Is business strategy really indispensable?

Veracles are our perspectives, our thoughts, on subjects that are dear to our hearts and crucial to your business. We find fresh ideas on any topic exhilarating because every big impact and every disruptive change in our world has begun with a novel, simple speck of a thought. However, it is essential that every such viewpoint is passionately discussed, fiercely debated, pointedly questioned, and judiciously accepted only with strong watertight evidence. That's why we would love your comments, questions, arguments, counter-arguments, and anything else that challenges our thinking and keeps us on the edge. Your response motivates us!

Is business strategy really indispensable?

Is business strategy really indispensable?

Veravizion No Comment

Why do I need a business strategy?

Recently, the chief executive of a retail business asked me this question. Let us first understand what strategy is!

In simple words, strategy is a plan of action designed to achieve long-term goals.

People apply strategy in many different contexts. For instance, military, sports, and business are some areas where strategy is necessary to win.

In the military, strategy is essential to win a war. It allows armed forces to plan military operations – offensive and defensive – in order to gain battlefield advantage over enemies, and achieve goals of national (and global) security.

In sports, strategy is essential to win a game. It allows sportspersons to devise a game-plan in order to gain an on-field advantage over rival teams, and win a match.

In business, strategy is essential to be profitable and grow over the long term. It allows organizations to develop business models and design operational processes in order to gain a competitive advantage, and achieve goals of financial security.

Coming back to the question then, is business strategy really indispensable?

For a moment, let us hypothesize about situations when strategy may not be important.

What if you are the general of an army having limitless troops and tanks? Or, the coach of a sports team having boundless talent and practice hours? Or, the CEO of a business having unlimited resources?

These situations might tempt us into thinking that one can easily trump the opponent without needing a strategy if one has unlimited resources.

In reality, organizations always have limited resources.

Even if organizations have resources in huge numbers, they are always finite in quantity.

Military organizations have a finite number of soldiers, shooting weapons, and shells.

Sports teams have a finite number of players, play paraphernalia, and practice periods.

Business firms have a finite number of competencies, capacities, and capital.

So, when you have something in a limited amount, what do you do? You find ways and mechanisms to use it judiciously such that you achieve your objective before expending the resources entirely.

Strategy is that mechanism!

In short, Strategy is important because resources are always finite!

To clarify, here is an interesting way to look at it.

The right strategy assists you in allocating your finite resources in such a way that you can build a competitive advantage against your rivals of any size, and can still win.

There is a gem of insight in that last sentence in case you missed it.

Strategy is the concept that helps you use your resources wisely and effectively. It allows you to prudently allocate your resources where they can deliver the maximum possible returns.

Some Examples

There are numerous examples in the military, sports, and business where a smaller team has implemented the right strategy to beat a disproportionately larger opponent.

History books are replete with instances of battles where a very small army has defeated a large one by employing strategic maneuvers. The battle of Longewala, the battle at Rezang La, Napolean’s 1812 invasion of Russia, and the 1775 battle of Lexington and Concord in Massachusetts are few such examples.

Sports archives are awash with games won by employing a tangible strategy; such games were called the biggest upsets of the time as a strategy was a late entrant in the world of sports as compared to some of the other fields. Here are three examples:

In the final of 1950 world cup football, Uruguay beat Brazil by keeping the game simple, focused, and warlike. Brazil was the hot favourites to win the game. Uruguay team was under no pressure and their captain asked the team to play a no-holds-barred natural attacking game, which they did.

In the final of the 1983 ICC world cup, the underdogs India beat consecutive three-time finalists (and two-time champions) West Indies by playing to the team’s strength of disciplined bowling.

One of the best examples of strategy winning a sports match is the “Miracle on Ice” game during the men’s ice hockey tournament at the 1980 Winter Olympics in Lake Placid, New York. In this medal-round game, the United States team consisting exclusively of amateur players (but following military-style discipline) beat the four-time defending gold medallists the Soviet Union that consisted primarily of professional players.

Examples from Business World

The business world is full of case studies of businesses devising deliberate strategies, developing sustainable competitive advantage, and capturing significant market share on their road to business growth. Here are two examples of businesses winning on strategy:

Blockbuster was founded in 1985 as a video (VHS) rental company. Within 15 years, it had 6,500 video rental stores around the US and revenues upwards of $5 billion. Netflix began operations in 1999 and led its strategy based on people’s video-watching preferences. Netflix devised a highly customer-centric strategy that included subscription-based charges and no late fees, among other things. As a result, customers could watch a video for as long as they wanted or return it and get a new one. By end of 2010, blockbuster was bankrupt while Netflix, on the back of its deliberate customer-centric strategy, is worth more than $150 billion today.

In the late 1980s, the sales of carbonated soft drinks were at a high. It would be foolish to introduce yet another drink in the fiercely competitive market. Yet, Austrian entrepreneur Dietrich Mateschitz partnered with a Thai businessman Chaleo Yoovidhya to introduce a new drink named Red Bull. Predictably, sales were (s)low during the initial years. That’s when the co-founder defined a strategy sharply focused on a chosen market segment. To that effect, Red Bull was positioned as an energy drink for students and adventure enthusiasts. The strategy would eventually help the business increase annual sales to 6.79 billion cans in 2018. As a result, Mateschitz became the 31st richest person in the world.

These and many such examples signify that strategy is extremely important because organizations are invariably resource-constrained.

So what?

On this note, some meaningful follow-up questions to ask would be: Is any strategy good enough? Does your business have a working strategy? Are you able to explain it clearly?

Related Posts:

<– Top Analytics Trends 2017 – An INFOGRAPHIC

Does Your Business Have a Working Strategy? –>

You can also subscribe to our blog – Veracles – to receive interesting articles and insights in email. We would love to read your perspectives and comments on that.

Do follow Veravizion on LinkedIn, Twitter, or Facebook, to receive easy updates.

Cover photo credit: photo by rawpixel on Unsplash.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Most Viewed Veracles

Schedule Your Complimentary Session with us Today!

We promise you will come away with insights on utilizing your business data productively and cost-effectively. This session will be free of charge and there is no obligation.