By Romulo Pinheiro, partner at FALCONI
Everyone knows that we are going through a large-scale economic and political crisis, which impacts several segments – if not all segments – of the economy. In times like these, it is common to relegate strategic planning activities to a secondary position, as companies direct their energies towards their own survival, by means of short-term initiatives.
However, this may reveal itself to be a wrong move. In times of great uncertainty, the secret is to combine short-term and long-term vision – that is, carry out activities in the short run in order to assure the company’s long-term goal – its perpetuity. After all, in a threatening environment, companies that maintain strategic management alive and know how to make better choices have more chances of surviving.
But what makes strategic thinking really useful?
Strategy is only necessary when faced with two circumstances: limitation of resources and competition, that is, the company does not have the human and financial resources necessary to do everything it wishes, and there are other companies in the market that compete for the same market share and clients.
Thus, the definition of a clear strategy will allow the company to: a) allocate its resources as efficiently as possible and b) anticipate moves from its competitors, standing out from them. We could name this competency “strategic maturity”, which provides organizations clarity in terms of its future moves – in other words, long-term choices that are made with more trust.
The cellulose and paper segment faces major challenges in order to increase its competitiveness level, which include:
In order to respond to these challenges in a consistent way, on a higher level than its competitors, the organization must carry out a strategic reflection process in a structured and especially pragmatic way.
At FALCONI, we have been applying an approach that allows the company to take short-term initiatives, without neglecting to look ahead – and the best thing is that the company can see more clearly where it is able to go through discipline in the activities it carries out. Furthermore, it allows for organization workers to learn throughout the process, consequently turning the strategic planning process into something sustainable and permanent.
Some aspects that made this approach stand out from others include:
1. Strategy with a goal: efforts made towards the Big Dream
When the strategic formulation starts with a preliminary goal, the result of a collective reflection from all executives or shareholders (or both groups), the company knows how much effort must be applied to the planning process.
Then, initiatives become “responses” to a clear challenge, instead of simple ideas generated without a real application.
A strategic formulation without a clear direction and goals ends up becoming a big analysis of scenarios, which is an important part of the process, but not an end in itself.
2. Identify really strategic questions
Some companies usually choose a ‘creative’ approach for its strategic formulation, that is, they start with a blank page, analyze several successful cases and benchmarks across the globe and then try to reach to as much action options as possible.
Mapping out the competition and market benchmarks is vital in any basic formulation process, but we understand that a step back must be taken and that we must make managers acquire an understanding and critical view of real opportunities and threats regarding the future and the possibility to reach the Big Dream that was set.
The following is what we call strategic questions: what keeps shareholders and executives up all night? What opportunities are we missing? What could get in the way and prevent our operation to be sustainable? What are we failing to see? In combination with traditional analyses of the outside environment, strategic questions convey pragmatism and a reality shock to the process.
Another benefit of clearly identifying strategic questions is the alignment of all parties involved, executives, and shareholders. A commercial director who only prioritizes client-related matters, without taking into account that, within any systemic environment that is a company, operation- or finance-related matters may substantially affect its performance, since all parts affect the whole.
3. Establishing the connection between Strategy and Results
Having clear goals and options does not guarantee a good strategy; you must make it happen. Unfortunately, this ought to be the most critical element of strategic formulation processes: guidelines are provided, but the company continues on its old pace, failing to catch up on the new moment.
We see that executives have a pathway, but they don’t know what to do or how much contribution will be necessary in order to reach the goals that were established. They lack a plan! And a strategy without a plan is just a collective utopia.
It is common finding strategic activities with a comprehensive analytical basis and scope, but they end up resulting in managerial inertia. We believe that this occurs due to the lack of plans elaborated with people in charge (“owners”), macro-stages, resources, deadlines, and specific indicators for actions or project.
These are the steps that make clear the main challenges faced by organization with regard to strategy: having clear goals, building a pragmatic path in order to reach such goals, and create an internal action and mobilization standard for execution.
Text published in the April edition of O Papel magazine.