Blog - Micha van Meeteren

9/3 Business strategy: a balancing act

During the development of the upcoming 2020 Future Value Chain report there is a lot of focus on trends that will shape the consumer products and retail industry over the decade to come. Besides this work, there are some other reports available on what top managers currently perceive as important topics. The question that comes to mind when comparing these findings is how to address the topics that currently demand your attention, but still be able to anticipate on the changing market conditions.
It seems there are two main routes that can be taken. First, one can primarily focus on the short term objectives and address the longer term outlook only when getting the opportunity to do so. On the plus side, all the energy and resources wll be spent on concrete and clear projects. It addresses the problems of yesterday, today and perhaps tomorrow. In doing so there may be some credits to be gained. That directly leads to the downside: your customers don’t really care about your problems. When you fail to keep up, your company does not add any value. Worst case scenario would be going out of business, or the painful reorganisations we’ve seen enough of lately. Besides this, there is no “when getting the opportunity to do so” in addressing longer term issues. The problems of today will absorb all of the time and resources, especially under today’s market conditions. The conclusion will be clear; this does not seem the most promising option. Being realistic, many will be applying this strategy in order to meet their targets or even survive.
An alternative is to address the future state as well as you can, and connect that with your current problems. The objective is to avoid working on time and resource consuming projects that will not save you in the long term. Exclusively do that for the situations you cannot avoid. An example to clarify this line of thought. Suppose your supply chain management is not running as smooth as you’d like it to. The costs put serious pressure on the slim remaining margins on your products. Action item: reduce costs, whatever it takes. So projects are started to squeeze a few more efficiency gains out of the current supply chain, to put the logistics service providers under pressure, or even sell off parts of the distribution network. When looking further ahead, the future is very likely to have a couple of things in store for you. First, if we do not manage to find alternative sources of energy, its costs will rise inevitably. Second, governmental pressure on sustainability is very likely to increase. Probably will cost you money again. Third, the congestion is likely to become an even bigger issue than it already is. By 2025, the world will add another eight megacities to the current list of 19—all except one of these eight will be in Asia and Sub-Saharan Africa. Such rapid growth will take its toll. So the answer to your problem may not be to find that one-tenth of a percent in efficiency, but to take as many trucks off the road as you can. Your focus should be on finding partners to combine transport, or to have a neutral third party to do that for you.
Summarizing, the short and long term exclude each other only when you perceive them as two distinctive focus areas. When you put today’s problems in the perspective of tomorrow’s industry outlook, that is where you can make real steps forward. This approach requires courage and a strong voice within your organization, but it may just be the only way to seriously achieving your goals.

9/3 Innovation strategy. Like the sound of it, but what does it mean?

Consultants are always eager to tag their work with the most exciting and promising terms. Anything to puzzle the minds of the discussion partner. Let’s get rid of that prejudice and make sure this topic of interest, ‘innovation strategy’ is tagged appropriately.
Here are parts of what Wikipedia has to say about innovation and strategy. Wikipedia may not be the strongest source for definitions, but earlier discussions on definitions proved that longwinding discussions are not all that fruitful. That, plus the fact that it is no exact science, is reason enough to take the easy route here.
		“Innovation is a new way of doing something or "new stuff that is made useful". It may refer to incremental and emergent or radical and revolutionary changes in thinking, products, processes, or organizations. Following Schumpeter (1934), contributors to the scholarly literature on innovation typically distinguish between invention, an idea made manifest, and innovation, ideas applied successfully in practice. In many fields, such as the arts, economics and government policy, something new must be substantially different to be innovative. In economics the change must increase value, customer value, or producer value. The goal of innovation is positive change, to make someone or something better. Innovation leading to increased productivity is the fundamental source of increasing wealth in an economy.” (Wikipedia, italics added)
“A strategy is a plan of action designed to achieve a particular goal. The word strategy has military connotations, because it derives from the Greek word for general. Strategy is distinct from tactics. In military terms, tactics is concerned with the conduct of an engagement while strategy is concerned with how different engagements are linked. In other words, how a battle is fought is a matter of tactics: the terms that it is fought on and whether it should be fought at all is a matter of strategy.” (Wikipedia, italics added)
So let’s keep it simple. Innovation refers to activities to make a positive change. Strategy is the plan of action, linking the different engagements or tactics. There you go: innovation strategy is the overarching plan, connecting the various innovative activities that need to make the positive change required for achieve your goals.