29 Dec 11 Diagnosis for strategy formulation
Treating a patient for the wrong ailment will not make the patient better, but may actually harm him. This is as true for an organization as for the human body.
Strategy formulation (and planning) is undertaken at least once a year in most organizations; and more often than that in some organizations. Strategies are devised for navigating obstacles and challenges to reach the desired business objectives/ goals. However, if the key obstacles and challenges are wrongly identified, how can the strategy hope to succeed?
Typically, organizations have a myriad of challenges… Competitors are coming up with new offerings in a market segment and we don’t have a competing product there. Certain geographies are growing faster than others. New technologies are emerging. The government is planning to tighten the regulations in the industry. Consumers preferences are changing. Production costs are rising. Labour problems are brewing. Two key executives in the marketing team have left. There could be many more…
But which of these are the critical ones that we need to focus on – to ensure that we meet our goals in the coming year? While all “weak” areas of business need to be addressed, business strategy needs to focus on the critical ones that will ensure success. Strategies that try to address all the areas are rarely successful as both, the focus and efforts are diffused. Management needs to pick the areas that will contribute the most to achieving company objectives.
If the diagnosis of critical areas is wrong, the organization will fail in achieving its objectives, irrespective of the strategy adopted.
This has significant implications for competitive intelligence (CI). Since the success of competitive intelligence is measured by the success of the strategies that are derived from the CI, ensuring that the diagnosis is accurate also becomes the responsibility of CI practitioners. For example, the business expresses a “need” for benchmarking its pricing strategy vis-à-vis its competitors, as it is losing market share. If the loss of market share is actually on account of better product design of the competing products, no amount of price adjustment will help sales.
CI practitioners then, cannot take the “problem statement” as given. They are duty bound and it is in their own interest to ensure that the problem statement itself is relevant to the organization’s objectives. They need to be involved in formulating the CI need.
What are your views on the boundaries of the competitive intelligence function?