10 examples of Successful strategies for Businesses
Last month I wrote about the top components of successful strategies. This month using these components I look at 10 strategies (using public domain data) of different organisations from various parts of society on whom we all have an opinion.
Note that I am evaluating strategies and not the organisations themselves. You may not agree with these assessments, but even if not it should help you think about what constitutes a good strategy and/or good strategy implementation (and after all there’s not much point having a good strategy if you don’t implement it effectively).
1. Phillip Morris (Tobacco)
Phillip Morris International (PMI) is in this article as it is very difficult to have a great strategy while you are a “sin stock”. PMI is doing a pretty good job though. It is pricing strongly where it can, defending the industry against very restrictive legislation and is still providing its customers with premium tobacco products. Meanwhile innovation in its offerings such as reduced risk products are coming through regularly. Combine this with a share buy-back scheme and you will see that they address their customers’ and their shareholders’ needs. Their treatment of their employees and the communities in which they work is good.
With all constituencies addressed their analytical strategy is perfect. However there is no aspirational strategy. No big idea. Imagine – PMI to manage tobacco out and alternatives in by 2030? or PMI to become a nutrition and healthcare company by 2040? or PMI – for a better world – to twin the targets (from the energy sector) of substituting carbon fuels with sustainable fuels to substituting tobacco products with harmless products? Aspirations are cloudy. No imagination. 6/10
2. Scottish National Party (Local and National Politics)
The SNP look after their core customers i.e. their electorate. Nationalists look to the party to represent their ideals. Meanwhile the rest of the electorate is looked after through sound local and national government. A solid discipline runs through the party and this rising tide of competence is carrying all before them. Their one weakness, still not addressed, is the economics of independence. With Oil at $30 per barrel (19th January 2016) the combination of high social welfare with an at best moderately dynamic private sector is an issue without an identified strategic solution. Aspirations are clear. Unlike Phillip Morris though the Analytics are shaky. Get to work on the details. 6/10
3. McKinsey (Management Consulting)
McKinsey has a loop strategy. Their consultants have no life outside the firm but benefit from being known as “ex-McKinsey” once they leave. Many of their clients love a safe bet that does not expose them to much risk. Their alumni become their clients – hence the loop. They have not deviated (much, and then when they did they backtracked) on their core offerings. They have a very strong social network offering and their Insights app is on my phone. No major weaknesses. Questions remain re how innovative they are in the delivery of their own services. Time for a change from the dark room and the white smoke? 7/10
4. Germany (National and International Politics)
Angela Merkel is in charge of a government that have created the conditions for an economy that is performing well. The fundamentals are fine. Her leadership of Europe is not in doubt and she is reaching her strategic aims of continuing economic performance, European solidarity, and social cohesion. Germany is the second largest exporter in the world and the 4th largest economy. Meanwhile social cohesion is higher than ever. With political capital to spend Ms Merkel is spending some of it on allowing refugees in. She moves slowly but she does move and that is what politics is for. One mark lost for the lack of dynamism in the message. 9/10
5. Leeds United (Football)
Leeds have not delivered to any of their constituents since 1992 apart from successive chairman who have made money on the back of their wonderfully loyal support. Leeds’s current manager Steve Evans’ analysis (before he was appointed manager) was that “Leeds are no longer a big club”. He was right – but he was not articulating a strategy. The current chairman Massimo Cellino recently said he would sell the club to the fans and then changed his mind. In one of his more celebrated approaches he dropped Paddy Kenny because his birthday fell on unlucky number 17. (Full disclosure I am a Leeds fan born on the 17th.) Leeds’s ever changing strategy gets one mark because it seems to work for one constituent which is the lead investor. Dismal. Go Leeds! 1/10.
6. Place2Be (Charity)
Place2Be is a small charity that delivers support for children’s mental health through support that is largely delivered at schools. This is a niche marketplace and they focus on it intensely. We have seen other charities fail because of lack of Governance. One look at the management team and the Board of Trustees from Michael Fowle through Benita Refson and Catherine Roche tells you that this business is in safe hands. So with a great marketplace focus and good governance all they need is a big name to help them with their profile. Their patron the Duchess of Cambridge fits the bill perfectly and she and her husband’s alignment with this cause is good for all concerned. Specially the children. Good market, good organisation, great fundraising capability, increasing profile. This is an organisation that is delivering against a thought through strategy. Take a bow. 10/10
7. The BBC (Media)
The good news for the BBC is that programming output is of a very high quality and leads the marketplace. Its news, despite a liberal bias, is well respected. The Conservative Government has recently understood the value of the World Service and has loosened the purse strings to allow that delivery mechanism to expand. So the BBC is addressing core constituencies.
