The Value of Strategic Thinking and Decisive Action in Difficult Times

Today we are faced with a serious global economic and financial crisis that, coupled with technology making geographical boundaries virtually nonexistent, have pundits predicting that the global output will decrease for the first time since the Second World War. What exactly does this mean for individual countries, individual firms and individuals? Does this mean that every country will see output and living conditions decline? Does it mean that every firm will decline in output and profits? It was reported in the news recently that the excellent financial results posted by Supreme Ventures was an indication that many persons are turning to gambling in these difficult times and the company is taking full advantage. Sadly several countries and most companies assume that the difficult environment will automatically have a negative impact and therefore political leaders and company executives sit back and hope that the worst will not happen. It is my belief that the countries and companies that perform well despite difficulties in the environment are those who sharpen their strategy and flawlessly execute it.


Drs. Robert Kaplan and Dave Norton define strategy as an integrated set of choices that position a firm, in an industry, to earn superior returns over the long term (I might add in good and in difficult times). What is this saying? First of all, companies need to differentiate themselves from the norm in an industry to enable customers to make purchasing decisions in the companies’ favour. Secondly, companies need to be at least as efficient as other companies in delivering the differentiated value to the customers. Companies will always have choices to differentiate, however what is important is that the set of choices must be integrated and hence an organization must align itself entirely around delivering value to customers. If a supermarket decides to differentiate on selection or availability, it must excel in purchasing and inventory management to ensure that goods cover a wide spectrum and are always available. When times are difficult, the supermarket cannot cut back on its purchasing and inventory capability in order to reduce costs as it will no longer differentiate and will experience serious revenue reductions.


This strategic thinking to differentiate or to position a firm to take advantage of the opportunities created by a difficult environment is what separates a well performing company from others. However, while strategic thinking is a necessary condition for success, it certainly is not sufficient. Without taking action, strategic thinking is merely a daydream. Michael Lee Chin once said that success is 1% strategy and 99% execution. This is even more relevant in difficult times as delays in taking action can result in loss of opportunities.


In summarizing, companies, and countries, must always think strategically and act accordingly. In difficult times there is a natural tendency to throw the strategic thinking out the window and cut back indiscriminately to survive. However, in difficult times there are always opportunities and companies must strategize ways to exploit these opportunities by differentiating themselves in order to grow or maintain revenue in a declining market. Companies must be cognizant of the internal processes that drive differentiation and ensure that these processes are never compromised when deciding to cut back on expenditure. More importantly however is to act swiftly and decisively once the strategy decision has been taken.