Perfection is said to lie behind the Simple and that which cannot be summed up in ten lines is not worth understanding. This is what business science faces today.
Knowing and understanding at this time all the instruments that exist to “properly” run a business or a company, is a complex task. New names and denominations are built for something related to this almost every day. Techniques, methods, formulas, recipes, prescriptions, "tips", recommendations, suggestions.
This "sophistication" is not necessarily healthy and useful, especially for three reasons:
- Knowledge of the techniques prevents in many cases the appropriate knowledge of the Concepts. The techniques change frequently, have no use or value prolonged in time. And if knowledge is limited to techniques, it ends up being obsolete at the same time that they cease to have practicality. Techniques cover the object of work in a very “dispersed” and superficial way.
The Professional who is trained for Business Management based on knowledge of the technical spectrum of the elements of government, is like the apprentice who fills the toolbox and then becomes a Carpenter, even if he knows little about carpentry..
For Vocational Training, this maxim full of wisdom must be maintained: "There is nothing more practical than a good theory."
Below are seven theoretical precepts that summarize, with absolute propriety, what every Professional should know about the nature and dynamics of business organizations. With adequate knowledge of this conceptual basis, understanding of everything else is guaranteed, including, of course, any management technique that is available and useful to adopt.
1) The concept of Business.- With this term a little bit of everything has happened throughout the history of management science, to the point that many people even tend to use it as a synonym for Company.
In reality Business is a task, a function, not a structure. Business is not, from any point of view, the same as Company or any other type of Organization.
In fact, the Business justifies the existence of an Organization. Without Business there is no Company.
The term Business comes from the Latin word “negotium” which means: “all kinds of activities that represent utility, interest or profit for those who carry it out”.
The Company, as a type of Organization, justifies its existence by supporting an activity that generates utility, interest or profit. In fact, every Organization (not just the Company of a commercial nature), is based on a Business, since all of them carry out activities that generate some type of benefit.
From this reality, no institution that is considered “administrable” is left out, not even the Family at the lower end of the administrative institution, or macro organizations such as the State at the upper end. All of them are supported by a Business.
This quickly clears up another confusion: the Business concept (as well as the concept of profit, interest or profit) is not exclusively linked to monetary or financial criteria.
However, not all the activities that are carried out in the Organizations generate the same degree of utility, interest or profit. Some activities get that result more directly and effectively. This is the specific case of the Production and Sales tasks. They are the ones who essentially perfect the Business. No other task in organizations acquires the same value in terms of the benefits it provides.
And since it must be assumed that no Organization will produce what it cannot sell, the Sales function takes precedence over the Production function and thus becomes the essential function of the Business.
2) The concept of Sales and Marketing.- Sales have perfected Business in organizations for thousands of years, and they will do so many years after Marketing concludes its “reign” on commercial concepts.
If an Organization does not sell, it disappears. If an Organization does not have Marketing (at least in the formats established by the technique), but sells, it does not disappear.
Marketing exists to support Sales efforts. In no case does it replace them. Marketing is a set of guidelines and techniques that can maximize the development of the Sales effort in an Organization, but cannot replace it.
The concept of Sales prevails over that of Marketing, because the latter does not exist without the former.
Marketing supports, DOES NOT direct the Sales function in an Organization. The latter is reserved for the Strategy.
It can be shown that business organizations that focus their task on Marketing development to the point that they displace the essential importance of Sales, are ineffective and, curiously, less competitive.
It can also be shown that Marketing managers work increasingly further from Sales, to the point of considering them only as an effect or consequence of the alchemy of their work on marketing variables.
Those who consider Marketing to be a concept that “includes” Sales are wrong. This is not shared among the humble effort of all the people in the Organization who do understand that it must be sold and who often fail to understand why Marketing managers cannot do it. On the other hand it would be very illustrative to know "Why" wants to include the concept of Sales in Marketing and "Why" it is uncomfortable to consider the inverse, which on the other hand is correct and most effective.
