2.8.1 Case study: Operational versus strategic thinking
Read this short case study and think about the main issues facing Fiona.
Case study: Managing everything – and nothing
Fiona was excited when her father announced that he was going to retire and that she was to take over as general manager of the small chain of off-licences (retail outlets for alcoholic drinks) that he had founded. She had lots of ideas about expanding the business, the most important of which was the establishment of a wholesale business supplying clubs and restaurants.
The new business was successful – she had identified a useful market niche – and after a year its sales were better than forecast. But it was not yet making money, largely because the operating costs were above budget. It was essential to introduce an efficient stock control system, and she set about finding a suitable software package. There were a number of teething problems – it was constantly crashing and she was the only one able to operate it, so it took a lot of her time. The company needed to recruit a new driver and a new order clerk: it was important to get the right people, but interviewing and agreeing terms seemed to go on forever.
One of her ideas had been to provide an own-label service for restaurants, so that they could serve wine with their name on it, and this had proved very popular. She enjoyed designing the labels with her software package, which she tended to do in the evenings. It was also necessary to remove all the original labels and apply new ones – and they simply did not have the labour to do this, so she found herself spending most of her weekends labelling wine bottles.
The wholesale business had introduced a number of new customers, several of whom proved to be bad payers, so she was spending an increasing amount of time chasing debts.
Their price list had not changed for three years, and she knew that a number of their products were now significantly underpriced, but she simply had no time to update the list. And the new business was still not delivering a profit.
You can see that Fiona is focused on operational tasks. She is busy operating and sorting the stock control software and designing, removing and sticking labels. She is thinking operationally and not strategically. She is working ‘in’ the business rather than ‘on’ it. Strategic thinking would enable her to look at the complete picture and decide which activities lead to delivery of the company’s strategy. She would be able to see which processes could be combined or even abandoned. She would be able to allocate resources more effectively (more about resources in 4 Capabilities and resources), which would improve the chances of success for the company.
Setting some regular time aside to take a step back and reflect on your business will be very difficult at times but also very important to ensure you allow yourself time for some strategic thinking. Working with a mentor or advisor can help you do this. Often it is the business owners who feel they have the least time and the least need to have a mentor, who most need time and a mentor!
There are many times when there are just not enough hours in the day, particularly at the start of a new business when you seem to be doing everything yourself. Time spent with an external experienced advisor or mentor can be likened to having a non-executive director for a larger company. They can see issues with fresh eyes and can help you consider the longer term view to get through the short-term operational pressures. They can also be a listening ear, a support and trusted friend.