In organizations, management can be viewed as ‘custodians’ of an entity’s well-being. Management must constantly be ‘zooming in’ and ‘zooming out’, evaluating the health of the organization and aware of the shifting ecosystem within which it operates. Senior management must be proactive and anticipate emerging threats and opportunities that are likely to impact their business. In business, we refer this activity as undertaking a SWOT analysis (examining the internal strengths and weakness and the external opportunities and threats). In undertaking strategic management tasks, I find it a helpful notion to view the organization as a rosebush.
Strategies entropy over time; therefore, ‘the gardener’ must undertake an iterative process of rosebush maintenance.
Although we could commence our examination and analysis anywhere on the bush, today I will start with an examination of external influences that are likely to impact the well-being of our roses. The four seasons– sun, rain, snow –will all impact the plant. The gardener must take preventative steps to mitigate the damage or exploit opportunities these seasons represent e.g. a period of sunny weather might provide either the opportunity to maximize the health of the plant or a threat if a lack of water is permitted to stress the plant. Similarly, a business must fully understand its competitors, stakeholders, markets, constraints, and competitive forces prevalent within the industry. To assist in undertaking this external analysis, strategic managers use an assortment of analytical models to assist their reflective thinking about where their business is today, where it needs to go, and how it should get there.
The second area the gardener needs to examine is the internal influences — the nutrients. The nutrients for a firm can be divided into tangibles and intangibles factors. The tangible nutrients are the hard assets, the people, and the capital provided by shareholders. Indeed, I find it helpful to think that the ‘capital’ provided to management by shareholders almost as a fiduciary arrangement. The board or management are provided funds by shareholders with the understanding (duty) that the board or management will maximize shareholders’ wealth and ensure the sustainability of the entity.
The intangible nutrients, and there are many, include nurturing a corporate culture, developing brand and trademark recognition, and establishing goodwill. Nutrients also include establishing corporate values, and demonstrating corporate social responsibility and ethical behaviour. Fostering a corporate memory, based on knowledge and experience acquired in part through market research, is also included in our notion of intangible nutrients.
Collectively, tangible and intangible nutrients give rise to the creation of the much needed core competencies. Using the rosebush analogy, the core competencies become the conduit between the external and internal influences – they are ‘the trunk’ that delivers the nutrients to support the production of goods and services.
The roses in our analogy are the goods and services we provide – collectively they’re the portfolio of our offerings – red, yellow, black, white – all represent different goods and services. The gardener must frequently undertake a portfolio analysis (a useful tool for this is Boston Consulting Group Matrix) to evaluate that the goods and services being produced are aligned with the strategic vision and mission of management, and represent value for money. It is imperative that the very valuable nutrients, both tangible and intangible, are not wasted and diverted from their ‘focus’ – to maximize shareholder’s wealth and ensure the sustainability of the entity.
Over time organizations, like rosebushes, develop destructive initiatives. Using the rosebush analogy, these are suckers. They sap the energy from the bush. They do not support the strategic direction of the firm. The gardener must have the intestinal fortitude to prune these fast-growing, lush green branches from the plant. The energy (resources) must be reassigned back to the goods and services for which they were intended!
Occasionally, in order to accelerate growth, the gardener considers adding new roses to the trunk through the process of grafting. In business, we refer to this growth strategy as mergers, acquisitions, and strategic partnerships.
There is, of course, much more to crafting and implementing strategy than outlined in this brief analogy. But it is helpful for new strategic managers to commence thinking about their business as a living organism that needs a vigilant gardener – a gardener that is always aware of the plant’s best interest, and prepared to exploit opportunities presented and mitigate damage that could occur as a result of the shifting external and internal influences.