A Definition of Strategy

The word “Strategy” is used quite liberally and can mean completely different things to different people. Even if you had to take one team of executives, there is likely to be more than one definition amongst them. So before having a conversation about strategy, it is very important to start by defining what strategy means for the team.

The definition that has worked very well for facilitating strategic conversations is this:

Strategy is direction and tactics is how one gets there.

So, in business, what sets direction? It is the scope of the business that determines the fundamental direction, made up of four components; offering, to whom, where and how. Any decision to change any of these is strategic and changes the direction of the business.

Mining in South Africa

By Jason Myhill

Something that is fresh on our minds is the violent ‘Lonmin conflict’. In my opinion there are two key uncertainties with their respective extremities that determine three scenarios for mining in South Africa and in particular, Platinum mining.

Uncertainty 1 (largely outside the control of mining companies) – mine workers act violently, vs mine workers act calmly

Uncertainty 2 (within the control of mining companies) – mining companies are not transparent, vs mining companies are transparent

The ‘game-board’ that gets created using these uncertainties shows that the companies and government hold the action cards that will determine the state of play at any given point, to their profit or peril.

Scenario 1 (best case) – mine workers act calmly AND mining companies are transparent (high road)
In this scenario mining companies support a transparent and accountable sharing of the facts regarding the take home salary and lifestyle conditions of mine workers thus making the facts clear and easy to resolve. This will result in the self correction of unacceptable employment and clearly separate the stars from the rogues. This will make the responsibility of government to control the license to operate a relatively straight forward task. Mine workers act calmly accepting that there is some recognition for their plight but also that they cannot call wolf thus keeping the workers honest in the process as well.
Scenario 2 (worst case) – mine workers act violently AND mining companies are not transparent (low road)
In this scenario the frustrations of mine workers is exacerbated and with time there comes a radical co-ordination of high numbers of powerfully armed mine workers. Mining companies start ‘barracking’ their head quarters and management offices with very tight security on site. Very few workers attend work, making production virtually impossible. Mining companies move there head quarters and management offices out of South Africa leaving the operations. Some mining companies pull out completely.
Scenario 3 (intermediate, slow and precarious case) – mine workers act calmly AND mining companies are not transparent (slow road)
In this scenario mining companies continue to defend their traditional position of existence and the mine workers take the government and mining companies to the highest court resulting in major lawsuits that force the rules of the game to change dramatically. One can clearly see that this could turn into scenario 2 very quickly.

Mining companies have the best control of the situation in scenario 1. A significant point to this is that the companies hold the power to change and actually to a large extent determine which scenario plays out.

The way in which mining companies are transparent I think is critical.

This is serious stuff for the nation, the perceptions of SA and our economy!

Health and Safety in Mining

A Unique Bond

Mining and health and safety are uniquely bound. One cannot have a discussion about mining without including the prevailing health and safety issues inherent in mining, whether in South Africa or across the globe. Mining is one of South Africa’s most fundamental economic industries and begs the obvious need, at minimum, to keep people alive in this work environment. Are South Africans able to adopt a lifestyle where they can live without unsafe living conditions, crime and violence? It seems that a life of safety and comfort without daily risks would render people immobile. From the moment one travels by taxi, or walks seven kilometers to school, to traveling by car on treacherous roads where drivers are impatient, prone to road rage and drunken driving, South Africans seem nonchalant about the sacredness of life and are quite happy to gamble with it. Does this affect the attitudes of mine workers towards their personal safety and that of their fellow workers? Has the tolerance to living dangerously rendered human life worthless? Although China has some horrible statistics, coal mining being the most deadly, the South African mines have a fatality and injury rate three times the equivalent in developed countries such as Canada and Australia. This is despite having health and safety legislation on a par with those countries. It seems acceptable and endemic to the South African culture to survive the perilous and fatal. South African mine workers seem prepared to take higher risks with their lives because of prevailing circumstances and the need to work and provide for their families. Do mine workers feel that they are cared for and valued as individuals by mining companies in South Africa? Perhaps there is more that can be done to improve conditions for mine workers so that the attitude of individual miners toward their own safety and the safety of their fellow workers is more positive, valued and accountable. Being healthy and safe is a lifestyle; the adoption of living in a particular way. Are mine workers empowered and authorized to make safe and healthy lifestyle decisions?

Competitive Selection

Picking your team 

The South African skill pool is currently affected by a major withdrawal of accomplished and talented people from within our borders to foreign capitals worldwide. The majority of these proficient experts leaving South Africa is not entirely a newsflash. With a growing economy the demand for skills is rising, placing even more pressure on the supply side. With this movement of experienced hands, the knowledge transfer becomes modest to non-existent. This creates an even wider cavity within South Africa’s specialised skill set and the world. Our language challenges and cultural multiplicity broaden this chasm even further. Whilst the objective of the BBBEE policy is to ensure that the upliftment of the economy is represented by a broader collection of people from within our nation, the policy should not be inaccurately rushed or forceably applied, as this will only be detrimental to the industry and the growing economic needs of South Africa. It is imperative to consider the desired growth of the country and our ability to stand up as a compelling nation on the global playing field where competitiveness and knowledge are key factors to success. In order to turn this situation to our favour, South African companies will turn their attention to a key driver in a winning strategy; competitive selection. This implies that the most highly skilled, trained and talented individuals will be selected. However, retaining expert individuals for our economic mobility will advocate a future escalation in innovative remuneration and higher wages.

Maturing in Business Strategy

Strategic Thinking

By Jason Myhill and Paul Skivington

There are four phases to maturing in strategic thinking for businesses:

1. Financial Budgeting 

Found in all companies and is the process of setting budgets and using these to monitor progress. 

2. Financial Forecasting 

Similar to the first phase except that it covers a longer period of time and includes some sort of issue identification and business unit and product/ service portfolio analysis. 

