has its own definition of the long, short and ultra-short term.”

Energy to build the future

In her work as a strategist and advisor, Van den Boom sees that entrepreneurs have “an incredible amount” of strength and potential when they work more short-cycle and think more carefully about their steps in the near future. “You have to know what you are doing and why. Overview and insight provide peace and energy to build for the future. And we really need that energy, because SMEs are the engine of our country.”

5 choices to determine a healthy strategy

Vincent Oomes is a Strategy & Operations partner at Deloitte. He advises multinationals in the field of strategy and presents them with five important choices. Just like Van den Boom, he stimulates companies to think thoroughly about their position.

Oomes: “When you ask companies about their strategy, they often say "we want to grow and that's why we are going to sell these products". But that is far too limited, it really won't get you there.” To determine a healthy strategy, you need to make the following five decisions, according to Oomes:

  • What is your ambition?
  • Where do you want to play?
  • How will you win?
  • Which competencies do you need for this?
  • Which organisational form is appropriate for this?

To be able to make choices, companies must go through a step-by-step plan in which they compare multiple options, Oomes advises. “First look at your current choices: how are you doing? What trends do you see in the market, among competitors and in society? Based on that, you determine which options you have and start testing those options. For example, how feasible is it to operate in a particular market, or to compete with particular companies?”

Determine action plan

Ultimately you have to make five definitive choices for the future, which you put next to your current situation. “The gaps that then become visible will determine your action plan for the coming years. That will be your strategy. For example: if you want to be on the market in China in five years' time, you know that you need to establish contacts in that country in the coming year. And if you decide to become the largest web shop but are not yet at the forefront of digital technology, you will have to hire people with the right technical knowledge and skills in the near future.”

Regularly check whether the assumptions behind the choices you have made are still correct, Oomes advises. “Is it still true that the market is moving like you assume and are the consumers still like you think? Depending on the type of company, you can adjust your action plan as soon as new information becomes available. The real estate sector is a good example: now that working from home is the new standard, landlords are no longer focusing on renting out office space, but on developing meeting places. You can adjust a well-thought-out strategy if current events require it.”

On Thursday October 29th, RTL Z and Deloitte organized an online seminar on this subject, Vincent Oomes was one of the experts present. Click here for the recording of the seminar. Please note the online seminar is in Dutch.

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