2020 has been an extraordinary year for business. The global economy has faced several challenges over the past few years, such as the economic recovery from a deep financial crisis in 2008 and an ongoing trade war between the world’s largest consumer economy and the world’s largest export market. The convergence of these challenges with the economic shock caused by the COVID 19 pandemic has created an environment with a unique set of threats… as well as opportunities for those with the right mindset and a structured approach to navigating a post COVID 19 world. To be clear, the impact of COVID 19 will be felt for years to come. However, with the recent reopening of most economies in an attempt to revitalise economic activities such as commerce and trade, businesses will require a bespoke strategy to prepare and position themselves within a marketplace that is rapidly transforming. A question to be answered in this process will be how one can maximise the value captured from the market through the appropriate allocation of available resource?
Those who answer this question well will be in a favorable position to outmaneuver their competitors in the market.
The first consideration in this process is an appreciation of your external environment. That is, the broader environment within each your business operates. What key shifts are taking places which will define the landscape that you are competing in? Do they pose a threat to your business or can they be leveraged to increase the value of your offering and subsequently your share of the market? This is often a question of perspective and a structured thought process which is fed by appropriate knowledge and wisdom is necessary to develop a world view which resonates with reality as we see it. An example is a PESTEL analysis; a tried and tested approach which can be used to segment the key factors which define your external context. Issues concerning Politics, Economics, Society, Technology, the natural Environment and as well as the Legal system at play must be collated and systematically assessed to draw insights concerning your external environment. Adding Geography becomes particularly useful in the analysis where the aforementioned variables can be further segmented along a spatial dimension where relevant and applicable to your business.
The second consideration in this process is a thorough understanding of your internal environment. Essentially, how do you define your operating model? From a resource perspective, what strategic resources are available to invest in your business. These include infrastructure, people and technology, amongst others, according to the nature of your business. The next question is which capabilities exist within your business? Your capability set is the mechanism through which you generate value from your strategic resources via a defined business process management system. Key businesses processes and workflows need to be identified, institutionalised and tracked to ensure that value creation is continuously maximised relative to resource expenditure. Another key component which is often missed is your Alliance network. Your business is part of a broader industry value chain. This means that there may be unrealised opportunities to develop alliances both vertically and horizontally. Some of the best alliances may lay outside your industry or economic sector and a structured approach is beneficial in isolating and prioritising those alliances which best serve your business strategy.
So now you have a meaningful understanding of your external environment and a thorough understanding of your internal environment. How does this enable your business to capture value from the market?
This begins with clearly defining your competitive advantage. If you were to overlap your analysis of the external and internal environment, one thing that should emerge is that which separates your business from your competitors. Is it scale which affords you competitive pricing? Is there something unique in your offering which would be difficult or impossible to replicate in the market? Is there a segment of the market that you understand far better than your competitors which you can target specifically? The answers to these questions will help you understand your competitive advantage and how your capabilities enable it.
Finally, through your operating model, your business must be able to create and capture value in a manner which is effective and efficient. A performance management system is a non-negotiable if one is serious about maximising value to their customers and their business. This, amongst other considerations, will be what separates those who thrive within this COVID 19 context and the world shaped by it and other factors over the coming years.
AIA understands strategy and its importance in shaping the future that your business desires. In this strange and difficult time, we can partner with your business to turn your vision and aspirations into a clear strategy that is meaningful and measurable. Our strategy and performance management tool, Strategi EXE (https://strategiexe.com/) has and continues to assist our clients in managing their strategy whilst enabling organisational alignment; bringing every single member of your business on board in the journey.
That which you can measure, you understand and that which you can understand you can change. Let us show you how.