Don’t underestimate the value of a sound strategy

We are in our 7-months of operating in Harare.  Since, our inception we have gained three (3) major home-grown Zimbabwean clients.  As a small enterprise it is humbling to have proudly Zimbabwean brands supporting a young small enterprise such as ours.  After all, we have no track record of management consultancy as an organization, although we do so at an individual level.  We have no huge corporate account with multinationals to endorse and/or validate our existence in the market and in addition, we are a young forward-looking new-kids-on-the-block; who is too 'green' to be distracted by the difficulties of non-functional existing networks.  Instead, we are equipped with ambition, hope, bravado and communication skills.  Yes, communication.  Something, that seems to be somewhat displaced in the fabric of our society but more so in business.  This is because as consultants when our client decides to get us on board to assist them on specific initiatives, more often than not, the client thinks that they know what the direct problem is.  They often come to us with pre-packaged solution. For instance, they will come to us saying we need to increase sales in our business can you come up with a market strategy.  However, what they sometimes often do not see is that a market strategy is just a ‘communicative-objective’ from the ‘business strategy’.  What’s the difference?  A business strategy says this is how our organization will work in order to reach our overall objective(s).  A market strategy says these are the promotional activities we will do to attract our clientele.  Hence, before we can draw up a market strategy, we need to investigate what the business strategy is?  Why?  The business strategy is the entire business model, the DNA of the organization.  It stipulates how the organizational system should work in its current economic environment to achieve its primary objective(s).  Failure, to disclose to the consultant or suppliers in the value-chain model how this system coordinates with its various suppliers; value-chain-processes and even to its own shareholders, will result in an entity that operates below its operating performance.  In addition, will not derive profitable returns to its stakeholders.  So, as practitioners, entrepreneurs, consultants in the field of strategy formulation and execution; what are the key factors in identifying that your business model IS attractive to internal and external suppliers; marketplace and the consumers:

  

• Understand your suppliers’ business model.  In emerging markets economy we often underestimate the importance of understanding our supplier’s value proposition.  We often adopt the elitist thinking that if we are providing business to our supplier then they should be profitable.  Think again.  What this results in is an incomplete vision of the partnership.  For example, we were hosting a FREE, networking function and we hired a supplier in the beverage industry to supply alcohol at the event.  When, I asked the supplier what the protocol is in supplying alcohol at an event, they indicated that they had to pay a $350 alcohol license fee just for the 2-hour event.  Having this insight, re-adjusted our outlook on the networking function.  In the future we will include a fee for the networking event so that we can support our suppliers.  Supporting our suppliers strengthens the value-chain.  By doing so, it may free-up the supplier to invest in product-volume or product-variety.  Another example, is when we mistake the supplier's value proposition as it's core revenue-generating activity.  For example, if we were a supplier of wines as a finished bottled product.  We would need to seek a supplier who has a good strong distribution network throughout the region(s).  Whilst the supplier will have strong distribution networks, their core revenue-generating activity will be in their promotional activities of the wine we supply.  You see, the easy part is getting the product to retail outlets but hard part is convincing that customer who walks in the shop to buy YOUR wines over another.  So, in essence, you may find that your distributor may own the retail outlets but unless you support their core business which in essence is strategic product-placement they may as well put your product behind another brand on shelves.  Unless 'incentivized' to do so.  How well do you think you understand your supplier's value proposition?

• Understand your marketplace.  Any marketplace needs to be scrutinized in an effort to adopt a prescriptive or emergent strategy or a combination of both.  Understanding how fluid the marketplace is will assist companies in determining 1) how to price their products; 2) how accessible the product needs to be to the consumer and 3) which products to supply to consumers, when and how.  For example, the Wine industry in South Africa understands that the South African consumer buying behavior and preference of wines changes according to seasons.  During winter, the sector experiences a high growth in red wines, liqueurs, whiskeys, Sherries brands.  In summer, a high volume of white wines, fruity wines, ciders and beers are most preferred.  Understanding the marketplace allows your company to revisit the business model to adjust specific marketing activities that match the current trends.

• Understand your consumers.  Keeping abreast with buying-behaviors is one thing, having customer insight is another.  You can develop a product for the general masses but if it only appeals to a particular demographic or social class; your organization will exert most of its resources on promotional activities on mass media and marketing campaigns that may seem fruitless.  As a result, one can fail to appreciate the role marketing costs places in generating revenue for your organization. Therefore, it becomes important to understand who your clients are and only spend energy on the client that creates value to your organization.

These three points, highlighted above may seem like common sense but one is so often amazed at how uncommon these practices are in developing/emerging marketing economies.  This may be due to the fact that as business’ grow through their business life-cycle from the growth stage to maturity; business’ overlook the simple details that allowed them to prosper and grow their markets initially.  Don’t underestimate the value of a sound strategy!

By Tambu Ndoro, Strategist/CEO-Founder at Hanga Consulting (PVT) Ltd, ©2011.                       Website: www.hangaconsulting.com  Email: tambu@hangaconsulting.com