Today’s complex and volatile environment has substantially modified the challenges that businesses face. Over the last few years, simple technical decisions have given way to strategic decision-making, which involves greater uncertainty.
To maximize results, this situation demands the constant practice of adaptation and improvement—in other words, entrepreneurship—on the part of organizations and their employees.
But entrepreneurship means more than just having good ideas. It requires continuous action, which can be charted in a series of four key maps. These maps can then be used to detect areas for improvement and develop the best response to the challenging environment.
The first step in reflecting on an organization’s future is to correctly diagnose the strategic environment.
Vision of the future
The process begins with a vision map. The first step in reflecting on an organization’s future is to correctly diagnose the strategic environment and understand its main features.
This diagnosis should consider various key issues: the impact of the laws of digitalization, including interconnection and the Internet of things; the possibility of establishing alliances with other companies; the growing challenges posed by automation; and the sharing economy and the “Uberization” phenomenon, whereby large companies like Uber or Airbnb, which have virtually no assets of their own, manage assets owned by others in every corner of the world.
Once the diagnosis is complete, the second step is to detect opportunities for the organization. Any of the main features of the environment has the potential to challenge the business from a technological, economic, legal, political, environmental, or social point of view. The ability to identify challenges in a timely manner is the key to acting early.
The third step is to develop concrete initiatives and translate them into projects, not only for the long term, but also for the short and medium term. In this strategic area, we must think about how to reach the market niches to which most demand has been transferred. The key concept in this regard is the long tail. How can you encourage consumers—who now play an active role in creating value propositions—to share their contributions with your company?
Initiatives should always be implemented from the perspective of profitability and return on investment. This requires an analysis of economic and financial impacts, as well as possible repercussions in areas such as the environment, culture, and society.
Control and monitoring are essential, since they make it possible to detect failures and make the necessary adjustments.
Deployment and execution
Once the vision of the future has been developed and the initiatives have been defined, it is time to get more specific. The deployment roadmap should contain the financial model, the customer strategy, and the strategic resources underpinning the specific project.
From a financial perspective, this map should take into account the five main levers of profitability. The first lever is the generation of growth and business volume. The next three levers have to do with profitability itself: product contribution margins, structure of fixed costs, and asset rotation. Finally, the fifth lever is financial leverage, which makes it possible to generate greater value through external financing.
As for customers, we should begin by analyzing the various profiles that make up the customer portfolio. From there, areas for improvement can be identified with regard to the target segment and the differentiated value proposition. The business model and the critical internal processes of service provision must be adapted to increase customer satisfaction, thereby improving expectations. This is how engagement and profitability can become a reality.
From the standpoint of strategic resources, the pillars for generating long-term value include employee talent and commitment, innovation, information, customer-oriented culture, and the political capacity to form alliances and reach agreements.
After the deployment roadmap, next up is the execution map. One of the first steps in developing this map is to analyze the centers of responsibility—that is, the organizational model and the teams that need to be created. Bear in mind that companies with a flatter structure and empowered, transversal teams are more agile in their decision-making.
Key factors pertaining to execution include a budget with a clear, predefined orientation and the constant revision of projects already underway. Control and monitoring are essential at this stage, since they make it possible to detect failures and make the necessary adjustments.
Companies with a flatter structure and empowered, transversal teams are more agile in their decision-making.
The three maps described above would not be possible without the energy of the company’s professionals, culture, and leadership—the fuel that powers the machinery.
The company’s people need to be dynamic, committed, and passionate enough to take action and generate ideas for change. The internal culture and the new roles filled by senior managers are constantly evolving. Nowadays, leadership has to face the challenge of managing increasingly diverse teams.
For a project, a transformation, or the business itself, the ability to define the right profiles for team members can mean the difference between success and failure.
© IE Insights.