The Economic Battlefield
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Strategic thinking is the art of war applied to business. It is thought, analysis, imagination and judgement applied to a competitive situation in which there are economic winners and losers. As CEOs survey the battlefield they must answer six questions essential to winning the war.
Answering these questions requires the inputs of his or her executive team and the support of excellent information knowledge management. Answering each question allows the organization to move purposefully into the future.
What will the future look like and what strategy should we pursue?
Strategy begins by reconnaissance and surveillance, creating a vision of the future in terms of factors such as economics, technologies, marketing methods, product design features, and demographics. A company can, through information, debate and imagination, envision a plausible future. Within that future they decide their strategy: what products or services they should provide, to which customers, and in which geographic locations.
What will be our competitive advantage? What are our core competencies and how shall we use them?
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To succeed in this future, companies must understand and use their attack capabilities. These range from the technologies they have, to specific products and unique selling methods. Successful companies fully understand the base from which they launch their attack. This is their competitive advantage. Boeing Aircraft, for example, builds its strategy on a single product, an airplane. Canon chose a different launching point, technology. It makes not one product but a range of products each traceable to core technologies of precision mechanics, fine optics, and micro electronics. Each company has a launch pad for their attack and each has a different combination of core competencies to support their attack capabilities. But both are very successful companies. By selecting and focusing their attack capabilities, organizations can take market share from weak competitors and defend against stronger competitors.
How should we use our support capabilities in order to enhance our strategy? What will guide their behavior?
The senior executive team must also define and use the support capabilities of their organization. Each capability, such as human resources, finance, and information technology must add value to the company’s product or service at each step of the value chain. If they do not, the attack capabilities or competitive advantage of the company is lost no matter which Strategic Anchor® it has chosen.
In addition, these attack and support capabilities are linked by clear values which guide the behavior of the various cross functional teams assigned to carry out the strategy. This linkage allows the whole organization to align its thinking and ideas toward a common purpose.
What changes must we make to compete in the future?
Strategic positions reflect the targets organizations will pursue and, equally important, the ones they will not pursue. To achieve these positions, organizations need to identify and manage the critical changes they must make in terms of aligning structure, systems, skills and rewards.
Does our reputation allow us to leverage our resources and enhance our attack capabilities?
In this battle, successful companies sometimes seek alliances and they always seek to have their shareholders on their side. But at the end of the day what symbolizes their strength as an organization is their corporate reputation. Their reputation is the first thing which crosses the bridge to the future and it will either strike fear in the hearts of its rivals or it will give reason for the competition to mock them.
How well do we use our strategic capabilities and can we successfully guide the implementation of our strategy?
The CEOs team sits at a position which gives it a view of the whole battlefield. Here they effectively employ their strategic capabilities in: managing the critical changes necessary for their organization to get across the bridge to the future; intelligence-monitoring of competitor movements and changes; performance-monitoring to know exactly how successful the campaign is being waged; and communications management to ensure the right (and wrong!) signals are being sent to appropriate stakeholders and competitors.
And in the center of all this is strategic thinking and learning. In the end it is the capability of the senior executives to think strategically which will ensure success.