Publication

The three corners of strategic business success

29 2017 September
Executive Education INCAE

Among his hundreds of experiences as a business strategist, Professor Esteban Brenes recalls the time when a board of directors spontaneously stood up to applaud after seeing that the entire command body of the company's organization had reached an agreement on the strategy for the medium and long future. 

The company had complied with the wise triangle of business strategy until it was expressed in such an express way that it could be summarized in less than 15 Power Point slides, as recommended by Professor Brenes, academic director of the Senior Management Program - PAG at INCAE Business School.

It is easy to say, but it is not easy to define a long-term strategy in such changing times and in an environment of high competitiveness, so pressured by the need to innovate and at the same time strengthen the star product or service. It is difficult to achieve a position within an industry and commit the entire organization to push in a single direction, but there is a plane for it and that plane has the shape of a triangle, explains Professor Brenes.

And that triangle has, of course, three vertices that become columns in a company's strategy, no matter what it does.

The playing field:

Here, the need to define which is the relevant industry for the company and, therefore, who are the consumers and the market or geographical limits that mark the field of action prevails. For this, it is necessary to make explicit the strategy that exists in all companies, sometimes unconsciously or improvised. It tries to do what Brenes calls a “Current Strategic Profile” (PEA) and, from there, identify the sources of growth or innovation, if that is the case.

The game mode:

Here the essential thing is to choose the competitive advantage and bet on one of two classic strategies proposed by the guru Michael Porter: the low cost or the high perceived value. Once this vertex is clear and placed next to vertex 1, the company can identify its positioning and, then, yes, it marks its competitive advantage and can segment the market. The advice that Brenes gives is key: never stay in the middle zone between low cost or high perceived value, always bet on one of them and then go to vertex 3.

How to play on the field:

Here the structure of the organization, corporate governance and establishing clear policies for human talent, processes and investment matters a lot, and then “getting everyone on the bus” in an aligned manner. The latter is decisive, the commitment of the entire organization to be directed in a single route and, for this, it is convenient to commit the staff through joint merit. Then everyone will clap afterwards, like the scene the teacher remembers.

In this way you can land the almost always blurry and generic concept hanging on the wall with a title that says "vision" or the more specific objectives on the label that says "mission", be they to give value to shareholders, create jobs or contribute to society with a valuable product or service. 

In reality, what will have materialized is what goes inside the triangle, the strategic purpose. A healthy sense of urgency, the idea of ​​success, firmness in goals, and the margins of necessary flexibility in methods will have been achieved. It will then be seen that those actions that were proposed when it was not known if there were enough resources and the objectives that generated a joint commitment made sense. And they will applaud, of course.

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