From Aspiration to Strategy

Summary: What do you when you have grown from a small company to a large behemoth in a span of 2-3 years, because you had access to easy capital and your assets appreciated unbelievably in this duration?

Some of the businesses in the GCC are asking the same question and grappling for answers which are not easy to come by. Their asset base has grown manifold in a very short span of time, and they are unable to handle this meteoric growth. Till now they were aspiration led. It is time to become strategy led.

 

There is no doubt that GCC has been the centre of action in many ways. If one leaves the geo-politics of the region aside, frenetic activity in business has overshadowed almost everything happening in the region. From mega townships by the sea to tallest buildings, it is all happening here, and at the same time. Almost every sector, from banking and finance to sports, is witnessing unprecedented growth. Money continues to flow from all quarters, attracting businesses towards it. This brings in more people into the fold, and pushes wages and salaries higher, which in turn people to spend more. Classical economic cycle in an adrenaline ruch.

Amidst all this, some businesses, with the right pedigree and resources, have seen their asset bases appreciate considerably. Not only that, but easy access to capital almost pushes them to think hard about avenues to invest. If they don’t, someone else will help investors put their money in some place. In this situation, the mantra is simple : “Find a business, and we will invest”. Competition is hot on heals, and hence it does not matter whether the business is in line with overall business strategy (that is, if there is one in the first place). What matters is that one invests money some where quickly, and hopefully it would grow and bears returns. Nothing seems to matter as much as becoming big and being present in multiple sectors because someone else decided to be there as well. This is the raison d’etre of some businesses which, at best, can be classified as “aspiration-led” businesses.

While aspiring for bigger and better is by no means a sin, this kind of thinking can quickly turn cancerous – growth comes, but at a high cost. By the end of it, a business is saddled with multifarious exposure to a large number of sectors, which require specialists to manage them, growth is limited because the scale is not there, which in turn makes the company’s competitive posture weak vis-à-vis its large competitors, and before you know, cancer spreads fatally.

The other critical issue that such businesses face is the lack of ‘form’ or ‘structure’. Because there is no over-arching strategy, these businesses are structured based on immediate business need – not on what the business would require long-term. Organizational structure of such businesses is fairly loose and chaotic at best. This is one of the reasons why only few business houses have been able to address the most important issue – talent retention. Lack of structure makes employees nervous, and they are attracted to MNCs which are more often than not, better structured and focused on certain lines of businesses, which in turn brings a common sense of purpose.

What is needed for GCC based business houses, therefore, is the movement from being ‘aspiration-led’ to ‘strategy-led’. It should not matter whether the competitor is entering the oil business or manufacturing toothpaste – the management should decide on a focus, and then go all out to become a benchmark in that chosen field. The view should remain long-term, and not immediate. Being strategy led is not easy, as it would seem here. It is difficult to leave clear business opportunities alone when your peers are rushing towards them. However, in the long run, it pays to be selective and to move with a sense of purpose, however gradual such movement is.

Structure follows Strategy, and not the other way round. When a business moves away from being ‘aspiration-led’ to ‘strategy-led’, it necessitates formation of a solid structure that is purposeful, long-term, scalable, and extremely relevant to the business situation – immediate and long term. There is less ambiguity within the ranks, and the senior management has a clear focus which translates to a clearer vision and mission. It does not take a lot of intellectual horsepower to understand that when you can see clearly where you want to go, you will find the exact means to get there quickly.

GCC based businesses which want to establish themselves as reputed companies of the future, need to take a cue from the above argument, and for the sake of longevity and enduring success, move from merely aspiration led focus to a far more stricter and precise strategy led focus