“Strategy without tactics is the slowest route to victory. Tactics without strategy is the sound that precedes defeat. “Sun Tsu
The COVID pandemic has radically changed our lives. From the accelerated adoption of remote work, through the greatest effort in human history to develop and apply vaccinations, to the countless stories of medical heroism and untimely deaths. Just as our lives have been affected by this pandemic, the business models of many companies will have to adapt to a world that is changing rapidly.
The last time the world faced a change of this magnitude was during the 2008 financial crisis. A lesson learned back then was that business conditions can become so different so quickly that only those business models that can adapt fast will have a chance to survive. Business leaders must ask themselves: How agile is my organization? How quickly can we respond to new market conditions? And how effectively can we adjust our business model to remain competitive in a post-COVID world?
If 2020 was the year of survival, 2021 will be the year to rethink and adjust our strategy.
In my college years, there was no question that the main goal of strategic planning was to maximize shareholder value. It was accepted as an absolute truth that the main objective of Senior Management was to generate the greatest amount of value or profits for the corporation, within the legal and ethical limitations imposed by the environment. In recent years, this conception has evolved towards a more inclusive vision, recognizing that companies have a responsibility to create value for a broader set of stakeholders, including employees, suppliers, government and society. Today’s business leaders must consider other, less tangible metrics within their strategic planning, not just profit, as well as effectively prioritize the interests and agendas of those different stakeholders. COVID will force companies to talk more about values, meaning and social impact and to ensure that these elements are explicitly included in their strategy.
The desire for meaning should not be ignored. Meaning and purpose are increasingly relevant to stakeholders such as employees, customers, governments, and civil society. Business should be a means to achieve prosperity and happiness and to construct a better world. Business is not an end in itself. Companies should be at the service of the people and not people be slaves of companies.
The most important job of Senior Management is to define the strategy and supervise its execution, taking into consideration the key internal and external elements. It is defining where to compete and where not to. It is defining how to compete with a model that is sustainable over time. It is identifying how the world is changing as a result of the pandemic, how this will impact our market, anticipating future trends and correctly reading the life cycle of these trends, because none are permanent.
The strategy allows increasing the chances of success of a business. You can never be totally sure that the business strategy is correct, but you can be sure that a business without a strategy will fail. Business leaders need to ensure that there is a robust internal process in place to proactively propose, review, and adjust the strategy. A process that is both rigorous and methodological, but also creative and disruptive. And once the strategy is clear, ensure that it is communicated efficiently to all levels of the organization so that its execution is flawless.
It is not possible to think that the strategy that was useful in the pre-COVID world will continue to be just as effective in the post-COVID world. Therefore, the role of Senior Management should be to challenge the strategy and adjust it before the market obliges us to do so. Each company has unique challenges and opportunities; the strategy is the filter that allows us to see the bigger picture more clearly to make the best out of those challenges and opportunities. In summary, the strategy allows the company to become the architect of its own destiny.
Managing Partner of Nuricumbo + Partners. His work as a consultant has focused around CFO services and challenges, in companies of all sizes, both in Mexico and abroad. He began his career at PWC. Later, he held the position of internal audit manager for Young & Rubicam and The Interpublic Group, two international advertising groups, working for five years in New York City and performing audit projects in many countries.