3. External Consideration 

This phase is dynamic, adaptive and sometimes surprising, and is in constant search of a more attractive portfolio mix. This involves external stakeholder analyses; customers, competitors and suppliers. 

4. Managing Strategically 

This takes careful and thorough linking of strategic planning to operational decision making, thus weaving the strategic planning and everyday management into a single, seamless process that is inseparable. There are five attributes to achieve this strategic management:

  1. A future strategic issues framework;
  2. Not limited to the top echelons;
  3. A series of feedback loops to negotiate trade offs among competing objectives;
  4. A high level performance review system focusing of key opportunities and threats; and
  5. A system to motivate and reward strategic thinking.

The following are four rules of strategic thinking:

  1. Seek hard, fact-based, logical information;
  2. Question every unquestioned assumption;
  3. Look for opportunities to win at less to no cost; and
  4. Thinking indirectly and unexpectedly.

A Dedicated Team

Phase 4 above implies a complete and continuous cycle of execution. This is very demanding on the CEO without a dedicated resource monitoring and facilitating the links. The leading person of this resource is referred to as the Chief Strategy Officer (CSO) who is able to focus and speed up decision making. The CSO builds world-class strategy development and execution capabilities within the company creating a department specifically for this purpose, hiring people with strong strategy-related skills and competencies. In the long term the role of the CSO can also be an effective succession planning tool. Whilst not a pure strategist, the CSO handles three critical tasks, namely:

  1. Articulating the strategy of the organisation, explaining how everyone’s work relates to this and engendering commitment to strategic planning;
  2. Driving, immediately and with a sense of urgency, the changes required to execute the strategy; and
  3. Ensuring that decisions being made throughout the organisation are aligned with the strategy.

The following are key characteristics of a good CSO:

  1. Someone extremely well trusted by the CEO;
  2. A star player;
  3. A jack of all trades;
  4. Someone comfortable with ambiguity;
  5. An influencer with the ability to communicate across all levels;
  6. A master at multitasking; and
  7. A doer.

The following are high level principles employed in executing strategy:

  1. Mind the time horizons; defend the core in the short term, build in the medium term and create viable options for the long term;
  2. Balance strategy formulation and execution;
  3. Exert influence appropriately (having the title helps); and
  4. Be smart in, and develop IT and HR smarts.

An Interpretation

Strategy may be interpreted as integrated actions that create a sustainable competitive advantage. This advantage sets the tone and thus the direction of the business. Risk is what may prevent or aid achieving the strategy. The role of the CSO and his/her team therefore is to facilitate a lifestyle that works towards a common strategy and manages the risks for the company within all the entities and across all the functions throughout the length and breadth of the business. The following philosophy of strategy is defined as an interpretation:

  • Strategy is direction and direction sets objectives;
  • Without objectives there are no risks;
  • Strategy and thus objectives without context will be disempowering and end up being bad strategy;
  • Strategy must rule in paths that fit our scope and rule out those that don’t;
  • Risks can either be positive (opportunities) or negative (threats);
  • Good strategy can turn into bad strategy by a change in the context and thus scenarios help explore alternative futures;
  • Similarly good risk management can be turned into bad risk management by a future change in perspective;
  • Bad tactics can destroy good strategy, but no tactic can remedy bad strategy;
  • Good strategy and risk control has a greater chance of being converted into good results if there are a set of measurable outcomes to which people can aspire; and
  • Strategy and risk control is about understanding what you do and don’t control, what is certain and uncertain about the future and knowing how to avoid unintended, and possibly tragic consequences.

The team dedicated to facilitating strategy across the company ensures that there is a unified approach, accountability and efficient implementation. We have found that the best people to paint scenarios and shape the strategic direction are those who are expected to implement the strategy. Dialogue is as much about gestures and facial expressions as it is about what people actually say and therefore it is necessary to engage in face-to-face conversations. It is also important to encourage dialogue that is as participative as possible since the best strategists in a team are often the last people who want to speak up. In order to test assumptions a method that involves questioning to stimulate the participants into a re-examination should be adopted. The tools to aid strategic decision making with regards to company scope includes components such as product range, product chain and in sourcing versus outsourcing.

A Construction Scenario Game Board

The early bird stays alive

Taking two principal variables affecting the construction industry, one largely within companies’ control, the on-time delivery of construction, and one, outside of any company’s control, inclement weather (climate change/ environmental impacts), a 2×2 matrix or scenario game board can be constructed. This matrix presents a best-case scenario, a worst-case scenario, as well as two intermediate scenarios. Here is the board on which companies can position themselves.

Environmental change is inevitable. There are two aspects to this uncertainty which determine how well prepared a company will be for any such scenario. One being how large this change in weather will be and another being, how accurate weather predictions are to know when this may occur. In order to help protect from the extreme detrimental affects which inclement weather will have on a business it is best to remain above the horizontal line at a minimum. Companies who consistently finish projects late throw away profit and will eventually close their doors.

Mobile Fechnology (future technology) and Marketing

Taking two principal variables affecting mobile fechnology and marketing, a relatively controllable uncertainty, unification / fragmentation, and the other less controllable, market satisfaction, a 2×2 matrix or scenario game board can be constructed. This matrix presents a best-case scenario, a worst-case scenario, as well as two intermediate scenarios. Here is the board with our current global position.

The opinion of the strategists at Dynaminds is that power trading with reference to mobile fechnology and marketing will be when advertising spend is instantaneously converted to cash. This may occur through the mobile web, direct messaging and individuals being able to purchase using there telephone account. The money will then be deducted at the click of a button without a credit card whether on a mobile pay-as-you-go or contract. This will satisfy the consumer’s insatiable appetite for instant gratification with products or services.