Strategic thinking

Directors’ Silence

zen-moser

Board members’ actions or lack thereof, has been very topical lately.  I found that the attached article released by the CGF Research Institute underlines the importance of appropriate dissent in the boardroom.  It also emphasises the role a functional board plays in contributing to a successful and sustainable organisation.

Directors are required to act in the best interests of the organisation.  This requires a director to have the appropriate inter-personal skills and the requisite knowledge and understanding of his obligations and responsibilities towards the organisation.  In addition to being committed to performing his duties to the best of his abilities, a director must be prepared to question actions and decisions being taken by the board.  He must also ensure that his differing views are properly minuted.

Constructive debate and dissent in the boardroom should be encouraged to ensure that business risks and proposals are properly explored and discussed so that appropriate governance and strategic guidelines can be communicated to management and the rest of the organisation.

Failure to voice and record your dissent as a director, may result in loss or damage to the organisation.  This in turn could expose you to potential personal liability as your silence/inaction may have resulted in a breach of your fiduciary and statutory duties!

29 Sept’14_Director’s dissent_Where your undue silence will be used against you

Is Your Business Ready To Scale Up?

zen-moser

Most entrepreneurs investing time and money into a business want to see it evolve from a small business to a large and successful concern! Unfortunately, this is not always the case. While many startups fail, others go on to achieve decent organic growth and a few like Amazon scale up significantly.

Investopedia describes a scalable company as “one that can maintain or improve its margins while sales volume increases” in other words, being able to channel more through the business without increasing costs. Others define a scalable business as one whose sustainability is not completely tied to ownership in that the business has managed to grow beyond the founder by focusing on something that is teachable to its employees, valuable to customers and repeatable in a way which generates a recurring stream of revenue. In my opinion, the most general definition is simply being able to grow your business to the next level.

Whatever your interpretation, at least 3 common themes are evident in ensuring that your business can grow:
1. Focusing on the future
Do you know what is happening in the market? Are you paying attention to new trends and new entrants? What is the competition doing? Can you leverage your strengths? Are their opportunities for acquisitions? These are all strategic questions which should be considered by management/owners who have their eye on growth.

2. Being in the right place
It is important to find and establish key relationships and networks that you can tap into in order to glean information on circumstances and opportunities which may impact on your business. To some, building relationships comes naturally, but others may require an actionable strategic plan to put these relationships in place.

3. Readiness to scale up
If the failure of a competitor suddenly provides you with an opportunity to grab additional market share, would you be able to seize the moment and deal with increased sales volumes? Alternatively, have you considered whether or not your products/services, people and systems are ready for growth into new regions or markets? Consideration will need to be given to amongst other things your organisational culture and the ability of your people to deliver increased volumes without compromising on service excellence. Do you know what products/services you will be able to sell into a competitor’s installed base or into a new region and what your approach to market will be? How will your supply chain be affected if you had to suddenly increase your order size or stock holding? Will your technical support, finance and administration systems be able to manage an increase in workload on a sustainable basis? Do you have access to capital to fund an increase in working capital or a possible investment in additional/new facilities? The answers to all these questions and more, need to be factored into your strategic plans.

Are you asking yourself some of these questions? Whatever your stage of readiness, it is important to think strategically and plan for success!

In a previous article I provide further insights into the strategic thinking process.

Strategic Thinking and Small Businesses

zen-moser

According to a study conducted by the Management Research Group, 97% of a group of 10,000 senior executives surveyed thought that strategic thinking was the most critical leadership skill for an organisation’s success. This is very interesting bearing in mind the limited amount of time organisations spend on strategic thinking.Good Point

What is strategic thinking? It is the process of generating ideas and possible solutions to current and future circumstances and challenges. It requires one to see the big picture, challenge the status quo, perform objective analysis and implement forward thinking and planning. This process is fundamental to an organisation’s sustainability. Far too often, current day-to-day operations and fire fighting take up all our management time and too little time is spent considering the future and the impact of changing circumstances on our businesses. We only realise this error in prioritisation once the walls start closing in and cash flows start suffering.

During the strategic thinking process, we ask questions such as “What might happen? When will this happen?”. We have to make strategic decisions around “What will we do?” and develop strategic plans incorporating “How will we do it? Who will do it and by when?”. We need to understand our connections and interdependencies with the external environment and how to align our internal capacities with the changing and dynamic external environment in which we operate in such a way that our business continues to flourish. As you have no doubt already deduced, this is not a once-off process, but rather something which needs to become ingrained into the organisation. In addition to holding dedicated strategy sessions, I have found that documenting your business plan and introducing budgeting and regular forecasting mechanisms can be useful tools to stimulate such strategic thinking.

Contrary to poplular belief, strategic thinking is not a process which falls solely within the domain of the CEO, but is rather the responsibility of every employee within the organisation. The power of harnessing your employees’ energy and drive in one cohesive direction can only lead to superior results! In my experience, it is therefore also important to create a corporate culture which encourages everyone in the organisation to think strategically. The strategic plan needs to be documented and communicated to everyone in the organisation so that all employees understand their role in achieving the organisation’s objectives. Consider rewarding your managers and staff for forward and proactive thinking and for generating longer term solutions. Encourage your staff to voice their different viewpoints and challenge the status quo in order to constantly improve efficiencies. Don’t be afraid to share information with your staff especially if it can help them achieve better, more sustainable results!