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Strategic Direction and Challenges

Ericsson is placing its bets in a number of areas: it’s fair to say that it is going for breadth in some carefully chosen buckets. Instead of narrowing its focus, it has decided to concentrate on a number of pillars, each of which will support and sustain its business.

At the same time, some other of the major vendors were divesting themselves of areas that they perceived as being non-core, narrowing focus, betting on excellence in a concentrated direction to carry them to the next phase of their development.

The two approaches could be construed as being almost diametrically opposed, yet each has been the outcome of a review of the pressures, threats and opportunities that present themselves to each organisation. This decision making process is fundamental to any business. At this point, it’s too early to tell who is right. We can say that some of Ericsson’s competitors have had their decisions thrust upon them, while it appears that Ericsson is moving from a position of relative strength, but in each case, decisions – often difficult ones – had to be made.

This is the essence of strategy. There are many textbooks that describe how to arrive at strategic decisions and indeed reinforce the importance of doing so, but the important thing is to make a choice, support and sustain it and then, which is the vital next step, adjust that strategy in the light of events.

Failure to make those choices and failure to account for all the factors leads, inevitably to disaster – witness HMV, Jessops, Blockbuster and the like, to name but a few recent examples from the British high street. Retrospect is a wonderful thing and it’s easy to criticise at this point in time. We cannot know what lies ahead, but it is beholden upon all businesses to make difficult decisions. The trick is to make them positively – there are many examples of different, often contrasting approaches bringing success to organisations. What’s clear from the losers is that any adjustment to the changing realities came far, far too late.

Whatever strategy is determined, it’s critical that it remains subject to rigorous testing. Is it still valid two quarters hence? What has happened internally or externally? Are the goals being met? And, if not, what are you going to do about it.

Strategy is indeed difficult, but the point is to act and then to remember that it is not fixed in stone, but rather something that needs adjustment, evaluation, measuring. Scientific method has many lessons, but the Popperian view has it that one creates a hypothesis and tests it. The same rigour must be applied to strategy – the question of how you test and sustain that hypothesis is critical for any business, from the largest to the smallest. Plenty of organisations get strategy wrong, but even worse seems to be doing nothing – at least if you are actively thinking about things, you can try to change course before it’s too late.