Barrister Dr. Jimoh Ibrahim, CFR |
The problem
of many organisations lies in the lack of intellectual capacity of the ‘General
as a Strategist.’ This manifests in the form of weak knowledge of what the
organisation needs, which is beyond the usual ‘as the spirit directs’ approach.
The fact remains that basic sound knowledge of management principles cannot be
compromised as a basic requirement. How does one explain a ‘General as a
Strategist’ not knowing the market he intends to play in? For instance, you see
a newspaper that is targeting the mass market publishing hard articles and
devoting many pages to intellectual/academic concerns. Such issues do not add
significant benefit to the mass market.
How will
such a paper fare in the market? The newspaper will lose market share very
quickly. The more poor people buy the newspaper, the more they will discover
that the articles are of no benefit to them. With time, they will drop the
newspaper. And when the intellectuals buy the newspaper, they are also not
comfortable with it, as there are just a handful of articles in which they are
interested.
The
strategic direction is clear and all that the ‘General as a Strategist’ needs
to do is to continue to upgrade his knowledge of the specific market and add
value. Strategic alignment will be very difficult if he changes market focus.
There is no
doubting the fact that First Bank of
Nigeria Limited is a mass market bank. And for a century, they have been
focusing on the mass market. First Bank never takes private banking as a
priority over and above their market focus. They have gained a large share of
the mass market. They develop products that the market will need and they move
on with excellent results.
Most new
generation banks do not know which of the markets they want to focus on. Many
of them want to focus on the mass market, with large branches of the bank all
over Nigeria. But in practice, they largely focus on private banking, which is
the end market of the rich, a clear case of cross purpose in strategic
direction. How does one explain a loan of more than the entire shareholders
fund given to one individual, when it is expected that such large sum of money
should have been given to many customers to support the idea of the mass
market, if that is the strategic focus.
It is so sad
that when you ask a CEO which market he is focusing on, he may often say, ‘I
focus on anywhere money will come from!’ Regrettably, those short term benefits
will not sustain the organisation. In a telephone hand set business, if the
company is focusing on the mass market, it is very important to address the
issue of price. For instance, of what significance is a telephone with features
like YouTube, Facebook, or Internet connectivity to an illiterate market woman
who wants a telephone? All of these will add to the price. And what a market
woman needs is a cheap phone to make her calls!
The
strategic direction for the ‘General as Strategist’ is to ensure adequate
knowledge of the market. You cannot develop a market that you are not expected
to focus on. The missing link therefore is the lack of appropriate
understanding of the market for the products of the company or the alignment of
cross markets. For instance, the Louis
Vuitton brand is meant for the end market of the rich. Their products mean
luxury! However, those behind the brand must think very fast, for the poor also
love luxury! Their only obstacle is price. But makers of fake Louis Vuitton
products can help the poor out of this dilemma. And once the rich begin to see
Louis Vuitton products with the poor, the brand may lose the end market of the
rich. Such an occurrence may create competitive advantage for the competitors
of Louis Vuitton, as the fake products may sell more than the original.
The greatest
challenge to any CEO today is the market. Market issues include price, quality,
competitive advantage, market share, technology, people and change. Nothing is
predictable in the technology market. Before you can conclude your strategic
road map, a new product that could put you on permanent disadvantage is
launched by the competitors. Oftentimes, you simply do not have an answer to a
competitor’s challenge.
Customer
loyalty cannot be taken for granted. The challenge for the ‘General as
Strategist’ in respect of knowledge development cannot be taken for granted. To
many customers, innovation is important for retention. In my view, if
innovation must be relevant, it has to be an accelerated innovation. But the
problem here is lack of knowledge of what to do on the part of the CEO.
How did the
CEO of Blackberry react to the
accelerated innovation introduced by Samsung?
They had no answer! Blackberry was offered for sale! How did Nokia react to the
same innovation of Samsung? They simply changed their market, moved to the
emerging market of Nigeria and accepted low market share in developed countries
of Europe and America, since they are at competitive disadvantage. And when
Samsung penetrated the emerging market of Nigeria by increasing market share,
what did Nokia do? Simply run away to no market!
In practice
and more particularly in the financial service industry, when a CEO has no
answer for a competitive innovation, he simply embarks on de-marketing of the
competitor. Again this approach is not sustainable. The key issue in understanding
where to play in the market is cost of operation. A CEO cannot charge a low
price for products meant for the end market, so also will it be impossible to
charge a higher price for products meant for the mass market. In the middle
market, both high and low prices are acceptable.
The CEO of Range Rover almost sent the company
into bankruptcy when he attempted to do a radical sales transformation of the
product some years back. He introduced a new set of Range Rover for the mass
market, while keeping the existing product for the end market, so that it will
be possible to have a Range Rover of twenty thousand dollars for the mass
market, while the superior Range Rover will remain for the end market as
luxury!
Regrettably,
he produced over one hundred thousand of such cars for the mass market. The end
market reacted by shifting to the competitor, ‘The Lexus’ and in no time, the
legacy of Range Rover was on the decline! The Board quickly met, sacked the CEO
and destroyed the entire vehicles meant for the mass market, so as to retain
the end market for the sustenance of their legacy.
The lesson
here is not to jump over markets. Once a decision is taken about which market
to operate in, the next thing is to keep that market. And how to do that
largely depends on knowledge of how to earn customer loyalty. The ‘General as
Strategist’ must be on top of such matters (NationalMirror)
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