Why Business Strategy Fails

Why Business Strategy Fails

by

Manoj Kumar Trivedi

Founder | Director | Business Mentor

iGlobal Research and Analytics, Calcutta, India

I am extremely thankful to industries I served across four decades of my professional journey that gave me enough space to learn. Its now time to payback.

Industrial Reconnaissance

PwC's 22nd Global CEO survey report of 2019 indicates their worry of immense skill gap. Despite this the world is moving ahead with its Industrial revolution through digitalisation. The basic purpose of present and past revolutions are aimed at scaling productivity minimizing the cost. But underperformance conundrum still haunts Business Leaders which must be explored at the outset to take necessary steps. If allowed to continue, many organizations can be even more incompetent in VUCA world while losing market space. Conversing through many leaders, I could not get answers to these typical findings:

• Though capable of higher yield, manufacturing units typically makes profit of 6-8% which is equivalent to bank interest. Retail business working on commission ends with higher-margin !!
• All the sincere effort to save costs across functions clocks-off, leaving business leader wonder where all the money gone!!
• Each and every unit produced carries equal amount of profit. Why profit never commensurates change in sales?
• All other factors remain constant, Total Cost varies across each batch produced!!

One of the reason that I could found of why Industries still underperform is the inability of leaders is to execute tasks against issues arising today in a way that prepares the organization for the future. This is mandatory in ever-shifting macroeconomy. There exists an extrordinary connection between the economy and investment results. Business Leaders who ignore the economy are set to fail. Decision makers who understand the economic stress point fair the best.Disruptions and growing business complexities are the biggest organizational dilemma. Growth is directly proportionate to shrinking leadership ability.

Nevertheless, I have encountered and noticed several BIG CONSULTANTS promising BIG REFORM, charging tens of thousands dollars, but ends up with standard report suggesting manpower reduction instead of dealing with real issues to bring reform.

To find an answer one has to look beyond the prism of specific costs as is ideally being practiced. Modern theories of firm strategy integrating various analytics, selective / incremental improvement and Lean aodoption has yielded little to no result.

Costs are like air in the balloon which when compressed on one side bulges on the other side.

Business is far beyond the general growth perception through increase in sales revenue. In the process, microeconomic factors governing operation are mostly ignored. Diseconomy of scales are not micro-analysed. Capegemini in one of the report during 2018 has found global industries are now changing their focus from customer analytics to operational analytics in VUCA world. Customer satisfaction in this market economy no doubt is of prime importance, we can't ignore creating value for self-sustenance.

Internal Revenue generation is of prime importance to sustain

Road ahead

Industry 4.0 leverages best opportunity to analyse microeconomic factor and neutralize macroeconomic implications on real-time basis. The purpose of Industry 4.0 is more about scaling productivity through Business Analysis, Business Intelligence and Decision Intelligence than technological advancement. Tools of AI are just the facilitator for matrix-based business. The real concept of Industry 4.0 is far beyond improving connectivity for global market reach /vertical & horizontal business integration.

Every technology is accompanied by its own business aspect for perfect utilization enduring growth.

Simply put, it is more like a Mobile phone which helps getting audio-visual informations. Value of such information increases based on our perception to utilise. The information is of no importance if we have no knowledge how to contemplate the information to our benefit. To some mobile technology is of immense importance while for others it is just a tool to communicate.

Similarly, success of technology lies in developing the capability for critical thinking and creativity enabling value addition across operation that has been marred by the commandment of hierarchy. As per PwC report, Global CEOs were optimistic of hiring such talents. Given the crisis they are now contemplating developing such talents in-house. Given the profile of Data Scientists, they must have Business Knowledge and expertise across all domain. No leader can wear all the hat to claim he has expertise across all business domain with required business wisdom. Hence it has become necessary to develop Modelling Scientist with IT knowledge and Decision Scientists across respective domain to analyse business and to create value across value chain of dynamics of Supply Chain: Procurement, Manufacturing & Logistics. Its proper to note here major values are colligated through many supportive functions that cannot be allowed to remain unproductive!!

Defining New Role is the essence

It's easy to describe existing jobs and existing roles does not exist than to prepare them for new role. Automation is fast replacing blue-collar along with low-rank jobs. Such jobs will be performed and controlled by IIoT. Many Business Leaders are joyous of reducing employment cost. Contrary may be true if lateral entry is considered. To analyse each business activity, number of employment may also go up.Developing existing capability and enhancing their expertise industries may avoid such a situation.

Business Transformation

In Industry 4.0 environment, Business is no more limited to conventional norms of selective improvement. A transformation is not a series of incremental changes, it is a fundamental reboot. It has to represent a fundamental and risk-laden reboot of a company with a goal of achieving dramatic improvement in performance and altering its future trajectory. Defining new role for renewed function across operational segment, inter-alia, value chain of dynamics of supply chain for value addition including supportive functions is mandatory for holistic improvement through business analytics and productivity analysis.

Developing capability,being the first step to migration under new normal, such capability will facilitate adopting relevant technology based on business dynamics. If not started now, industries will end up the same fate of ERP adoption that has ended up as a back-end office tool as mere data-center. Organizations can either opt for holus-bolus or selective functional transformation developing capabilities relevant to Industry 4.0.

Economic Engineering across value chain is the only business skill that thrives under new normal of Industry 4.0-UNIDO & Ors

Do you find this post relevant to your business or career? If yes please "Like" and spread the word to the benefit of all. Also please feel free to discuss further in case if this interests you-(91) 9433013863 / 9051831961, OR, write at trivedi.k.manoj@gmail.com