The captain´s strategy: strategy vs. opportunity

We try to keep our eyes open to opportunities, over and over again. We try to detect them, own them and turn them into good business. Even more, we've been paid for doing so. However, does that mean we are strategic? Can awareness help us define business strategy?

'Opportunity' is a curious word. Its root in Latin, o portus, means 'towards the port'. Opportunity is the wind that steers our boat to port. As when sailors take advantage of the direction of the wind to steer their ship accordingly, to the port. However, is that the port we want to reach? This is a completely different matter.

Opportunistic thinking means starting from whatever resources you have, the context, what is at hand. From that point on, we need to generate actions that will allow us capture those opportunities at the right time. It means using our sails to take advantage of the wind, every single gust, to efficiently sail towards any given port. Now, this kind of thinking may work well operationally. Though it is of no use if you want to generate a strategic plan.

On the contrary, strategic thinking is starting from the result you seek, the goal you've set. That will be the starting point. Then, you need to think of the resources you need in order to get there. It means identifying the port you want to reach and then define the kind of resources, the way you'll line up your sails and the crew you´ll need to get to that port.

Strategic thinking means starting the other way round: from the goal, to then think of the resources. As opposed to opportunistic thinking.

Man shall not live of profitability alone

To think strategically we need much more than setting a profitability or volume target. Yes, profitability is essential to a company as a requirement. Growing, selling, making the most money you can is clearly a common point we all share. However, it is not enough when defining your strategy. You can make the ship sail faster, but you need to know where it is headed.

Defining strategic goals requires much more than growth or profitability goals. You need to define how we will do it, what kind of landmarks we need, how to differentiate your company or how to build value in order to attain growth goals. If we say that goals are defined just by the profitability you seek, we might as well say our goal in life is 'breathing, eating, and drinking water'. Profitability is oxygen, food, and water, but it is far from beying the strategic challenge. The profitability you want for next year will speak loud about the level of stress and the challenges you will face, though it will not be able to tell you anything about how to go where you want.

Think of the ship once again: profitability will define the speed. Strategic goals will define the port and the direction.

What port do we want to reach?

Once strategic goals (and growth goals) are defined, we need a clear business strategy. When you know you want to reach a given port you need to plan the journey, the itinerary.

We often set a volume goal and ask our teams to propose actions in order to plan ahead. Sometimes we ask the team to do extensive market research work to detect opportunities (insights) that will help define actions. It is a clearly opportunistic starting point. Strategy is not something you ask, nor does it result from research, or a number of insights. Like goals, it is a top-down process, originating in what you want in the end. It starts from the decision of what kind of company we want to be and how we want to differentiate ourselves along the way.

Once the strategy is defined and shared with others, we can ask those teams working close to operations and reality to propose initiatives leading to action. Once teams are in line with a clear, common strategy, we can give way to a spiraling creative process of initiatives and projects that will lead us to our destination. A sailor might suggest we change the sail, and another member of the crew might recommend we adjust our direction, but this is only possible if the journey is clearly defined and everyone knows about it.

Opportunities may distract us from the strategy

Let us imagine we're running a marathon.  Let's also imagine we love watermelons. We are about to reach the finish line, just a couple hundred yards more to run, and we see a great, juicy, delicious watermelon. A unique opportunity. Would you stop, pick it up, and carry it as you run towards the finish line?

Some might say it will depend on how fond you are of watermelons and how badly you want to win the race. However, stopping to

pick up the watermelon sounds like a strange choice. For watermelons are easier to get than marathons, so it might be better not to give in to that temptation, reach the finish line, and think about how to get a watermelon later on. What if it were not a watermelon, but a bar of solid gold? Or two bars? What about three?

Profitability may distract us from our strategy. Short-term goals may tempt us to compromise long-term goals if we want them badly. Temporary price discounts might give us the volume growth we need to attain the volume goal in our plan. However, what about our pricing position? Does this affect the brand? Profitability, volume or share goals are short-term and will not show us how to get to the destination we want.

There is a time for opportunism, and a time for strategy

A strategic perspective will help us define our long-term direction. However, opportunistic thinking may help us on given occasions. There are two, at least, that stand out.

I'll call the first one 'desperation for taking advantage of the wind'. During a crisis, when all you want is to put out a fire or stop a hemorrhage, opportunities may be the lifesaver we need. If a ship is sinking all you want is the opportunity to stop the water from coming in through the leak. The second situation emerges when you need to focus on operational execution. What I call 'the captain's orders'. No ship can sail if the crew is always questioning the direction it is taking. And in terms of operations there will be times when questioning resources will not be the best choice, for action is what is required. Think of headcount, for instance. You need to operate with the headcount you have. Because someone else has made a strategic decision in the past, and they may not want to go back on their choice at a time when action is all you need.

With the exception of these two instances (there may be just a few more), the strategic plan is what needs to set the direction, and that means decisions cannot be biased depending on what we have or know, but motivate us to ask the necessary questions to reach our destination.

Based on opportunities only, the plan will never guarantee the long-term future, nor define short-term results as our full potential. Profitability understood as the only single goal is hollow, and cannot guide us to grow. It creates stress, and does not help us succeed. A plan based on strategies will help us face known challenges, and guide our teams towards a common goal. A plan based on strategies will help us choose the port, and bring us closer to it.

 

Gaston Francese
Director at Tandem, Soluciones de Decisión.
gf@tandemsd.com