strictly growth business has, by definition, to be in a continual state of growth. This is only possible if the powerful market position it seeks is so challenging that it takes considerable time to realise. This is the vision element.
Whilst the strategic vision needs to be exceptionally challenging it must obviously have sound logic in its formation. There is no point fighting a war that is impossible to win. The sound logical basis on which the strategic vision is based needs to be written down and filed. This is the clear definition element.
All three elements are critically important to the on-going success of the strictly growth business.
Strategic vision is the almost impossible objective that drives a business forward year after year. It is the mission that inspires all those involved to make their very best contribution.
Settling on a strategic vision requires more than analysis. Strategic vision requires very fine judgment of the odds of succeeding within the particular market environment. The vision encompasses the degree of investment as much as the strength of the market, political and competitive forces. There are many excellent books dealing with strategic planning and there are some methods that are widely accepted, but this remains a personal issue and , purely for the sake of completeness, the key thought processes that I used are covered in sections of this chapter.
Sometimes the strategic vision can be a dream in the mind of the leader. Often this is enough. It encompasses an exhaustive analysis that lies in the leader’s mind set, sometimes described as gut feel.
Essentially the strategic vision is best defined by the statement “is it worth the bet?”
This clearly defined strategic vision enables it to be used over time as the yardstick against which all products in the portfolio and all business projects are assessed. It is, in effect, under constant review. It will enable the business to maintain continuity particularly when there are the inevitable changes in top executives. It will also be the datum against which dramatic changes in market dynamics for critical product lines or the overall market demand its review.
Even the visionary leader will benefit from having a written definition of the vision as a means of communicating to others, as a constant reminder to ensure continued focus, and as the start of an exhaustive analysis that may be developed over time to improve accuracy in forecasting customer and competitor behavior. In the corporate world a detailed written strategic vision is an absolute essential.
This, then, is the clearly defined strategic vision (CDSV) that continues on year after year after year until either it is close to realisation, or some dramatic event occurs that can be viewed as so significant it is a true paradigm shift in market dynamics. When either of these events occurs a new CDSV is needed.
There is no need, and should be no attempt, to change the clearly defined strategic vision unless there is a paradigm shift in market dynamics. Certainly there is absolutely no sense whatsoever in having any formalised regular review. Market dynamics do not change to match any pre-ordained review dates. In fact such formalities are dangerous in risking postponement of debate, being a waste of executive time and possibly causing unnecessary positioning by executives.
CHAIRMAN AND CHIEF EXCUTIVE OFFICER
The two key strategy executives in a business are the strategic business unit (SBU) manager and the investors representative. The SBU manager can have a variety of titles such as general manager, managing director, product line director and others. For the sake of brevity this book uses the title Chief Executive Officer or CEO.
The CEO is that person with the day to day operational responsibility for the performance of the strategic business unit as well assole control of all the functions that drive that unit. Both elements must exist for the CEO to be effective.
The investors representative is usually the chairman of the owning corporation but, as in the case of merchant investment houses, is sometimes a non-executive director. In start-up and privately owned businesses the CEO is often his own chairman. As a business grows even the individualistic proprietor generally finds it necessary to include a second key executive, especially as extra capital is sought for expansion.
It is critical for success that the role of the CEO is clearly understood by all involved and that there are absolutely no overlaps of responsibility with any other executive elsewhere in the organisation. The CEO is the captain of the ship, solely in command and seen to be solely in command. If such a person cannot be identified in the organisation then the chairman’s first task is to change that organisation and appoint one. There simply has to be a single CEO with performance responsibility together with control of all the business functions for any strictly growth business to function.
The CEO needs to be a leader with the focus and determination to win. Leaders inspire people and empower them to realise almost impossible goals. Leaders are good communicators, listening as well as talking, ensuring mutual understanding and clearly enunciating ideas and instructions. Precise communication is a primary skill of the CEO.
Leaders can be very intelligent but it is more important for the CEO to be wise. Wisdom comes from experience and requires intelligence coupled with the ability to listen, to consider, to learn and to understand human behavior. Wisdom enables the CEO to make good decisions at the right time.
The Chairman’s role is to ensure a long term return on investment for the shareholders, to ensure the business continues to encompass all the eight elements of the strictly growth business and to ensure that the CEO is tactically successful. This is a purely strategic role.
The chairman should maintain an active knowledge of the business environment in order to supervise the CEO and monitor the strength of the top executives. If the business fails to grow through good tactical management it is the chairman’s responsibility to fire the CEO.
The CEO is solely concerned with delivering the CDSV. The Chairman has a broader remit and must consider selling the business and moving into alternative markets that are likely to be a better long term investment for the shareholders.
The CEO is concerned with the medium term. The Chairman is concerned with the long term.
There has to be a mutually sympathetic relationship between these two executives. The strategic debate between these two is central to success and should remain a private issue. They might well mutually agree to involve others in that debate at critical times, but generally the privacy of their regular debate about the strategic situation and business progress towards its CDSV should be sacrosanct. These two, acting together, will have their own agenda, particularly relating to the top executives. It is these two who effectively ensure all that all the eight aspects of the strictly growth business remain ever present.
ECONOMIC THEORY OF UTILITY AND VALUE
Classical Economic Theory reduces market behavior to a few simple but intrinsic consumer characteristics. At the heart of the market theory is the concepts of Utility and Elasticity of demand.
Utility is a combination of the need for the product and its degree of satisfaction. This is a very personal thing as the degree of need and satisfaction varies person to person,
