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Described as "Mr. Strategy" worldwide, Dr Kenichi Ohmae is regularly sought out as a public speaker and management consultant. Ohmae, according to the Financial Times of London, is "Japan's only management guru." As an author he has published over 100 books, many of which are devoted to business and socio-political analyses. Kenichi Ohmae -voted by The Economist as “one of the world's top five management gurus”- changed the landscape of management strategy in his book, ‘The Mind of the Strategist’.
Ohmae points out that unlike large US corporations, Japanese businesses tend not to have large strategic planning staff. Instead they often have a single, naturally talented strategist with “an idiosyncratic mode of thinking in which company, customers, and competition merge in a dynamic interaction out of which a comprehensive set of objectives and plans for action eventually crystallizes”.
The first step in strategy is to identify the one issue that matters most- the critical issue. To do this, one must frame the question properly. Suppose a company is incurring high costs for overtime work. What is the correct question? Could it be, “How can we reduce overtime?” or maybe, “Do we have enough staff?” or perhaps, “Does our staff have the necessary skills to do the work in a timely manner?” Each question would elicit a different response. Clearly, though, it is necessary to answer the third question before moving to the second, and then the first.
Strategy is about achieving competitive advantage. If there were no competitors, there would be no strategy. No one would need it. This suggests that the most important strategic issue is competitiveness. A company can tolerate certain internal deficiencies, but firms cannot survive competitive inadequacy. Allowing the company to deteriorate vis-a-vis its competitors means putting the company’s fate in the hands of the competition.
Every industry has one or two factors that determine success. No matter how complicated the industry may seem, at its heart it is simple. Banking, for example, is about collecting money at a low cost and lending it at a higher return. The critical factors in an industry can be identified several ways. One is to analyse the industry, looking at each segment, defining how competitors in each area behave and drawing some overall conclusions about the success factors. Another is to examine the conduct of winners and losers to define the behaviour, advantages or resources that made the difference. Once you have identified the key factor for success (KFS) in your industry, re-deploy your resources to focus on building strength in that key factor. If it is service, focus your resources on developing outstanding service. If product design is a key factor, focus on that.
Examine your product and identify areas where you can focus on achieving a relative advantage. This may mean literally taking your product apart, taking your competitor’s product apart and comparing the two. For example, Fuji and Sakura competed in the market for photographic film. Their quality was comparable, but Fuji had an advantage in its name, which suggested the sharp colours and contrasts of Japan’s scenic, holy mountain. Sakura means “cherry blossom,” and connotes a vague, hazy sort of beauty. Sakura analysed the market to find out whether it could reverse its loss of market share to Fuji and found that consumers were becoming more concerned about cost and often tried to squeeze an extra shot or two onto a roll of 20 exposure film. Sakura decided to introduce a 24 exposure film at the same price as Fuji’s 20 exposure film. Strategically, this made sense. Sakura could not win the image contest - Fuji had relative strength there. But Sakura could develop relative strength on the basis of cost.
The Bold Stroke
Simply put, this is about asking “Why” to test every assumption that is ordinarily taken for orthodox wisdom in your industry. One of the best practitioners of this method is Taiichi Ohno of Toyota. He asked why car companies had to keep costly-to- finance inventory on hand, and wound up inventing “just-in-time” material management practices.
Think of strategy as a triangle with three sides: company, customer and competition. Movement by any of these elements affects the market and may make it necessary to change the strategy.
- The purpose of business strategy is to cause events to favour your strengths.
- Identify your strengths and build on them.
- Every industry has a key success factor- know yours.
- Penetrate appearances.
- Address the problem, not the symptoms.
- Know what separates winners from losers in your industry and your market.
- Analyse potential improvements in terms of cost, benefit and strategic advantage.
- Keep track of customer and market trends- even though customers may not know what they want.
- Know the difference between a “business” and a “product.”
- Think like an entrepreneur, but think.