Strategy and productivity. Impairment of productivity due to lack of strategy
Have you ever wondered, why is my business not so productive if I pay all the attention, all the administration and keep an eye on what my employees do?
It is highly feasible that effectively the people involved in the business have all the desire to work and put all the enthusiasm into their activities.
But then, why doesn't the business go as well as we all want?
Well, there are many factors that could affect a situation as complex as the one we describe, in which although people are fully motivated, they are somewhat puzzled by not knowing why their productivity is not so high and why therefore they cannot withstand the attacks of the competition, either because we do not have competitive prices, or because by lowering our prices we lower the profitability of the business.
For more than 28 years of working at managerial levels, for different organizations, both national and transnational, and after having analyzed a large number of cases through my professorships in the Master of Business Administration, Marketing and Investment Management, I have realized that there is a great factor that appears as a common denominator in this problem, which consists of the strategy.
What is strategy ?: Below I will give you some descriptions of authors, but this article will not stop at that, because then I would not be giving a new value to society. Actually the most important thing is the applied part that follows the academic one, but it is not convenient to skip the always necessary academic part as a starting point.
There are many definitions of strategy from the very origin, in which we refer to the Greek words: Stratos = Army and ago = I lead, which brings us as the first meaning Strategia = It is the art of leading the armies.
Likewise in the 1940s, Von Newman and Morgerstern introduced the concept in game theory while maintaining the idea of winning in conditions of competition or rivalry.
Alfred Chandler defines strategy as the determination of company objectives and the lines of action to achieve them.
KJ Halten: It tells us that the strategy "is the process through which an organization formulates objectives and is aimed at achieving them."
Michael Porter. In 1979 he proposed the analysis of the five forces that bears his name, where the strategy includes understanding the environment through knowledge of the movements and results of direct competitors and those whose products can replace any of ours, which become also in possible competitors. Likewise, the power that clients have over our business when conducting negotiations with them and the same analysis is carried out with suppliers.
Subsequently, he published his next book Competitive Strategy, where he develops the matrix of generic strategies where two possible paths are proposed: Cost leadership, aimed at the mass market or differentiation directed at a specific and focused market.
It is worth taking up what George tells us. A. Steiner in his book Strategic Planning, What Every Director Should Know, where he states that the Strategy can be carried out in two directions, the first at the highest level called Strategic Management, which is the one in charge of the long-term approach. term and the second is the Operational Directorate in which the strategy is supported through operations.
It raises the need based on the questions raised by Peter Drucker, on the duties of senior management in which we should ask ourselves what is our business and what should it be? This can only be raised by those who fully know the organization and can make the corresponding decisions.
Marvin Bower: (Director of Mc Kinsey and Company) presents the 14 managerial processes as follows:
- Setting Goals Planning Strategy Setting Goals Developing Company Philosophy Establishing Policies Planning Organizational Structure Providing Personnel Establishing Procedures Providing Facilities Providing Capital Establishing Management Programs and Operational Plans Providing Controlled Information Motivating People
We could continue naming countless authors who perhaps add some new element, but which go hand in hand with what the first authors tell us, however the great problem that I have visualized is not in knowing and understanding the concepts but in the application of the same in reality.
This is where the applied part comes from:
The problem starts from the moment we want to establish the question: Is this the business you wanted from the beginning? And if not, where did I get lost? Why are we here?
When addressing these two questions, a very complex process comes that depends not only on the business but on the personality, mentality, paradigms and motivation of the entrepreneur who is carrying out the analysis process.
A first situation that can occur is justification, thinking that everything is fine and if it is not what was originally thought, it could be said that a large percentage has been achieved and that it is very close to what was planned.
If the situation is correct, in this case it could be said that if a direction and management of the strategy is being carried out, and of course there is a strategy.
Only you have to be careful because many times the numbers indicate that the situation is very different from the one planned, but the managers justify the results obtained as a consequence of situations outside the organization such as the crises that came from abroad, or the economic situation. of the country or the serious contraction of the market or the economy or the crisis of Greece, Spain, Italy, etc. Here there are serious problems of blindness of the management, which affects the entire organization because then the focus changes and we lose sight of the productivity of the business, we clearly seek to lower costs, seek sales, reduce losses, lower levels of rejection, etc.. Which by itself is correct and it could be said that it is what keeps the day to day.
However, not being clear about a future outlook or an adequate approach, it can lead us to navigate in an ocean of possibilities all of them followed at the same time, which in general make the organization end up stranded in that immense ocean of possibilities without specifying any.
They may be focusing only on the tactical operation (day to day) without generating the projects that may give subsistence and growth to companies in the future. It is when organizations lose their vision.
Another scenario that could arise is that by not being clear about the expected situation of the future, companies become less selective in carrying out future projects. It is probable that some of them will begin without further study of feasibility and profitability, with which resources of all kinds (material, financial, human, etc.) are consumed without achieving what was intended at the end of the project.
Under these conditions, what is convenient?
Undoubtedly the most important thing is the generation of the company's strategy, which we consider as the understanding of the situation of the organization, which is visualized in the long term (more than 3 years).
In order to bring the organization to this situation, you must have a broad knowledge of the current situation of the organization in its different environments, both inside and outside the organization.
Within the internal environment: It is very useful to understand the processes that are carried out within the company, where we should be able to determine our strengths, weaknesses, opportunities and threats.
Remember that strengths and weaknesses are internal characteristics of each organization and that opportunities are determined in the external environment.
Just as threats are external situations that the organization may or may not achieve depending on the use of strengths and / or the protection taken from our weaknesses.
It is then when the strategy comes into play:
When it is clear there is a great possibility to discern among a wide variety of activities and projects, selecting only those that lead us to achieve the established goal in the time that has been set.
By having clear strategies, you can also allocate specific and highly necessary resources to drive the organization towards the goal.
Now we see clearly that the lack of strategy can confuse us in the day-to-day operation and can lead us to use the resources correctly applied to projects or activities that do not lead us to the expected situation.
And in your company, how strong is your strategy?
Do you know how your business should be from the moment you opened it to date and how it will be in the next 5 years?