It is interesting to see how those who express themselves in the often confusing language that Marketing provides and very “simple” to whom they actually sell are considered “updated” and “avant-garde”.
3) The concept of Bureaucracy in business organizations.- All tasks that are not those of Business in an Organization (that is, Sales and Production), are included among the support tasks, or, well called, functions of the Bureaucracy.
The term Bureaucracy is a positive interpretation of what should be understood as tasks performed in the "bureau" (desk).
The tasks of the Business require support tasks to optimize their results, for this the functions of Accounting, Finance, Administration, Logistics, Human Resources, Marketing, Research and Development, etc. can be formed. All of them have specific objectives to fulfill in organizational efforts, but none are bigger and more important than supporting Production and Sales functions.
All the functions of the Bureaucracy are Cost Centers for the purposes of the Organization's interests. And as costs they are only justified if at the same time they support the improvement of the Business.
Bureaucracy is the "fat" in the body structure of business organizations, Business is the "muscle". The Organization needs "fat", but in appropriate measures, never to the point of "obesity". Bureaucracy cannot develop disproportionately until it "suffocates" the Business, in the same way that excess fat cannot reach the point of "oppressing" an individual's heart muscle. At least it cannot do so without seriously jeopardizing the health of the Organization.
It is curious to see how many managers in business organizations run the Business from the interests of the Bureaucracy. It alarms to check how many business decisions are made based on financial premises, for example, administration, or logistics. And this violates (fortunately NOT with impunity, because the market takes care of that), the basic Strategic Principle that maintains that Resources are always subordinated to the Business Strategy, and not the opposite.
4) The concept of Competition.- The Company has no competitors, the Business does. Sales are those that are disputed in the market, there is no dispute over the size of the organizations, the image, the brand or the efficiency of administrative or financial functions.
The competitor wants to maximize his own Business at the expense of another. The competitor wants to increase his sales at the expense of the sales of the others (beyond eventual figures of unsatisfied demand or "new markets"). The Conflict is generated exclusively due to the active existence of the Sales function.
Competition over time is always a matter of “zero sum”, because what one wins, another loses. Precepts such as “unsatisfied demands” only constitute potential states of competition. Beyond that the competition is ubiquitous and timeless. Much more so in the current consideration of globalized markets and economies.
Competition, on the other hand, is the only variable in the organizational environment that exists with the natural premise of causing “damage” to the interests of the Business and, therefore, of the Organization. No other environmental variable specifically serves this purpose. Many can have the same effect, but none is conceived for that purpose.
As a product of the Competition, business organizations operate within the framework of a permanent Conflict, and the entire order of their internal management is obliged to develop according to that reality.
The traditional Administration has evolved as a system of thought and action privileging the attention of the internal variables of the organizational dynamics. The Administration, in itself, has very poor resources to act effectively on the Conflict. For this reason, and based on the invaluable value of its “syncretism”, it has been forced to turn to the epistemological knowledge of other sciences and disciplines to reinforce its effectiveness in the treatment of external variables. In this way she resorts to Strategy.
The system of thought that develops around the concept of Strategy is probably the most effective one that man has to interact with the Conflict. The Strategy is the summation of wisdom from thousands of years of history in the life of man and his interaction with the Conflict.
However, the Administration does not present itself with the necessary humility before the Strategy. He scarcely addresses it superficially, and on that fragile state he constructs diverse conceptual frameworks, violating the fundamental character of the original precepts.
Today there are no valuable coincidences among thinkers in Administration regarding the fundamental meaning of Strategy. The term is still subject to the discretionary use that administrative science gives it.
If there is hardly any coincidence, it is in the relative utility that Strategic Planning thinking provides for the interests of the Organization in the treatment of environmental variables.
For the Administration, the Strategy concludes as a “type of plan”, one that differs from the rest in the “special” consideration it makes of the variables related to the environment, especially Competition.
