We’ve tried, time and time again, to be attentive to opportunities. We’ve tried to detect them, capture them, and transform them into business; and what’s more, we’ve even been paid for doing so. But does that make us strategic? Can this attention help us define the business strategy?

‘Opportunity’ is a curious word. It derives from ‘o portus’, which in Latin means ‘towards the port’. Opportunity is the wind that carries us to the port. Thus, a sailor could encounter a wind that would take him to a port, a wind that he could take advantage of to take him to the port. But the question is, is that the port we want to go to? That’s a different matter.

To think opportunistically, then, is to start with the resources, with the context, with what we have; and from there to generate actions that allow us to capture those opportunities. It involves rigging the sails to capture that wind, so that not a single gust escapes, and sailing with high efficiency to a specific port. Now, this kind of thinking can work at operational levels. But, to generate a strategic plan, it is completely useless.

On the contrary, strategic thinking is about putting the desired result first, the objective; starting from there, and precisely from there, questioning the resources needed to achieve it. It involves first defining the port we want to go to, and then defining what kind of rigging we will need to assemble, how we will align the sails, and what kind of crew we will need to get there.

Strategic thinking involves starting with the objective to question the resources. Opportunistic thinking is the opposite.

Man cannot live on profitability alone

To think strategically, we need much more than setting a profitability or volume target. It is clear that profitability is a fundamental requirement of a company. And growing, selling, or earning as much as possible is clearly everyone’s desire. But when it comes to defining strategy, this is not enough. We can ask the ship to go faster, but the question is: where to?

The definition of strategic objectives requires much more than growth or profitability objectives. It requires a definition of how we are going to do it, what kind of achievements we should reach, how we will differentiate ourselves or build value to achieve our growth objectives. Saying that the objectives of a plan are defined solely based on an expected gain is like setting a goal in life that says ‘breathe, nourish, and hydrate’. Profitability is that oxygen, that nutrient, and that hydration, but it is far from being a strategic challenge for our lives. How profitable we want to be next year will tell us a lot about the level of challenge and the level of stress we must face, but it will not tell us anything about how to do it.

Returning to the ship, profitability will give us the speed at which we want to reach the port. Strategic objectives will give us the port and the course.

Which port do we want to go to?

Once the strategic objectives (and also the growth objectives) have been defined, we must define a clear business strategy. Once we have defined the port we want to reach, we must define the path, the course we will follow.

Many times, we define a volume objective and directly ask our teams to propose actions to complete the plan. Or we ask them to conduct extensive market research to detect opportunities (or insights) that trigger actions. This starting point is clearly opportunistic. Strategy is not a question, it does not arise from research, nor does it arise from a compendium of insights. Like objectives, it is a top-down process that starts with desire. It starts with the decision of what kind of company we want to be and how we want to differentiate ourselves along the way.

Only once the strategy has been defined and communicated can we ask the teams closest to the operation and the customer’s reality to propose initiatives for action. Once we have the teams aligned behind a clear common strategy, only then can we start an upward creative process where initiatives and projects guide us to our destination. A sailor can propose a sail change, a navigator can propose adjusting the course, but only if everyone is clear about the path.

Opportunities can distract us from strategy

Let’s say we’re running a marathon. Let’s also assume that we really like watermelons. We’re a few hundred meters from the finish line when we come across a unique opportunity: we see a fresh and delicious watermelon. Do we stop and carry it to the finish line?

Someone might say that it depends on how much we like watermelons and how much we want to win that marathon. But stopping seems like a rather strange choice. Since watermelons are generally easier to obtain than marathons, it might be better not to be tempted by that opportunity and wait until the finish line to worry about the watermelon later. But what if it wasn’t a watermelon? What if it were a solid gold bar? Or two bars? Or three?

Profitability can be a distraction from strategy. Short-term objectives can often tempt us and we can compromise larger long-term objectives to achieve them. A temporary price reduction can give us that incremental volume we need to reach the volume target of the plan. But… how does this affect our price positioning? How does this impact the brand? A profitability, volume, or share objective is just a short-term goal, but it says nothing about how we are going to achieve it.

Moments for opportunism and moments for strategy

While a strategic perspective will allow this long-term course to be defined, there will be occasions where opportunistic thinking can help. There are at least two that stand out.

The first I will call, “desperate to catch a favorable wind”. In crisis situations, when what matters is putting out a fire or stopping the bleeding, opportunities can save us. If we have water coming into the boat, it makes sense to look as soon as possible for opportunities to remove it. The second situation occurs at times when the focus should be on operational execution. I will call it, “the captain calls the shots”. No ship can function if the sailors are constantly questioning the course. In operational matters, there will be times when it will be much more effective if resources are not questioned and actions are executed. For example, that is the headcount, and with that headcount we must operate. This is because someone has already made the strategic decision before and is not looking to reopen that decision at the time of execution.

Allowing for these two examples (and perhaps some more), the strategic plan must set the course and allow decisions not to be biased based on what we have or know, but rather motivate us to ask the questions to achieve it.

A plan based only on opportunities will not guarantee the long term, nor will it ensure that that short-term result is the maximum we can achieve. Profitability as the only objective is a hollow objective that does not guide growth. It only transmits stress without giving an idea of how to achieve it. A plan based on strategies will allow us to challenge what we already know and guide teams behind a common sense. A plan based on strategy will help us choose the port and take us closer to that port we want to reach.

Gastón Francese
Partner at Tandem.
gf@tandemsd.com