I
n Lewis Carroll’s Alice in
Wonderland the Cheshire cat
tells Alice that if you don’t know
where you are going, “it doesn’t
matter which way you go.” This is
a trap that businesses must avoid—
the starting point for any new
venture is having a goal and there
must be a clear strategy as to how
to get there. It is also essential to
have a vision of what success will be
like once that goal has been reached.
This vision must be shared and
understood by everyone so that the
company has a common objective.
Following a vision
Making decisions about a good
business strategy starts with critical
analysis, such as SWOT analysis,
but it should also involve identifying
which actions not to take. Strategy
is also vital for companies who
want to lead the market—most do
so by offering a product or service
that is either the cheapest or the
best. There are numerous business
models and theories that can be
followed to devise a successful
strategy. Leading US strategist
Michael Porter, for example, has
provided organizations with ideas
to help them analyze their market,
understand the competitive forces
at play, and position themselves for
competitive advantage.
Once the board of a company has
agreed a strategic direction, it must
be prepared to change course if the
need arises—but always keeping
the original vision in mind. In
addition, business leaders should
be on continual alert for changes in
the external environment. Avoiding
complacency is crucial, since the
pace of business and change is
constantly increasing. Competition
is fierce, and companies must
innovate if they want to stay at the
top and avoid being overtaken or
becoming outdated. There are
many examples of companies who
failured to do this, such as Research
in Motion (now known as BlackBerry
Ltd), the Canadian technology
company whose business sufferedwhen sales of its BlackBerry
smartphones fell sharply—bosses
had failed to anticipate Apple’s
more advanced iPhone.Keeping a balance
Companies should always balance
long- and short-term objectives.
The board must keep the long-term
vision in sight, but in the short term
they need to make decisions that
allow them to create enough profit
to stay in business—a precarious
balancing act, particularly in an
uncertain world. It is impossible
to predict what the future will
bring, so executives often use
scenario planning by asking
“what if?” questions. Assessing the
likelihood of unwanted events does
not remove uncertainty, but it does
help to avoid complete surprises.
The trend of diversification into
unrelated businesses has declined
recently, and companies now focus
on the core business. Management
experts C. K. Prahalad and Gary
Hamel argued that a company’s
ability to consolidate its strengths
into core competencies can provide
a competitive edge over rivals.Flexibility
Globalization, technology, and a
changing world order have made
business far more complex.162 INTRODUCTION
Determine that the thing
can and shall be done,
and then we shall
find the way.
Abraham Lincoln
US former president (1809–65)