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Strategic Management as Simple Rules

Suresh

BY: Suresh .V. Menon, Principal Consultant & Business Advisory on Six Sigma, ISO Auditing & Business Process Documentation.

We are often asked where simple rules come from. While it is appealing to think that they arise from clever thinking, they rarely do. More often they grow out of experience especially mistakes. At young companies, where there is no history to learn from, senior executives use experience gained from other companies, say for example a CEO of ABC company drew on his decades of marketing experience to focus his company on customer service. He then declared some simple rules: the company must staff the customer service group with technical gurus, every question must be answered on the first call or email and R&D must rotate thru customer care. Most often a rough outline of simple rules already exists in some implicit form. It takes an observant manager to make them explicit and then extend them as business opportunity evolve.

Knowing when to change

It’s important for companies with simple rule strategies to follow the rules religiously-think ten commandments, not optional suggestions- to avoid temptation to change them too frequently. A consistent strategy helps managers rapidly sort through all kinds of opportunities and gain short-term advantage by exploiting the attractive ones such as ABC Companies powerful brand position. Although it is unwise to churn the rules, strategies do go stale. Shifting the rules can sometimes rejuvenate strategy, but if problems are deep, switching strategic processes may be necessary. The ability to shift to new strategic processes has been the secret of the best new-economy companies. Like all effective strategies, strategy as a simple rule is about being different. But that difference does not arise from tightly linked activity systems or leveraged core competencies, as in traditional strategies. It arises from focusing on key strategic processes and developing simple rules that shape those processes.

The only constant is change, there’s almost universal recognition that the most salient feature of competitive advantage in the market is not sustainability but unpredictability. In Stable markets, managers can rely on complicated strategies built on detailed predictions of the future. But in complicated fast moving markets where significant growth and wealth creation can occur, unpredictability reigns. It makes sense to follow the lead of entrepreneurs and underdogs-seize opportunity in the here and now with a handful of rules and a few key processes. In other words when business becomes complicated strategy should be simple.

Example of some Strategic tools used in some organizations

We can implement six sigma in the operations, production, logistics department for seamless quality management, business process documentation and gap analysis of processes in the organization can help the organization to gain a competitive edge. Implementing world class ERP systems and android apps also helps the organization to smoothen the flow of operating. Using financial engineering as a tools to reduce operating costs and production costs. Using lean sigma to reduce defects in manufacturing will further raise revenue of the organization.

To conclude there are an ocean of tools in strategic management which is beyond the scope of this article.

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