Arvind Singhal: Fast strategy

MARKETMIND

In my last piece, I mentioned disruptions businesses face on account of changes in the business environment and therefore the need to be prepared for the same.

Continuing the same theme, I would like to state that businesses need to give a fresh look at the very paradigm of business strategy development and execution.

I would like to draw an analogy from a phenomenon named "fast fashion", popularised by the Inditex Group of Spain. Inditex is one of the most successful businesses in the world operating in the realm of textiles, clothing, and retail.

It is a 5-billion euro enterprise, and better known to the average international consumer by some of its retail brands like Zara and Massimo Dutti.

Essentially, Inditex was a pioneer in breaking several lost-established fashion retail business paradigms by investing in manufacturing and supply chain technology, as well as develop new business processes whereby it could track consumers' buying behavioural patterns almost real time and then have the appropriate merchandise delivered to the retail shelves within an unbelievable concept-to-retail time period ranging from two to five weeks.

By doing so, Inditex has managed to delight its millions of consumers for years, and in the process build a business that is one of the most profitable in its class.

Many have now tried to emulate the Inditex model, with varying degrees of success, including a relatively new US-based clothing chain named Forever 21, which has notched up retail revenues of over $640 million in quick time by using a similar strategy.

Among other common elements of these two businesses, the most surprising one is that Inditex still continues to manufacture largely in high-cost Spain while Forever 21 manufactures almost entirely in Southern California (and not in Mexico, the Caribbean, China or India, as most other US-based clothing companies do).

I am drawing upon this analogy to make the point that while even today, in a highly competitive world, there are many opportunities to create large, profitable businesses""in many cases the key to success could be to create business structures that are designed for "quick response".

In the Indian context, over the last 13 years, I have had the privilege of working with some of the most illustrious business groups and enterprises on a number of "strategy" projects.

However, in most situations, it has generally been a frustrating experience, with the majority of companies spending far too much time and resources in developing strategy and plan.

In many cases, by the time the strategy work has been completed, it is usually too late to go into execution of the same since the ground realities may have changed, leaving a much narrower window of opportunity to implement the idea/plan and milk the same before the consumer needs change or market conditions alter.

How can Indian companies change the way they strategise in real time and execute at the speed of light, so to say? They can start first by hitting the streets.

Far too many senior managers in India spend far too much time in the cocoon of their own offices or headquarters, engrossed in a repetitive sequence of meetings.

In their quest for professionalising, many Indian business families have gone to an extreme where the senior leadership spends time mostly in preparing budgets, reviewing performance against budgets, and then going back to fresh budgeting exercises each quarter (and in exceptional cases, even each month).

A more productive use of the senior management time would be to have them out traveling""in India and outside India""walking the streets, entering retail stores, attending trade conferences and shows, and generally meeting customers, suppliers, and thought leaders in their own industry as well as other industries similar to theirs.

Only by this process can companies get an insight into the current and emerging consumer/business trends and developing opportunities.

Once they have an idea of what is going on, and what the next hot trend might be, the companies should set up internal teams whose brief should be to strategise on "how to do it" rather than "whether to do it".

Further, the brief on "how to do it" must be given with respect to the dimension of time and scale""challenging the team (s) to focus on the "speed to market" and "speed to scale" rather than an academic exercise in market research and business plan development.

As far as scale is concerned, it is increasingly more important to think of global scale rather than the local Indian one even if it is an entry into a new sector or a new business.

In the coming years, most Indian businesses would be facing competition in India from global competitors. Many of them will have already achieved a scale that will give them a formidable advantage in India even if we factor in the relatively high import tariffs and other entry barriers.

Speed to market, and speed to scale itself can be achieved through relentless innovation that touches business processes, operating structures, and other business paradigms including partnerships and collaboration with other businesses and other entities.

It is difficult to develop a universal template for "fast strategy" that can be applied to all kinds of businesses. However, some of the tenets as mentioned above could be "universal" even in the Indian context.

There is no doubt in my mind that India offers extraordinary business opportunities today. Notwithstanding its much-talked- about deficiencies in infrastructure and the myriad challenges it faces, it is pulsating with energy.

Its young population is experimentative, and in the years to come, will have far more purchasing power than ever in the past. It needs new products and new services, and new solutions to deliver these products and services.

Companies that are quick to get off the mark will be the winners in the future!

arvind@ksa-technopak.com