Companies in Pakistan lack a clearly defined strategy
Despite being an important tool, many do not understand it well
Despite being an important tool, many do not understand it well.
ISLAMABAD:
Pakistan’s businesses are struggling to compete with international firms operating both locally and internationally.
In order to succeed, it is important that they set the basics right. What are those basics? One of the major cornerstones for success of a business is devising an effective strategy. Despite being the most common tool for planning, many do not understand it well. So, it will be useful to start the article with the introduction of the concept of strategy in simple words.
Strategy is defined as “a plan of action designed to achieve a long-term or overall aim”. Ven den Steen states, “strategy is the smallest set of choices to optimally guide (or force) other choices”.
It can thus be called a unifying force that connects ideas of the past with implementation in the present and aids in the development of future actions.
After defining strategy and its importance, now let’s talk about its utilisation in the corporations of Pakistan.
Preliminary analysis of annual financial statements of top 10 companies of Pakistan indicates that very few companies have clearly defined their strategic priorities and action plan whereas most others are plagued with vague statements and ambiguous action items.
It is understandable that strategy is an internal document, but companies do give an overview of their strategy in publicly available documents.
In most of the strategic statements, key elements are missing like the proposed actions and resource utilisation which will lead to the goals and aims of the company. Many companies in Pakistan use vague language such as “maximise returns to our shareholders and provide optimum value to all stakeholders”.
Following is an example of a Pakistani company’s robust strategic plan, which stands out for its clarity, organisation and proposed actions while accounting for anticipated challenges. It clearly articulates the strategic objective, the current status and the potential roadblocks that may lead to failure.
Based on the literature review and our experience of working with some organisations, we propose following six steps to devise an effective strategy for companies:
(a) Develop an inclusive culture
(b) Parent company strategy vs functional or divisional strategy
(c) Take a methodical approach to formulate a strategic plan
iii. Break down each component of the value chain – raw material, operations, delivery, customer acquisition and customer retention.
(d) Pick a few salient strategic options
(e) Path to formulate a successful strategy is, what > why > how > where > when > who. For example, what strategy are we going to pursue, why it is important, how we are going to do it, where that strategy will be implemented, when is the deadline and who will be accountable for passing through the goal line.
(f) Devise and monitor a detailed action plan
Indeed, there is no “one-size-fits-all” formula for devising and implementing effective strategies to expand, sustain and transform business organisations.
However, the above six components should be given due attention in this process. Many strategies fail only because of a lack of effective communication with key stakeholders. So, make the communication plan a cornerstone of the strategy.
Naveed Iftikhar is a public policy adviser and researcher having interest in public-sector governance, cities and entrepreneurship. Irfan Altaf is a management and strategy professional working for a leading consulting group in the US
Published in The Express Tribune, March 26th, 2018.
Pakistan’s businesses are struggling to compete with international firms operating both locally and internationally.
In order to succeed, it is important that they set the basics right. What are those basics? One of the major cornerstones for success of a business is devising an effective strategy. Despite being the most common tool for planning, many do not understand it well. So, it will be useful to start the article with the introduction of the concept of strategy in simple words.
Strategy is defined as “a plan of action designed to achieve a long-term or overall aim”. Ven den Steen states, “strategy is the smallest set of choices to optimally guide (or force) other choices”.
It can thus be called a unifying force that connects ideas of the past with implementation in the present and aids in the development of future actions.
After defining strategy and its importance, now let’s talk about its utilisation in the corporations of Pakistan.
Preliminary analysis of annual financial statements of top 10 companies of Pakistan indicates that very few companies have clearly defined their strategic priorities and action plan whereas most others are plagued with vague statements and ambiguous action items.
It is understandable that strategy is an internal document, but companies do give an overview of their strategy in publicly available documents.
In most of the strategic statements, key elements are missing like the proposed actions and resource utilisation which will lead to the goals and aims of the company. Many companies in Pakistan use vague language such as “maximise returns to our shareholders and provide optimum value to all stakeholders”.
Following is an example of a Pakistani company’s robust strategic plan, which stands out for its clarity, organisation and proposed actions while accounting for anticipated challenges. It clearly articulates the strategic objective, the current status and the potential roadblocks that may lead to failure.
Based on the literature review and our experience of working with some organisations, we propose following six steps to devise an effective strategy for companies:
(a) Develop an inclusive culture
- Everyone is encouraged to think about the future and how each individual and process can potentially impact the strategic objective and the outcome
- Solicit feedback from each member of the workforce, especially those heavily involved in the groundwork
(b) Parent company strategy vs functional or divisional strategy
- Identify if the strategy would be formulated at the corporate level or at the functional level
- Decide about the most suitable model after a considerable analysis of pros and cons of each approach
(c) Take a methodical approach to formulate a strategic plan
- Top management should lay out vision, strategic goals and priorities
- Perform analysis of the company’s core capabilities and internal and external factors that influence the company’s performance
iii. Break down each component of the value chain – raw material, operations, delivery, customer acquisition and customer retention.
- Put together a positioning map for company’s current state vs future state
(d) Pick a few salient strategic options
- Easy to communicate with the organisation
- Easy to get employees attention and commit resources to only few strategic options rather than to focus on a long list of priorities
(e) Path to formulate a successful strategy is, what > why > how > where > when > who. For example, what strategy are we going to pursue, why it is important, how we are going to do it, where that strategy will be implemented, when is the deadline and who will be accountable for passing through the goal line.
(f) Devise and monitor a detailed action plan
- Assign responsibilities and resource allocations
- Carry out a periodic monitoring and undertake necessary changes in the plan
Indeed, there is no “one-size-fits-all” formula for devising and implementing effective strategies to expand, sustain and transform business organisations.
However, the above six components should be given due attention in this process. Many strategies fail only because of a lack of effective communication with key stakeholders. So, make the communication plan a cornerstone of the strategy.
Naveed Iftikhar is a public policy adviser and researcher having interest in public-sector governance, cities and entrepreneurship. Irfan Altaf is a management and strategy professional working for a leading consulting group in the US
Published in The Express Tribune, March 26th, 2018.