Tuesday, March 28, 2017

Selecting the 'Right Strategy'

As humanity progressed, ideas and markets have developed leaps and bounds. In modern world where market competition is a high, time has been added an important factor in decision making of an organization. The paper [1] discusses the importance selection of correct strategy. Selection of right strategy depends upon various factors like: (a) Market Predictability, (b) Market Flexibility and (c) Organizational Vision. Similarly, Strategy style can be segregated into four segments: (i) Classical, (ii) Adaptive, (iii) Shaping, (iv) Visionary. Let us briefly understand what these classifications really means.

(a) Market Predictability – The ability to decipher the market response with high probability over a considerable duration of time. The Market predictability can dictate the choice of correct strategy.
For ex: In oil industry, where market rates are not drastically changing day to day (high Market predictability) a company can focus itself with classical approach. They can chalk out a plan for next 10 years and monitor their progress accordingly. However, in software industry, where ideas are outdated every month, it is not possible for a company to plan itself for future 10 years. In this case their predictability of market is low and are likely to be wrong, so their primary goal has is to Engineer flexibility and not optimize efficiency.

(b) Market Flexibility – The agility of a market to change with shorter duration of time.
In new or young, high-growth industries where barriers to entry are low, innovation rates are high and demand is hard to predict, a company may have to adopt a Shaping Style. It should have short but continual plans and their focus should also be beyond their own company.
For ex: Facebook’s best strategic move in 2007 was to open its social networking platform to outside developers, thus attracting all kinds of applications and helped to rapidly spread its base in the social internet market.

(c) Organizational Vision – An organizational vision plays an important role in selection of current strategy. If an organization visions to develop a market for next couple of decades, it needs to adopt a visionary strategy. Their environment needs molding to advantage the future benefits. In this visionary approach, thorough execution and sticking to the original plan is vital. Visionary strategist must have the determination and courage to stay the course and commit the necessary resources. Again, this approach cannot be adopted by new entrees to the market since the affordability cost is higher.

As we can see, selecting correct strategy is the key to success of a company. However, an organization needs to analyze its strength, resources and competitions and identify their strategic style. It’s the not only the strength (size) but also the intelligence (naivet├ęs), that matters. We must remember even the Hannibal can defeat the mighty Romans with the correct choice of strategy!

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