Strategy

23 March, 2015

For those of a certain age, the first time we heard the word “strategy” was during the Strategic Arms Limitation Talks (SALT) that signalled the start of the end of the Cold War. Strategic referred to long-range. Younger readers will probably associate strategy with long-term business planning. But strategy is a much more subtle concept than mere planning.

As not everyone is a Project Manager, or a Project Management Professional (PMP)®, let us take a universal example of a plan. Suppose we want to take a vacation. Even if this involves packing a tent into a back-back and hiking to the great outdoors, or instructing our PA to have the Gulfstream ready and the dust covers taken off our retreat in Antibes, a vacation needs to be planned.

First of all, we are constrained by time and budget. For the 9-to-5 worker, there are only a limited number of days available for this vacation. In some industries, annual shutdowns force us to take time off at certain times. People with school-going children will also have to plan around term-time. Our budget restricts our options and affects the quality of the experience. Business class flying is a lot nicer than being in the back of the bus; the Sheraton is a lot nicer place to stay than the YMCA.

But our vacation is a win-win proposition. We get to relax in a different setting and the travel and accommodation providers make money from our trip. Certainly our plan involves risk – air traffic controllers can go on strike; the person we were madly in love with after a few dates turns out to be intensely irritating after long-term exposure – but the plan is not going to threaten any other party.

This is where strategy comes in. If you want to set up your own business, you are going to upset someone. For instance, when Apple dreamed up the Smartphone, did they plan to put Eastman Kodak out of business? They might have hoped to gain market share from the telephone manufacturers, but the impact the Smartphone has had on “holiday snap” cameras and even wrist watch sales was unexpected. But it happened – if you develop a better mousetrap in your attic and the world does beat a path to your door, manufacturers of the existing mousetraps are going to lose sales. You have become a threat and your competition is going to react to that threat.

Or, as the Prussian Field Marshal, Helmuth Karl Bernhard Graf von Moltke put it: “no plan survived contact with the enemy”. This is a critical aspect of strategy – when you enter a market, you become a threat to the established players. They will have to respond to your threat or they will lose business or go out of business completely.

An interesting strategy that was used by the Statoil and Maxol petrol stations during the noughties was the idea of a price promise. They guaranteed that you could not get cheaper petrol with a mile radius. They monitored the surrounding stations and matched their prices. If someone decided to drop their prices, the nearby Statoil or Maxol would drop theirs to match. This was really clever, because they did not enter into a price war – this was no mindless race to the bottom. What they did was remove price as a differentiator. It was significant that when the competition gave up on lowering prices and let them creep up, Statoil and Maxol brought theirs up to match.

In effect, planning assumes that your work – your project effectively – will not affect the environment. However, when you are devising your strategy, you have to appreciate that your approach to winning a war or breaking into a new market will cause a reaction from your opponents or your competitors. While the Project Management Institute recommends that its PMPs® plan their work and work their plan, corporate strategists need to be much more flexible. This means that a strategy is not so much a plan as an approach to achieving a goal.

Going back to the price promise example, a local petrol station might have opened on the basis of being a price leader. If people were getting their fuel cheaper, they ignored the old fashioned pumps and grotty surroundings. However, when the local Statoil – with its shiny supermarket and spotless forecourts offers the same prices, where will the customers go? For the local petrol station, another differentiator needs to be found. Maybe they will provide mechanical services that you do not get in the fancy retailers. However, that will take business from the local mechanics, who will change their strategy to deal with this new threat.

For Project Managers, sticking to the plan is the key to success. However, the important thing for strategists is to be adaptable. It is a bit like Newton’s Third Law of Motion – for every action, there is an equal and opposite reaction. If the reaction is such that the strategy will no longer be effective, change the strategy.

Velopi covers strategy planning in its Program Management Essentials and Program Management Professional (PgMP)® Exam Preparation courses.  For more details, please visit our training page or contact us directly.

By Velopi Seamus Collins

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