Introduction

The current global financial crisis has forced many firms to rethink their business model in order to ensure their survival. Old business models that are static and make stead-state projections for extended period of time (e.g. 5-10years) have now become redundant. The nature of the competition is changing rapidly and businesses have to respond if they want to seize market share. To do this, firms will have to take more seriously, the role of strategic thinking in making business decisions. When macroeconomic conditions are challenging, it is adroit strategic planning that will differentiate those firms that survive from those that go under. In the business world today, strategy is at the forefront of the organization’s functional areas, not in the periphery, like two or three decades ago.

Strategy

This refers to the plans that are put in place in order to ensure the long-term growth and survival of the business. Contemporary organizations have a department fully dedicated with the sloe responsibility of coming up with new ideas that will position the business to respond to the rapidly changing drivers of profitability in the industry. 3M (Minnesota Mining and Manufacturing) is a good example of a company that has taken this approach. A key feature of the strategic transformation is to put the right people in the critical areas of the business and give them greater autonomy and control over decision making. These persons will have to possess a comprehensive understanding of the key factors in the industry and the business unit that drive profitability.

Many companies around the world have recognized the need for taking strategic thinking quite seriously and have also implemented strategic thinking in helping to turn around their fledging fortunes. One such example is KRAFT Foods. According to Irene Rosenfeld, when she returned as chief executive of KRAFT Foods in 2006, she spent most of her time on strategy. She implemented a turn around strategy that has transformed the way the company operate and eventually lead to increased growth. The strategy involved a revamping of the company’s organization structure to make it more responsive to the rapidly changing needs of its market place. This was a structural change that was necessary for the company to survive.

More than Structure

Strategic transformation will require more than a change in structure. It will require changes in culture and operations as well. Employees will have to change the way they view their relationship with their clients. Each customer must be treated as a king. This red carpet treatment must not be limited to large customers. All customers are valuable. Firms must treat all customers as if they are new.

Internal relationships in the organization is also critical as part of the cultural change. Employees must not see their role as being limited to their job description. Where they have the talent and expertise to provide help in other business units besides the one they are employed to, they need to utilize these talents. They must think in terms of the “flexible organization” i.e. one where all employees have the ability to participate in any functional areas of the business. Management will also have to change their compensation and evaluation structures to reflect this flexibility. It will require new metrics and also new compensation packages for staff.

Operationally, firms will have to ensure that their products meet the needs of their consumers. It may mean rebranding or developing new lines of products. Some companies in Jamaica, for example, have maintained their same line of product since their inception in the 1960s and 1970s, until today. This is not good. Consumer preferences do not remain static, so businesses will have to change their offerings to meet this demand. In this transformation process, firms will also have to put mechanisms in place to enhance staff capabilities in order for them to carry out their functions effectively.

Concluding remarks

When the macro economic environment become challenging, CEOs cannot afford to use it as an excuse not to perform. They will still have to deliver growth in shareholder value.
To achieve this goal, CEOs have to focus less on operational issues and be focused on the strategic transformation of their organization. Strategic thinking will have to be at the core of the organization and be removed from the periphery, as is the case in most organizations in Jamaica.

Densil A. Williams is a lecturer of international business in the Department of Management Studies. He received a Ph.D in International Business from the Manchester Business School in the U..K. His research papers appear in major international journals in North America and Europe. His research interests are in the areas of international business, international development and strategy. He may be contact at densilw@yahoo.com