How many first-year pupils do you think will start school in 2030? How about 2040? 2050? This was the question asked by a CEO to Janne during a meeting to discuss the business environment and its changes.
Another manager told how, in the early 2000s, he anticipated regulatory changes in the industry and made investment decisions based on those predictions - which, as the 2010s approached, proved to be correct as the anticipated regulation came to fruition and the company grew to become one of the largest in its sector in Finland.
The third manager refused to name his company's objectives, and instead spoke of goals that are being pursued, but which are higher in level than the individual objectives and further away in time.
We meet a lot of good leaders in our work. Recently, we have had the opportunity to talk to real strategic leaders like these examples. We call them strategic leaders because the common thread between these meetings is that each of the leaders took an analytical look at what is happening in the market and the environment over the longer term.
These stories are examples of strategy, which Vaughan Evans defines in his book Strategy - Plain and Simple with a simple formula:
Strategy = Market + Competitive advantage + Risk
Strategy development is about understanding the market (market situation, operating environment, ecosystem), developing and creating a competitive advantage, and identifying, taking and managing risks. The managers in the case studies described - perhaps having read the book, perhaps not knowing about it - the key ideas about strategy in this very book. Their role as strategic leaders is to understand the market, analyse its evolution, invest in risk management up front, and shift their focus from current objectives to longer-term goals.
Many leaders often focus on the fiscal year - what do I have on the table now? How do we get to this year's targets and budget? And there's nothing wrong with that either - that's the job of the manager, to ensure the company is viable and profitable in the short term. And not just in the short term, but in the long term. Strategic leaders balance the two, ensuring that we not only nurture today's capability, but also build tomorrow's competitive advantage and strategic plan in partnership with the board. How will customer demand and the market evolve? What drivers will drive the market forward? How will the competitive landscape evolve, and how will our competitors respond to foreseeable market changes? What differentiates us from our competitors today and tomorrow? What managed risks do we need to take to stay ahead and be tomorrow's market leaders?
Do you know how many first-graders will go to school in 2030, 2040, 2050? We didn't know before that meeting. And we hadn't fully understood how everything in certain sectors would be affected. This is the essence of our work - meetings allow us to constantly learn new things and develop our thinking. This time it was about the schooling ecosystem and the sectors that are linked to schooling.
Let's meet to learn about your ecosystem. In return, we promise to bring you a discussion on strategic leadership, ecosystem thinking and identifying and strengthening your competitive advantage.
