Rajiv Salkar, Global Head - Business Development, Geometric
In plain words, Strategic Management is the continuous planning, analysis, execution and monitoring of all the activities necessary for an organization to meet its goals and objectives. Thus Strategic Management entails the following key concepts
- Assessing the internal and external environment
- Defining goals and objectives
- Formalizing and executing action plans
- Constantly monitoring and adjusting the plans to changed circumstances
Strategic management has been in force for thousands of years. We are well aware of Chanakya and his “Niti” which was nothing but political and economic strategies for ruling the kingdom. We are constantly reminded of the various examples of the winning strategies as well as the strategies which did not work. Let us look at each of the basic concepts in today’s environment. For practical reasons, we will restrict the discussion in this article, to the technology companies.
It is been said that the only thing constant in life is change. Every decade in the last half century, has seen major changes in the business environment. One of the major changes in the last two decade has been the rapid improvement in technology. The increase in computer processing power, data storage, availability of bandwidth and the rapid developments in artificial intelligence, machine language and enterprise mobility have created huge opportunities that were unheard of before. We are in the midst of a digital revolution and technology is the focus of this resolution.
Assessing the Internal and External Environments
A successful strategy involves a better assessment of the internal strengths and weaknesses and careful understanding of the opportunities that are created due to the changing external environments. The impact of external environments could be due to technology or due to political or social changes. I recall a case of one of our family acquaintances who came with a great idea of manufacturing electronic taxi meters in Mumbai, way back in the 80’s. He had everything decided from the design, material, production facilities, pricing etc. He built prototypes and was ready for manufacturing, but the biggest problem was that he had no understanding of how long it would take the government and the union to accept the idea. After a few years of trying, he sold everything and returned abroad. The business idea was perfect but premature.
The biggest challenge in today’s fast changing business environment is the accurate understanding of the opportunities and threats. The advancement in the technologies have reached a tipping point where big data analytics, cloud computing and the ubiquitous Internet of Things (IoT) are transforming businesses around the world. This will lead to many new opportunities as well as close traditional businesses in the future. Dubai just announced that 25 percent of the public transport will be autonomous driven by 2030. This will create many changes in the need for driving schools or new software to train, test and issue licenses.
These advancements are rapidly changing the technology landscape. Most of the technology businesses have started to adapt their business models and operations to cater to new opportunities. However there will be a need for integrating these new technologies with the existing legacy applications. Whereas the large IT companies are well entrenched in large enterprises to cater to these needs, it is a good opportunity for specialized IT SME companies to provide solutions for integrating various IT systems.
Defining goals and objectives
It is important that the goals and objectives must be clearly linked with the internal strengths and opportunities due to the changing external environment. In the recent years we have seen a plethora of start-ups in the area of e-commerce or data-analytics. While these organizations are betting on the increased use of smart phones and the bandwidth, it is very difficult to understand their goals or objectives and the differentiation.
Clarity of objectives helps in better communication as well as defining precise execution plans. One of the areas where technology start-ups can consider venturing is - 3d printing or autonomous driving. I know there are already companies in these areas – but there is still enough scope for new entrants – as these are still evolving technologies.
Formalizing and Executing Action Plans
This is one aspect of strategy which has changed considerably over a period of time. I expect that in the days to come it will undergo even more drastic changes. In the last decade, one of the main factors that influenced the management action was globalization. In the last five years, Big Data Analytics, Internet of Things and Social technologies is changing how we operate in our day to day life.
This generation of social connectivity needs immediate gratification. Execution plans without use of these technologies are a sure recipe for failure. Use of big data analytics for analyzing customer segment and experience is a must for marketing strategy. The most difficult challenge is to manage the experiences where digital meets physical. Consumers are expecting free and intuitive user experience. This requires focused attention and investments to cater to the consumer needs. Another big challenge is the introduction of automation technologies and Internet of Things in the execution strategy. In the last decade many new technologies have proliferated to automate knowledge work. Judicious use of these technologies will be a major area of attention for strategy and management.
One of the critical factors for success in a global and digital economy is to have partnerships. This is one area, where many Indian organizations have met limited success. It is necessary to build strong and meaningful partnership frameworks that can build long term mutual benefits. An action plan that incorporates this holistically will have a good chance of success.
A plan is effective only if it is well understood by all the actors responsible for executing the plan. In fact it is more often that well intentioned ideas result in failures as either they are too complex to understand or not communicated in simple terms. In the complex world of digital economy, instantly connected via social network, it is important that careful consideration is given to communication strategy – both for internal and external world.
Monitoring and Adjusting the Plans
Strategy is for a foreseeable future – typically 5 years in the current business environment. Even in such a short period of time, there will be many changes – both due to technological advancements or external actions such as changes to regulatory framework or political environment. Evaluating the impact and quickly adapting strategies to the changed environment is the key for success. One of the ways of increasing the relevance in a changing market environment is to be close to the customer’s business – thereby constantly providing business value.
Strategic Management has always been the corner stone of successful companies for centuries. In addition to strategic management, there is also one more thing which is critical for success, which is intuition. The only thing that has changed in the last few decades and will change rapidly in the future is the connectivity and proliferation of data. We will also have technologies to analyze the large amount of data in minutes or seconds giving us valuable information to act upon. We will also have strategies, methodologies to effectively manage and interpret this data for useful inference and action. However the biggest challenge will be how to effectively use this data along with our intuitive knowledge to evolve winning strategies. Until now this is still an art, and I hope that it remains as an art. Who knows, the day may not be far when even intuition will be generated by robots fed with millions of data describing various business scenarios.