It’s pretty much unheard of in the business world today, but in setting your business up to win you should cast your eyes forward one hundred years.
Active Knowledge Questions:
When you undertake strategic planning for your business, how far ahead do you look? How would your leadership team respond if you asked them to plan ahead for the next 100 years?
How Far Can You See?
As a business leader, knowing how to plan 100 years ahead is a skill you should master.
At a recent strategic planning session, the question of ‘what opportunities and markets can we see in the future?’ was raised. The response was one of almost silence.
The leadership team was in the middle of a major project and all considered themselves 110% committed to that activity and could not even think what may come next. Then came a response that it was ‘almost impossible to see even five years ahead as who really knows where technology would be at that point’.
The event raised two questions for me:
- Can a leadership team, one responsible for setting strategy, ever allow themselves to be so ‘busy’ that they do not have time to look into the future?
- Can you afford to wait until everything is known before you plan your future?
The obvious answer is no, if you want to lead and win in your chosen markets and not just be a follower.
So how far should one be looking into the future in planning ahead? And how do you make allowances for the unknown?
Again, there seemed to be a nice theoretical answer – look as far forward as possible, 100 years is a nice number, and don’t wait for the future to form, create it yourself.
All nice in theory but how would you practically even get a handle on such a task? Well, actually, I believe it is possible and this is how.
Being Dominant In Your Market
Over the past few decades, there have been various approaches put forward as to how you can take a dominant position in your marketplace and maintain it. Here are what I consider to be the most prominent ones, which still exist and are pursued today:
1. Competitive Advantage
Businesses still talk about gaining and sustaining competitive advantage but what that advantage may be has now become quite vague. In its original form, competitive advantage was considered to fall into one of three categories:
- Overall cost leadership that may be achieved through a set of functional policies directed at cost leadership in your industry.
- Differentiation that requires creating something that is perceived as being unique industry-wide, whether it be a service or product.
- Focus whether that is focusing on a particular market, product, geographical region or customer group.
It was considered important that you select where you would build your advantage and not get stuck in the middle by trying to achieve more than one of these advantages.
2. Core Competencies
The real source of competitive advantage lies in the ability to consolidate company-wide technologies and skills into competencies that permit and empower individual business units to recognise and adapt quickly to new opportunities as they are detected.
These core competencies would be represented by, for example, a technological expertise that anchored the business in the marketplace and allowed it to create a variety of products utilising that expertise. An example today may be image recognition, which leads to a multitude of commercial applications.
Only through a single-minded and concerted focus could such core competency possibly be built.
3. Blue Oceans
The language of ‘red’ and ‘blue’ oceans has now become familiar to most leaders. Businesses should not engage in ‘head-on’ competition being the red ocean. Rather, they should seek to identify and create fundamentally new market spaces in which there are no direct competitors.
This new space is the blue ocean where you are likely competing outside the conventional boundaries, and wisdom, of the industry. It’s a space in which your strengths will also give you a dominant position.
In each of the above instances, the advantage is likely only temporary until such time that competitors enter your blue ocean, build competing competencies or negate the competitive advantage that you had established. Of all these alternatives, a true core competency is likely to be the most enduring and capable of exploitation.
There is, however, an underlying catalyst, or dynamic if you prefer, that drives all of these alternatives and which represents a deeper and far more enduring form of advantage. This is where companies should seek to build their strengths.
Creating A Company That Will Endure
There is an old proverb which appears in many different forms but goes something like this:
‘If your vision is for a year – plant wheat. If your vision is for 10 years – plant trees. If your vision is for 100 years – plant people.’
I think the expression of this proverb in a business strategy context would be: ‘If your vision is for a year – build a competitive advantage. If your vision is for 10 years – look for blue oceans. If your vision is for 25 years – create core competencies. But if your vision is for 100 years – build the competitive engine of your business.’
The underlying catalyst in each of the advantages noted above is ‘capability to compete’. While that capability may rest with the generational team in the business, it is seeded and rebirthed through the competitive engine of the business.
There exists within your business, whether you recognise it or not, a competitive engine that determines whether your business performs well or continuously trips over its own feet. It is operating every moment of every day and influencing every aspect of your business’s performance. Your every action impacts how this engine runs, again, whether you recognise it or not. The engine is formed the moment you begin to think about starting your business, and continues for the entire life of your business.
This engine sets the floor and ceiling to the success of your business. It can become the DNA of your business and endure across generations of leadership and teams underpinning its enduring success and life.
The competitive engine can give your business a life far exceeding 100 years and allow it to see and create the future.
Your competitive engine not only drives competitive performance, it will create the ecosystem that will seed and fuel a continual renewal and evolution of the business.
In the next edition of Compete Weekly, I will unpack how the competitive engine will fuel your business’s continual renewal and evolution.
An entirely new level of performance.
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All the best in the success of your business,