Carefully thought-out strategy keeps the home fires burning

The ultimate price for failing to think about strategy could be a second cold war with Russia over the control of energy supplies. By Chris Ingram

Chris%20IngramBuilding great brands requires a heavy front-end of strategic thinking and planning before you go and do "stuff". Or so I thought. But after three years in the brand business, I’ve been astonished at the number of senior executives who are "too busy to think about strategy". Now, I’m great believer in the "just do it" attitude, but it does kinda help to have a well-thought-through plan in the first place.

Marketing departments, right up to marketing director level, are often buried in implementation. Even though the scope of the typical marketing director’s responsibilities have been dramatically reduced over the years, the downsizing of their departments plus short-term decision taking, the proliferation of channels and the fragmentation of marketing services suppliers, has created a frenetic environment.

At chief executive level, the situation is certainly no better, although the reasons are different. Any major company, even if not US-quoted, is effectively working to a quarterly results cycle, but pulling in the opposite direction to this huge short-term pressure are the twin obsessions of corporate governance and transparency.

Even quite small companies are expected to have separate audit, remuneration and nomination committees. Risk management has become a whole new area for board directors and key execs to come to grips with, helped, of course, by another raft of advisers.

But Sarbanes-Oxley is perhaps even more challenging. I know of one large corporation that has had to add 40 lawyers just to deal with that inspired piece of legislation. Add to this the drastically reduced job security of chief executives (now down to two years), and it’s not altogether surprising that they spend too little time on strategy. Sometimes you feel that finding time to even run the company competently on a day-to-day basis must be an achievement.

Ironically, it is the dramatic improvements in communications that has been responsible for turning "time" into an increasingly precious commodity.

We all know that the development from paper to fax to e-mail to mobile resulted in the possibility of instant communications, anywhere and any time. But why did the vast majority of execs decide "because I can I will" and make themselves contactable on a 24/7 basis? It is no wonder that a high proportion of them have no idea how to separate out what’s important from all this chaff – and I deliberately use the word "important" and not "urgent".

But at least they all have an excuse. They all have jobs to do and, ultimately, it involves creating wealth. What about EU officials? Do they even realise that they have created not just a free trade zone, but a strategy free zone? There are two huge threats rushing up on the EU, but no one seems to be looking in their wing mirror, let alone take avoiding action.

The first is China and its search for mineral resources to meet its growing needs. It is busy signing long-term agreements with those African nations rich in mineral resources and, to ensure it wins, it is offering substantial incentives – building dams, roads, railways, football stadia. In the past year alone, $10bn (£5.1bn) was spent.

Hence the headlines two weeks ago, "mining companies in talks to stop China excluding them from Africa". Like Western Europe, China is poor in natural resources, but unlike Europe it has a strategy to protect its key supplies which it is busy implementing. It is moving with awesome speed in a way that the Brits did in Victorian days to protect their interests.

But far more serious is the way in which Russia seems to be using its vast energy reserves as a weapon. We have witnessed Russia turning off the gas supplies to former satellites to "speed up" negotiations with them and the West’s supplies get disrupted as a byproduct.

Chris%20ingram%20largeGermany is negotiating long-term gas contracts with Russia, which will account for a sizeable proportion of Germany’s future energy needs. Others are sure to follow suit.

Let’s do some scenario planning. Russia looks to acquire some strategic assets from EU members. It buys British Gas because the UK doesn’t believe in strategic assets any more. In Germany their government resists, Russia waits for a cold winter, then turns off the gas to Germany and Germany submits. Newly-emboldened with the success of its energy weapon it claims it is strategically threatened by the EU and its "geographic encroachment" on Russia and demands that Romania and Bulgaria rejoin the new "Friends of Russia" bloc. There are huge protests, the gas is turned off across Europe and by extraordinary coincidence, Romania and Bulgaria are found to be in breach of some obscure EU rules that result in their rejection.

Yes, this is alarmist stuff and I haven’t even got to the part where Russia says, "It’s our turn to have Poland again". Although this is only playing the scenario planning game, hopefully it underlines the danger of being "too busy to think about strategy".

  • Chris Ingram is chief executive of the Ingram Partnership


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