There is however a significant flaw in the BBC’s strategy and that concerns its policy on its own funding. It believes that the license fee, a regressive form of taxation, is the best way to fund itself. I disagree for technical and operational reasons. Firstly – it is unfair on its viewers who use the service to a greater or lesser extent. Secondly – it is inefficient and expensive to collect. Thirdly – the BBC’s publicly funded work distorts all the markets it competes in and some adjacent markets. Who would want to be a news publisher or a sports publisher when very high quality writing is free on the BBC without an advertisement in sight?
The BBC should turn this funding weakness into a strength. First thing to do is to acknowledge the weakness in the current funding model. Then, deploying your creative skills, consider developing models of funding possibly along the following lines. Firstly a hypothecated progressive tax for core services (the News, the World Service, and other soft power related activities). Secondly, a diminishing license fee for all other activities that would quickly be completely replaced by commercial income (such as subscription), advertising or capital investment. Finally a government trust could be set up for those innovations or activities that the Government deem are in the national interest and that would if possible ultimately move into commercial ownership. An example would be developing a social media presence to counter extremism.
With very good programmes, inappropriate funding, a complicated governance structure, and with a strategy of broadly keeping the status quo the BBC’s strategy does not fully address its current or future needs. Grasp the funding nettle. 4/10
8. Private Eye (Media)
This magazine shows that media companies can indeed produce a great strategy. Hats off to Ian Hislop and his team. The magazine’s strategy has for decades been to publish very funny jokes and some very serious journalism. They dropped the gossip columns year ago. With the internet revolution they took a principled decision not to give content away for free. If you want to read the magazine then you must pay or you must subscribe. Circulation is at its highest level ever. So readers, investors and employees know their direction of travel. “Jokes, Journalism”. The shortest mission statement I know. Perfect. 10/10.
9. The Labour Party (National Politics)
With Jeremy Corbyn as leader the party is not united. The Parliamentary Labour Party is at odds with the Leadership. The rank and file members are however more in line. The strategic direction of travel is towards more democracy in the party and (possibly) deselection of MPs who do not tow the party line. This would make perfect sense were it not for the fact that the electorate seems to be out of line (or at very best not yet persuaded) with the views of the leadership. So the problem with the Labour Party’s strategy is not its policies or its aligning its policies with its members’ views or with putting pressure on its MPs to conform. At least all of these constituencies are addressed in one way or another. The problem is that the view of the wider electorate does not seem to count in the world of ideas that they are developing. It’s like a department store that only wants to sell to its own employees. This is a major strategic – and possibly fatal – weakness in an otherwise coherent strategy. Get real. 4/10.
10. China (National and Global Politics)
There is much to admire about China’s “grand strategy” whose main aims are state sovereignty and internal stability, being a global power, and economic and social development. The Renminbi is on its way to becoming a reserve currency, their economic performance is (if the numbers are to be believed) sound and their military and economic reach is expanding. Technologically speaking across all industries China has a strategy of either developing their own or learning from other people’s IP. They have a well-established academic infrastructure. Finally they have developed their own version of the world bank in the AIIB. Job done? No.
There are three clear technical issues with China’s strategy. The first is that it has a debt bubble – which is not addressed by current policy (as far as I know). The second is a communications issue. China discourages open communication both from within its borders and internationally. This is probably largely a function of a one-party state which by definition limits debate. This weakness should be converted into a strength and China should formalise in an accessible way how local and international people and institutions communicate with the state and how it responds. As long as China has an instinctively aggressively response to criticism it will be regarded as brittle. Thirdly – its environmental strategy is clearly not sufficient or if the strategy is good then it is not being implemented well. Environmental issues, poor communications and a material unaddressed financial risk are real technical strategy errors that live alongside some great aspirational and analytical thinking. A curate’s egg. 7/10.