Friday April 19, 2024
Executive Briefings Business And Management: Strategy
Adit Jain, IMA India
April 2024
Try internal expertise – it works
What’s good for the goose, is good for the gander, or so we are led to believe. But this argument has imperfections, as every individual or entity is different, driven by a varying set of compulsions. The same principle works for businesses. They have their own unique culture, processes and technology platforms, all of which determine the ingredients of what constitutes competitive advantage. Logically, therefore company employees in operations are the best placed to identify weaknesses or areas of improvements, but managements sometimes refuse to listen. They prefer to bring in outside expertise through strategy consultants, often with uninspiring results. Business strategies across organisations have tended to be conceptual. In the best case, employees feel like subordinates to the company’s centralised concept. In the worst case, they are not involved at all. This disconnect happens because consultants claim ownership over strategy, but nothing ever gets done.
Recent evolutions, move away from exclusivity and towards an inclusive course. Strategies are fostered by an internal team, created across business functions, executed without business consultants and at a fraction of the cost. The reason is simple – most consultants have a one size fits all approach, although they will take pains to explain why this is not so. Company employees understand their markets, know their products, suppliers, customers and are the repository of relationships. That in itself is the winning argument. Consultants, on the other hand, parachute into a company with a limited understanding of its culture, history and distinctive challenges. While they have remarkable analytical skills, their recommendations could lack the touch necessary for effective implementation. The fees charged by consultants are usually exorbitant, often running into millions of dollars for large-scale projects. The return on investment, on the other hand, is underwhelming. Studies have shown that a significant portion of consulting engagements, fail to generate the anticipated benefits.
But company managements and boards feel compelled to declare that their advisors did a wonderful job. Frankly, after squandering a few million dollars, they have no choice but to take such a stance; any other viewpoint would look stupid. Ultimately, sustainable success lies in nurturing internal capabilities, cultivating a culture of innovation and prioritising long-term strategic thinking over short-term fixes. In areas where some outside expertise is required, there are seasoned individuals available for hire that bring in decades of experience and would be willing to join an internal team as a collaborative member. Such expertise costs nothing, but could prove invaluable.
Perhaps, a suitable way to internalise the strategy process is to identify a few individuals from various functions – technology, sales, digitisation, human resource, finance and manufacturing – and give them the terms of engagement. This should be articulated in the written word, with clearly defined objectives and an allocated budget that allows for travel and site (or plant) visits to locations both within India and overseas. Often managers refuse to let go of the brighter ones, but that is a must for this to succeed. The team should comprise of a cross section that includes employees who have been with the company for several years, together with newer ones who may have fresh ideas and the adeptness to look at scenarios differently. Over a period of four months the team should be able to scout for technology, channel partners and a market strategy. It could, for instance, include a member with prior experience in a consulting firm with process knowledge on how such assignments are handled. It should work.