How can you find time, to avoid concentrating on making a profit today, but ensure your company will be able to create profit tomorrow (how can you find a vital business model for future years)?
In larger organisations, it is much easier – the senior managers are less involved in the operational parts of the business. In larger, more profitable companies, there is a space to build a new structure, where new business models are generated and tested (in parallel to the operational side of the business). Sometimes there might be a need to run an interface between these two structures, which will serve as a point of contact. The board, in this case, can be close enough to understand what the potential future business models are (and what evidence support them). At the same time, they can be close enough to be able to understand the current operations.
“How can you find time, to avoid concentrating on making a profit today, but ensure your company will be able to create profit tomorrow (how can you find a vital business model for future years)?”
Smaller companies don’t have this luxury. In many cases, in smaller organisations, an owner (or the group of owners) not only manages the operations directly, but also takes an active part in the process.
These types of companies don’t have huge resources to spend on building strategy awareness. This means that the same people who work in a company (by managing directly or working on an operational position) need to work on a company (e.g. by asking strategic questions, recognizing assumptions, building hypotheses, testing them and obtaining evidence). What’s more, in fact SMEs, directors and owners are the most appropriate people to conduct strategy activities; they need to build business awareness to make the right decisions (because they are the decision makers and they are directly responsible for the results of the company).
“The operational part of the business is “noisier” and often more urgent, than the “strategy creation” part. This means that Urgency can win with Importance, and pressing problems generated by the operational part, could be distractors of strategy during creation processes.”
The challenge in a smaller company is that the operational part of the business has “eaten” the strategy creation part of the business. The operational part of the business is “noisier” and often more urgent (imagine the case: you get a call from your main customer with a complaint on the day when you plan a strategy workshop. What are you going to do?), than the strategy creation part. This means that the Urgency can win with Importance, and pressing problems generated by the operational part, could be distractors of strategy during creation processes. In this case, the owners ability to create a vital strategy can be impaired). This is one of the reasons, why SMEs need a strategy partner – somebody who will help to facilitate and support the strategy creation processes, and who can bring structure into strategy exploration.
This can happen, but only if the management is aware of the necessity of separating these parts of the company (operational and strategy building processes) as well as recognising that each process needs resources (financial, time and others) to produce results.
This can be done by allocation of resources. In the case of SMEs, this can be for example “Strategy Wednesday” (or “Half day strategy Wednesday”, “Every two weeks strategy day” etc.), where company directors works only on the company. It is not perfect; it also requires a compromise (it limits resources available for the operational part of the business) but allows for the achievement of measurable results in longer term.
You might say now: “Come on Witold, it’s a common sense” – yes, I agree; it is not rocket science – it is a simple solution. But at the same time I don’t know many SMEs where senior managers have clearly separated and put aside regular time just for strategy exercises. They need to have a time when they sit down and talk in a structured way about their current and future strategy. This is somewhere they can ask themselves what needs to be done to verify the basic assumptions, and when they plan (and possible undertake actions to verify these plans).
And yes, I’m aware that it can be my cognitive error (the fact that I don’t know many of these enterprises, doesn’t mean there is not many of them). So, let me ask you – if you are a senior manager, or company owner – do you have separated and regular time reserved just for strategy exercises? Is the operational part of your business disturbing your strategy thinking in any way?
When we have a new business model and decide to develop it, we should not give up strategic activities; a strategy building process should be a permanent process – we should test the current market and look for alternatives all the time – ideally both for the new model and for the improvement of the current one.
In order to confront the rapidly-evolving world around us, we need to have a system in place to adapt to the changes. This article is the Seventh from the series which aims to describe basic approaches, which can help to be more responsive and adaptive. Sign up to the newsletter – so you will never miss an update!
