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Strategy Is A Creative Endeavor
Strategy is not built by using Frameworks only. It also requires solid Creative Thinking!
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If you have been to a Business School, you would remember being taught different frameworks like SWOT Analysis, Porter’s Five Force Model, Value Chain Analysis, Competitive Analysis and so on. In most of the project presentations, one can bring new insights by using some sort of framework for analysis. Hence, an important ingredient of management education is to learn different frameworks. There is special emphasis of such frameworks for those who take up Strategic Management as their focus area. The importance of such framework lies in the fact that they provide method to the madness and a structured approach for understanding the problem and framing the solution.
2X2 and 3X3 Matrices
Many Corporate Strategy practitioners love a matrix analysis approach. There are certain frameworks like BCG Growth Share Matrix, Product Market Fit Matrix, McKinsey Nine Box Matrix and so on. These approaches were popularized by the respective Management Consulting firms and they have been used extensively in solving real business problems. For example, the BCG Matrix has been extensively for performing Portfolio Analysis to understand the relative importance of different Business Units in an organization and the action that can be performed on them. Many take these standard frameworks and tweak them to create custom build frameworks that are more suitable to their context.
While these are great tools and frameworks, one need to also understand that building Business Strategy which can give you substantial competitive advantage requires lot more to be done. Building great Strategy is as much as art as it is science; it is as much intuition based as it is backed by data & analytics. Building great Strategy is a creative endeavor that has to be supported by calculated risk-taking. There are 5 pillars on which great Strategies are built which is explained below.
Challenging Conventional Wisdom
When mobile phones were first introduced in the India market, SMS was a big hit. It was the first-time people moved away from voice to text. It was a massive consumer behavior change. For many years it was the dominant technology and a major revenue stream for all Telecom players. A lot of services got defined by using SMS as the underlying technology.
At that time no one would have thought that a free messaging service is possible which can be much more user friendly. WhatsApp was founded in 2009. Starting as a status update tool it quickly moved to become a free messaging App based on mobile internet. It was acquired by Facebook in 2017 for $19 billion valuation. Today it has over 1.5 billion active users and is expanding in the area of Business Services.
Disproportionate competitive advantage results only when one challenges conventional wisdom and invests in disruptive and seemingly impossible ideas. Being open to such conversation is the beginning of creative thinking.
Extending the Context
In research, coming up with a totally novel finding is extremely rare. Adding new findings to the current body of knowledge is considered equally valuable. Similarly, ground breaking strategies that is totally novel is tough although not impossible. Yet one can build strategies that can be an extension of current strategies along with nuances that is applicable to the current context.
Ola was founded around a year and a half after Uber came into existence. Ola was trying to solve the same problem as Uber but in a new geography which had its own idiosyncrasies. The same can be told about Amazon and Flipkart. They were founded over a decade apart but in two different marketplaces. Although the business model was similar in these examples, the execution has to be per the Indian consumer mindset, regulatory environment, cultural differences etc.
Riding the Wave
Agility in building Strategy is as important as being thoughtful in the approach. One should not wait for a Strategic Planning process to happen if one can identify an opportunity and can gain from it. One of the best examples is the explosive growth that PayTM witnessed during the Demonetization period in India. PayTM was quick to roll out its services to vendors in almost every street of the country to take advantage of the situation. While there were other Digital Payment players, no one rode the wave as successfully as Paytm did.
Use the Ecosystem
Mergers, Acquisitions, Joint Ventures, Strategic Investments or Partnerships has become extremely crucial in the Digital Economy. One has to move fast to capture more than fair share of the market. Industries in which the growth rates have come down significantly need to invest more time and effort on this. Leveraging the Ecosystem rather than having a do it all approach is the key. In the IT and ITeS sector we can see this happening. Most big IT companies are doing tuck-in as well as large acquisitions. Partnerships are thriving like never before. As on March 2020, Accenture made 53 acquisitions in the last 30 months predominantly focused on building digital capabilities.
Balancing Core Business with Moonshots
Building strategy is also a balancing act. It is not just about aspiring for moonshots but also building moats around existing business, investing in it and ensuring that it grows or defends its market share. One of the moonshot aspirations that Ratan Tata, former chairman of the Tata Group, defined for the group company Tata Motor was to build a car for a price point of Rs. 1 lakh. Tata Nano was the outcome. While, Nano did not see a lot of commercial success, it was a real moonshot in terms of ambition. Tata Motor continues to be the dominant player in the commercial vehicle market in India and has significant presence in others automotive segment.
Frameworks and creative thinking go hand in hand. Data and intuition-based decision making also go together. It is important we learn such frameworks that adds a lot of rigor in our analysis. Yet we need to be creative when defining Business Strategy. Just having good frameworks will be quite academic and creativity without analytical rigor will not make a convincing case.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.