5 posts tagged “strategy”

Many of us tend to get caught up on the daily routine of keeping things running and forget to manage the big picture. But it is crucial that you set aside some time to work on the strategy of the company. Otherwise, one day you can find yourself barely trying to keep afloat or worse out of business altogether.

Strategy entails focusing on activities to maintain competitive, providing leadership for your company. This means keeping in touch with customer changing needs. By focusing on your customer, you quickly realize that for example they are no longer buying CDs but downloading music. So rather than doing business as usual, the leadership has to be there to provide the direction to address the change in customer needs.

Strategy can also be applied on a personal basis. A simple example is if you are currently investing in some financial instrument such as stock, bond or money market but getting a return far less than the debt you are carrying. Does this really make sense, the answer is obviously no, you are better off paying off the debt or loan first. See the big picture, that by paying off your credit card debt at 20%, you are actually getting an equivalent of 20% return on your money. Rather than making a possible 5% if you were in invested in a GICs or possible 10% in a stock.

The late Peter Drucker summed it up best when he said, “Leadership is doing the right things, and management is doing things right”. Remain strategically focused and truly be the captain of your ship.

Having hit parity and even surpassing the U.S. dollar many are asking how long will this ride last.  The answer is no one really knows.  However, we can hypothesize that it will depend how fast the U.S.  economy recovers.

The U.S. represents one third of the world's economy, U.S $13 trillion.  And although many have argued that China and India will pick the U.S. slack this still has to be seen.  More specifically for Canada, it means that China and India will need to pick up Canada's commodities and services respectively.  For a more detailed discussion see "Bet you a Loonie U.S. Still Matters".

But what does a high dollar mean for business and investors?  Many manufacturers have seen their companies suffer as a result of poor exports and high material costs.  But a high dollars also means there is also an opportunity for companies to take advantage by retooling and making investments in machinery and systems to improve productivity. 

Investors's could you use the high dollar value to buy into U.S. equities.  Prior to parity you had to deal with foreign exchange risk.  For now that risk has been eliminated.  Even if the Canadian dollar were to drop, the investments made in U.S. equities would be hedged. 

Take a strategic approach and see how you can leverage the high Canadian dollar. 

One of the key goals of management is to position the company so it can compete effectively. No one has articulated this better than Michael Porter. Michael porter is a business strategy professor at Harvard.

One of the textbook examples of how to position a company is Dell. Dell’s strategy of uniquely serving its customers directly and customizing computers to users needs had been effective since its launch. Dell was able to carve out significant market share that allowed it to grow to a $50 billion dollar company.

But last year Dell was having a hard time competing. HP had come back strong and started taking back some market share. This had forced Michael Dell back to the position of CEO in Jan 31st of this year.

So what does Dell do? They come up with a retail strategy. They start selling computers through Walmart and so far it has been successful. They have plans to expand by selling in other retail outlets.

What does this say about sustainable competitive strategy? This says that there is no such thing as sustainable. A strategy has a finite life. You constantly have to be in touch with the market and customers to satisfy their needs. Your strategy will eventually need tweaking due to market forces, forces such as those that Porter talks about in his five-force analysis of industry. One of those key forces is technology.

I recently tuned into an interview with Henry Mintzberg.  He talks about his upcoming book  "Managing Right Now".  Professor Mintzberg succinctly defines managerial work by referring to four planes:

Plane #1.  The Thinking Plane---which involves strategizing, insights, big picture stuff

Plane#2. The Information Plane---processing information, finding out what is going on, issuing orders etc.

Plane#3.  The People Plane--Leading people and linking to people externally.  I agree with his point that leadership and management are one in the same.  He asks, "Have you ever seen a leader that is a bad manager or vice-versa?"  The answer is clearly, no.  So he does not understand why people tend to  separate the two, although he says it is ok to separate some characteristics..  But ultimately his view is" ..the separation [of] leaders and managers is nonsense and creates a lot of misery.  Managers have to be leaders and leaders have to be managers.."

Plane#4. The Action Plane--Managing projects, fighting fighters internally, and doing deals externally.

Pretty basic stuff that should not leave anyone guessing what management is about.

Can Canadian companies compete in a global economy?

This will easily be another story that could be part of the new book "Why Mexicans don't drink Molson".  Essentially,  the book criticizes Canadian companies for having a domestic mentality and not being able to compete internationally.