Tuesday, May 31, 2011

Should Corporate Strategy Be Redefined?

May 31, 2011
John Wong

The corporate strategy – is supposed to be the meaning by which an organization achieves and sustains success. However, it rarely rises to that level, despite an abundance of corporate strategy theories and significant researches done over the past few decades.

What explains the relative failure of most organizations to create effective strategy? Part of the problem is that corporations and their managers face difficulties clearly and consistently in defining what corporate strategy is; probably much of that struggle can be traced to their interpretation of the word “strategy” by itself.

The original meaning of the word strategy derives from the Geek strategia, which is used in the military terms and represents the ability to employ available resources to win a war.

This interpretation has generated problems when such concept is used in today’s business context as it implies the existence, even the necessity, of opponents. As a result, most managers would believe that a corporate strategy implies a strong focus on competition knowingly competition occurs almost at the all levels, most organizations concentrate their strategic efforts on constantly improving the goods and services.

In war, for instance, objectives can often be clearly defined, and so strategy is thought of as a means to a specific end. This view has persisted in the corporate world where strategies are conceived as plans to accomplish certain goals. Although corporate strategy can be very goal-oriented, especially in the early stages of an organization’s development, the very nature of goals implies temporary success. In contrast, sustainable success is not, and cannot be an end unto itself or a goal to achieve. Therefore, goal orientation becomes arguably inappropriate when success has to be indefinitely sustained.

Despite this, an overwhelming number of top executives and researchers make extensive use of objectives in their quest of lasting corporate success. Certainly, a number of factors contribute to this: the need of leaders with limited tenure to point to achievements, the tyranny of meeting the expectations of the financial markets and most management teams extensively rely on forecasting and planning. Still, the idea held by most managers that strategy itself is all about goal achievement only exacerbates the situation. Therefore, it is important for strategists to remember that the more specific an objective, the further away it may potentially lead the organisation from its optimal big picture.

So how strategy should be redefined? Clearly it cannot rely too strongly on objectives nor can it focus too heavily on competition. A more fundamental concept is needed to guide an organization in seeing its big picture, and such concept should be customer. To create sustainable, long-term success, an organization must fundamentally understand and relate to its customers. It is an ongoing encouragement of this understanding, based on neither specific competitors nor temporal objectives, which must be at the heart of any real strategy. And it is that from which all objectives should naturally cascade.

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