5) The Concept of Strategy.- Like the concept of Business or Sales, Strategy is a heritage in the history of man that greatly outweighs the poor experience of the Administration.
The Strategy is, of course, neither a Plan nor a “type of plan”, in the same way that the Administration itself is not.
The Strategy is a system of thought and action that allows interaction, with advantage, on the Conflict. The Strategy is the best known way to "manage" the nature and effects of the Conflict.
The Strategy differs from the Administration in the work object on which it acts, not in a matter of epistemological scope.
As a method of government, the Strategy may very well "incorporate" the Administration among its work mechanics, at least if the fundamental objective of the Organization's work is in the resolution of the Conflict. On the other hand, the Administration cannot easily “incorporate” the Strategy, at least not if the conditioning of the organizational life is outside of it. If the environment conditions the Organization, then the Strategy conditions the Administration.
It is obviously easy to deduce that the favorable resolution of the Conflict is not an issue that begins and ends developing plans. The Conflict is, above all, a dynamic full of action and unpredictable situations. In that vertex of its nature it is far from the factors that guarantee an effective plan. The Conflict requires appropriate Action and Reaction to eventualities, and both aspects are very far from the conceptual seed of a Plan.
The Strategy is also not an orientation for the treatment of aspects in the Long Term. And this constitutes another wake-up call for the way this topic has been treated in the business world. The dynamics of the Conflict is a short-term matter. Action has nothing to do with the long term. Everything that is related to the long term ends up being a Plan, and nothing more than that.
Now, if the Administration confuses Strategy with Plan, it is completely understandable that it wants to associate Strategy with a Long-Term Plan. However, the Strategy defines the future through the immediate action it develops on the Conflict. That is their only participation in the considerations that may exist in the future.
Finally, it is very difficult to understand or study Strategy as a function, in the same way that it is very difficult to study the dynamics of a particular Conflict, at least while it is developing.
This was perfectly clear to those who originally resorted to the term Strategy. This word descends from the Greek word "strategos" that etymologically means General, Commander. The term refers directly to an individual, a person, not a verb or a function.
It is in the process of “Latinization” of the term that the word Strategy arises and a certain desire to refer to it as a task or function.
There is no way to limit definitions to refer to Strategy as a function. In the same way that there is no possibility of referring to what a man does in the course of his life, other than saying that he "has lived".
The only way to properly define Strategy is by affirming that it constitutes the function of STRATEGOS. Everything that STRATEGOS does when interacting with the Conflict must be understood as a Strategy, regardless of whether it does it right or wrong, in which case it will be worth referring to a good or a bad Strategy.
Now, what qualifies STRATEGOS in its function? What allows us to affirm that this particular individual does Strategy when acting? The answer is also simple: the fact that your actions are conditioned by the application of Strategic Principles.
The Strategic Principles are special guidelines for action. Its origin in time is paired with that of the Strategy itself, since they constitute the accumulation of innumerable experiences, of innumerable STRATEGOS, interacting with innumerable conflicts.
The Strategic Principles summarize human wisdom in positive interaction with Conflict. There are useful, effective and prudent guidelines for dealing with the Conflict. They are guidelines that have achieved beneficial results over time, and for this reason they later become Principles.
When a Strategic Principle advises addressing the Conflict “always concentrating your own strengths against the competitor's weaknesses”, it is proposing an orientation whose effectiveness has been proven many times. When another Strategic Principle states that "invincibility is found in defense and vulnerability in attack", it provides wise advice to the man who interacts with the Conflict.
The Strategic Principles are innumerable:
- Estimation of Conditions. Comparison of attributes. Conversion of time into an ally. Everyone must benefit from victories. Know the trade. Beware of the General - Sovereign relationship. Use the normal to distract and the extraordinary to win. Coordination of impulse and of time. Take the Initiative. Plan for surprise. Be Flexible. Reach critical mass. Deceive the competitor (application of stratagems). Get Mental Advantage. The best defense is a good offensive. Make victory the only option. Etc, etc.
