The category strategy is your plan to create value for your company through the specific sourcing category. It’s after analyzing the supply market that you will identify and select the best scenarios to sustain company’s competitive advantage.
Having a clear strategy looks already like a great achievement. If this strategy is approved by the key decisions makers your way forward is pretty robust and promising.
Therefore why does strategy execution not deliver the expected results? What is this common mistake that buyers do?
I call it ”beat a retreat”. What does it mean? Instead of pursuing the execution of a strategic activity with the final goal in mind you stop all development after the first problem arises.
Strategy is a long term plan of selected set of activities. The question is not any longer whether or not we go there but how do we go there. If a selected activity is not producing the expected results after the first trial for example, the question is how to make it effective, and not challenge the initial rationale and therefore give up the potential added value.
Let’s take a typical example.
Ater analyzing the suppliers cost structure it becomes quite clear that Eastern Europe suppliers could deliver a product with a 20% price reduction.
Everyone buys the ideas of developing a new source from Eastern Europe with a great added value at stake. But the first delivery shows administration problems and the quality is below your standards. This is where the ”back a retreat” turns on. The people involved will invoke the inability of the supplier to live up with the expected standards. This inability is so deeply rooted in the country’s culture that there is no way to overcome the problems.
Yet another example related to innovation.
You have been effective in finding a start up that proposes something disruptive that when it is in place in your organisation it will move you to the world class level you want to reach.
But surprisingly this new solution is not yet bullet proof and would still need development. The unsatisfied users have a fantastic excuse for not changing their current way of working. Now your dream is gone.
To be honest the first hint i got about this common mistake was from an engineer who wanted to change a critical compound to decrease the production cost.
After the first trial the conclusions from supervisor were quite clear; ”the quality is not there so we have to be back to previous solution” and I’ll always remember what the engineer asked ”what’s the quality issue?” The supervisor responded the color and the engineer to say ”so we have a color issue, let’s solve it!”
The strategy is a plan to reach your goal. Your goal is your compass, your final destination. If you abandon it it means that you have two problems. First your contribution to company’s competitive advantage has disappeared and second as a leader you did not make the change happen. So don’t beat a retreat after the first obstacle, keep going and stay neutral when analyzing the issues popping up on the way to your final goal. Therefore the pre-work to sell your strategy to the main stakeholders and get their genuine commitment to your long term goal is crucial.
These guys will be fully aware of the final destination, see there a great opportunity to create benefits for he whole company but as well for their own department. When executing the activities planned in the strategy they will see the problems as obstacles to overcome in order to reach the final goal and not excuses to come back to previous solution.