How many first graders do you think will start school in 2030? What about 2040? 2050? This was a question that a managing director asked Janne when the meeting was about the company's operating environment and its changes.
Another manager talked about how in the early 2000s he predicted future regulatory changes for the industry, based on which he made investment decisions - which turned out to be correct in the 2010s, when the predicted regulation came true, and the company grew by taking advantage of its industry to become one of the largest in Finland.
The third manager refused to name his company's goals, and instead talked about the goals that are being reached, but which are higher in level than individual goals and have a longer time span to achieve.
We meet a lot of good leaders in our work. Recently, we have been able to talk with real strategic leaders like the examples. We name them strategic leaders because these meetings are united by the fact that each of the leaders went through analytically what is happening in the market and operating environment with a longer time perspective.
These stories are examples of strategy, which Vaughan Evans defines in his book Strategy – Plain and Simple with a simple formula:
Strategy = Market + competitive advantage + risk
Strategy development is understanding the market (market situation, operating environment, ecosystem), developing and creating a competitive advantage, and identifying, taking and managing risks. The managers of the examples described - perhaps after reading the book, perhaps without knowing about it - precisely the central ideas of this book about strategy. Their task as strategic managers is to understand the market, analyze its development, invest in managed risks at the forefront, and raise their eyes from current goals to longer-term goals.
Many managers often focus on the fiscal year – what do I have on the table now? How do we reach this year's goals and budget? And there is nothing wrong with this either - this is the manager's job, to ensure the company's operational capability and profitability in the short term. And not only in the short, but also in the long. Strategic managers balance between the two and ensure that not only today's operational capability is nurtured, but also tomorrow's competitive advantage and strategic plan are built together with the board. How will customer demand and the market develop? Which drivers drive the market forward? How is the field of competitors developing, and how are our competitors able to respond to foreseeable market changes? What separates us from the competition now, what about tomorrow? What controlled risks do we need to take in order to stay ahead and become tomorrow's market leaders?
Do you know how many first graders will go to school in 2030, 2040, 2050? We didn't know before that meeting. And we hadn't fully understood what it would affect in certain industries either. This is the salt of our work - in meetings we constantly learn new things and develop our thinking. That time it was about the ecosystem of going to school and industries related to going to school.
Shall we meet to learn about your ecosystem? In return, we promise to bring you a conversation about strategic leadership, ecosystem thinking, and identifying and strengthening competitive advantage.