Here, of course, they are not all what they are, nor are they all what they are. It is idle to try to list them without having a specific objective. The important thing is to understand that from its concrete application emerges the genuine strategic action and the qualification of STRATEGOS.
In addition to the application of Strategic Principles, STRATEGOS must deeply know the nature and dynamics of the Organization, because for its final benefit the Strategy is developed and because the necessary resources emerge to activate it and bring it to fruition. On the other hand, he must also know perfectly the nature and dynamics of the Conflict, because it constitutes his main object of work.
All these considerations are raised as the focus of study of the Strategy is transferred from the function to the individual, or to everything that he must know and be to achieve the greatest effectiveness in his work with the Conflict.
6) The Sales Strategy.- If the Strategy is the concept of action on the Conflict and this, in turn, is generated from the desire to improve Sales, then the Strategy is, by precept, the primary guiding factor of Sales activities.
In reality the only title that is reserved for the Strategy is that of Sales Strategy (or Business Strategy, which has been the same).
The term Strategy is virginally reserved for Sales. There is no useful meaning or purpose in using this word for any task other than Sales. The Sales Strategy constitutes a central element of all the activities that an Organization must undertake in its development in the market. The plans and actions of all other tasks and functions that exist in the Organization must be "subordinated" to it. Only in this way can the Business be perfected and reach the best competitive state.
Conceptually, there is no basis for using the word Strategy in efforts that are not linked to Sales. Referring to "constructions" such as Marketing Strategy, Financial Strategy, Human Resources Strategy or even Organizational Strategy does not have any solid justification.
In reality, all the Marketing, Finance, Human Resources, etc. guidelines must be included in the Sales Strategy. They must be part of it.
Conceptually it is also not clear what can, or should, be understood from the use of the Strategy as a qualifying adjective. This is the case of "strategic marketing" or "strategic planning". In these endeavors, the Strategy is used in a forced way. Neither the Marketing nor the Plan, for example, require this “help”, much less the Strategy that in each case of these is partially used.
Theorists of using Strategy as a qualifying adjective ignore the wealth they lose by not evaluating the potential of each concept separately. There is still a lot to discover in Marketing or in the planning processes without this kind of epistemological “usurpation” of the Strategy. And much more remains to be learned and applied from the enormous value of the Strategy, without impoverishing the process through its partial use.
The Administration must be aware of the reasonable limits that exist for the practice of its “syncretism”. The usefulness of this mechanic can be seriously affected if one moves from intelligent use to premeditated abuse.
7) Integrated Concepts.- Business-Sales-Competition-Conflict-Strategy-STRATEGOS:
- The Business supports the Organization. Sales perfect the Business (not Marketing or any other function of the Bureaucracy). Sales are conditioned by Competition. For this reason, they generate a permanent Conflict. The Strategy is the fundamental weapon to face the Conflict with advantage. The Strategy is not a Plan because the Conflict does not lend itself to its exclusive application to be addressed. The Strategy is not a consideration of long term because the Conflict is not. Strategy is the function of STRATEGOS. This function is qualified by the application of Strategic Principles, deep knowledge of the Organization and of the Conflict.
Among the primary interests of the Organization, the Strategy is simply the guiding system for sales efforts. But in this simplicity is the existence and value of the Company in the market. Nothing more and nothing less.
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AUTHOR'S DATA.-
Carlos Eduardo Nava Condarco, a native of Bolivia, lives in the city of Santa Cruz de la Sierra, is a Business Administrator and Entrepreneur. He currently works as Manager of his Company, Business Strategy and Personal Development Consultant, writer and Entrepreneur Coach. Author of several books on Entrepreneurship, Business Strategy and Personal Development, including:
“Entrepreneurship is a way of life. Development of Entrepreneurial Awareness ”
WEB: www.elstrategos.com
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