THE MANILA TIMES
Business Times p.B5
Monday, November 3, 2003
LEARNING AND INNOVATION
By Moje Ramos-Aquino
Journey on entrepreneurship: Making big decisions
In his book Strategy Pure & Simple, Michel Robert wrote: “Once a company’s management understands which driving force is at the root of the company’s strategy, decisions about the types of products, markets and users that will bring competitive advantage are made more successfully.”
You can’t be and you can’t sell everything to all possible markets and users at the same time. There is no Jack of all-trade company. Even variety stores don’t carry everything. If they carry a lot of things, they are still known for one particular line of products or service. Otherwise, they are carrying a lot of non-moving goods and a huge inventory, which represents sank costs and losses.
Even variety shows on television and radio are focused on a certain aspect of the show, mostly the host/s or a certain attractive segment that appeal to most fans. That is why variety shows try to present a single theme for its regular presentations. They can’t be all things to all fans. David Letterman is the single, most important factor in the success of The Late Show. His guests add spice and glitter to his repertoire of gigs. People will continue to watch Dave with or without the Top Ten List. Dave provides the strategic heartbeat of the show and everything about the show revolves around him. Without him, there is no Late Show.
This is what is termed strategic driver that establishes the parameters by which critical decisions are made. Over time this driver shapes the landscape where the business operates and determines the identity of the organization. We have discussed eight such most important strategies. We are down to two as we move on our Journey on Entrepreneurship. These last two are return/profit driven strategy and size/growth-driven strategy.
All business organizations are organized for profit but they are not necessarily driven by profit. Even so-called nonprofit organizations need to realize some profits to cover expenses for their day-to-day operation and their projects—especially these days when traditional fund sources are scarce, if not totally unavailable. However, although these organizations desire profit, they do not necessarily exist for profit only.
The Rotary Foundation for Soup Kitchen, Food Bank and Training Center managed by Judge Lore Veneracion under the auspices of the Rotary Club of Quezon City North is reeling under the rising cost of operations and increasing number of recipients for their charities. There are no new donations coming in. The Foundation is raising funds through its various money-making ventures like water filtration, bakery, candle-making, cafeteria and catering services, etc. (If you need any of these products and services for your Christmas give-aways or parties, please call them at 939-8288.)
There is no mistaking, though, that conglomerates or holding companies are there to increase shareholders’ value. The only reason it does business is to earn profit. They form, buy or sell subsidiaries on the basis of return or profit. They even go into unrelated business and acquisition binges for the money. Their driving force is purely profit. Financial institutions such as banks, investment houses, lending companies and pawnshops are similarly driven.
Finally, some businesses are driven by size or growth strategy. Simply for growth’s sake or for economies of scale, they expand and diversify. They probably coined buzzwords such as lateral diversification and backward integration. Sometimes these activities are done without regard for financial gains. Big is beautiful is their motto.
At this point, maybe you have been through several ways of assessing opportunities for your business. You have revisited your goals and objectives for the coming years in your annual planning workshop. You have reviewed the performance of your operating and administrative units. If you are a small enterprise, you review your overall performance.
Having done all that, if you are still finding it difficult to make those big decisions about your products, markets and users, then, you have no strategy in the first place and the future of your enterprise is nowhere in sight.
Moje Ramos-Aquino is the president of Paradigms & Paradoxes Corp. and assists companies in their strategic thinking and planning. Her email is email@example.com