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The Strategist’s Challenge

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The strategist’s major challenge is to simultaneously manage three critical factors: VALUES, OPPORTUNITIES and CAPABILITIES.

VALUES refer to the mission and scope of the organization; how this organization sees and defines itself. One way to analyse a firm’s values or its missions is to look at its mission statements. Most publicly traded companies have these displayed on their website or their corporate annual report. And here are a few that I’d like to share. 

The Walt Disney Company; the mission of the Walt Disney Company is to be one of the world’s leading producers and providers of entertainment and information. So first of all it defines the industry in which Disney operates; entertainment and information, that’s somewhat interesting. Second, they define their aspirations, they want to be one of the world’s leading producers. A global company and one of the leading producers within the entertainment and information segment. 

Google’s mission statement; To organize the world’s information and make it universally accessible and useful. This is a very broad definition here, one in which they express very high aspirations in terms of what they’re looking to accomplish. 

Contrast that with Dell. Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. They define themselves as the computer company positioned to deliver better value by delivering the best customer experience.

Citigroup; Citigroup is to be the most respected global financial services company. Like any other public company, we’re obligated to deliver profits and growth to our shareholders, Of equal importance is to deliver these profits and generate growth responsibly. What I find interesting here is how they have incorporated values explicitly into the mission statement. Their objective is beyond just delivering profits, but also to deliver profits and generate growth in a responsible way. So you see these values starting to permeate their statement. 

OPPORTUNITIES are the external environment in which you operate in. What does the market value? What does the market demand? And are there others out in the space providing value in similar ways. The competitive effect of your company is the key consideration here. You cannot afford to assess the opportunity available to your company in isolation and purely considering your current capability.  

Consider the following example, Kodak. For nearly 100 years, Kodak was one of the leading companies in the world. Producers of film, pioneers in film, they had both capabilities and values and a mission statement that allowed them to be highly successful. But the world changed and as you might guess, with the advent of digital technology, Kodak declared bankruptcy a few years back. What happened? Well, the opportunity set changed for them ultimately. So while, organization, great capabilities, mission and values, are wonderful, at the end of the day opportunities were not available to them, at least in the way they had historically defined their business. 

CAPABILITIES BRING US TO A MORE INTERNAL FOCUS. What does the company do well? What are their capabilities? What assets might they leverage to meet market opportunities? There are a few things to think about here. We’re going to introduce the idea OF COMPETITIVE ADVANTAGE. Now competitive advantage is a term you hear bantered about in the popular business press all the time. Competitive advantage is always relative to your competition. It’s not sufficient to just be good at something or even to be great at something If everyone else is great as well.  So, if you have a high quality product but everyone else in the market has a high quality product, that’s not a competitive advantage. You must centre on what you really do differently from your peers.

Taking together values, opportunities, and capabilities define the Strategist’s Challenge and the three main questions we need to ask. It’s at the intersection of those three questions that reveal VALUABLE COMPETITIVE POSITIONS. Those positions within a market that an organization can take that will allow them to survive and thrive and create the most value for its stakeholders. The responsibility of strategy is to ascertain the companies Valuable Competitive Position which answers – How do you create and sustain value?

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