While the data clearly argues on behalf of tenuousness, it is clear that companies do not have to be short lived. Clearly, understanding the underpinnings of a company’s sustained success and how to improve it is of extreme interest to its management team—perhaps the one most important raison d’être for that team. It is also true that in today’s business environment, typified by the rate of globalization of business and the speed of technical innovation, static business practices likely will not be a long-lived formula for success. That is, success is determined by how well a company understands the changes taking place in its operating environment and how well it adapts to, or better, takes advantage of, the opportunities presented by those changes. All this would suggest that the most successful companies have in place strategic planning processes to continually address how they are performing, the reasons for that performance, and what must be done to remedy performance problems.

It is also important to mention at the outset that much of a company’s success derives from the efficiencies of its internal operations. Never has this been more forcefully demonstrated than by the success enjoyed by Japan in the automotive industry (and copier industry, and on and on) in the 1980s. The threat posed to U.S. dominance by Japan’s success had a profound impact on the U.S. approach to business. Benchmarking, outsourcing, partnering, and emphasis on being the low-cost producer all became the new operating norms for company executives. But in today’s business environment, while critically important, success in these areas still cannot assure long term growth because every one of these elements is directed at achieving parity with the industry’s best.

It stands to reason then, that long term success must come from finding and performing optimally in a unique market niche and providing a level of value to the customers in that niche unattainable from any other supplier. The purpose of this article is to address a few of the key factors of your company’s success—its need to 1) understand the changing operating environment and to translate those changes into upgraded performance, 2) continually think strategically, and 3) intensify focus on ever changing, ever-more demanding customer needs.

Thinking Strategically

The essence of strategic planning is answering four very simply posed questions that ought to be a mantra for today’s executive:

• Where are we?
• Where do we want to go?
• How do we get there?
• Did we do what we said we’d do?

While easy to ask, getting meaningful answers to these questions is anything but a trivial task, and many good books have been written on the subject. At the heart of the matter is getting a thorough assessment of the company’s environment, internal and external; building upon the company’s strengths; and remedying its weakness.

In a seminal article on the subject, Michael Porter in the Harvard Business Review reminds us that a company can outperform rivals only if it can establish a difference that it can preserve—a sustainable competitive advantage derived through strategic positioning. It must deliver greater value than its competitors to a customer, or create equivalent value at a lower cost. It must do these things in an environment of constant change. In fact, it would be fair to say that the single biggest reason companies fail is their inability to accommodate the requirements imposed by change —in their operations and in their approach to the marketplace. As de Geus says it, “a successful company is one that can learn effectively and learning means being prepared to accept continuous change.”

Connecting with the Customer

In any commercial enterprise the primary goal of the strategic decision-making process is focused on assuring, in every way possible, that the company is the supplier of choice to its chosen customer base. This can best be accomplished when the company never relaxes its attention from the following customer-based issues:

• Who are your customers?
• Where are they going?
• How are their needs changing?
• How well satisfied are they with your performance as a supplier?
• What other choices do these customers have with regard to your products?
• What must be done to assure that you are always the supplier of choice?

In addressing issues with regard to the customer it is important to understand, that they, too, are constantly wres-tling with the demons that would threaten their own survival. Efforts by the supplier are most effective when they are perceived by the customer as supporting their own business objectives. This is a circumstance that has intensified in recent years with new technology implementation and as the globalization of commerce dramatically upsets the competitive paradigm. No longer must customers compete effectively at home with domestic competitors, but they must do so in all major global markets against competitors from all nations.

Resulting from the new competitive dynamics are several practical guidelines for addressing the needs of today’s harried customer.

John Brandt of Industry Week summarizes them this way:
• Customers expect from all suppliers the level of service they receive from their best supplier.
• Customers want solutions to their requirements, not just products or services.
• Customers value information more highly than products or services.
• Customers expect your advice and assistance in running their businesses.
• Customers are everywhere, and expect you to be everywhere too.
• Customers are mobile and expect you to deliver product and information where they are.
• Customers insist that your company be structured around their needs.
• Customers expect process to decline.
• Customers expect integrated performance from your value chain.
It should be clear from this list that the successful suppliers in a competitive environment will be those who, consistent with their principal product focus, find ways to add value for their customers.

How to Do It

It should be clear by now, at least for companies in the business of selling a product, that a thorough knowledge of their customers—current and potential—is crucial to their success. It should also be clear that companies don’t last long by running their operations each day the same way they ran them the previous day. Companies succeed when they can both accommodate the unexpected and raise the level of their current performance. These are best accomplished through an orderly process of continuous improvement in all its operations, ever-motivated by a need to raise the level of customer satisfaction. Thus improving customer satisfaction can be said to be central to the purpose of a meaningful strategic planning process.

It is likely true that all companies do plan strategically, even if the only plan that exists is carried in the head of its CEO! Obviously, however, those organizations that harness the contributions of all participants in the company will have a distinct advantage over those that don’t. The question, then, is how can an organization set up an enterprise-wide, customer motivated planning process that meets its needs?

Exploring how to do this is not the purpose of this article, but readers interested in doing so are directed to a number of resources to help get them started along the way. Highly recommended is Michael Porter’s book, Competitive Strategy, a seminal volume on the subject published in 1980 by the Free Press. Porter followed this book up with at least two articles that appeared in the Harvard Business Review, “What is Strategy?” (Nov.-Dec. 1996) and “Strategy and the Internet” (March 2001). It wouldn’t take too long of a search to find countless numbers of other good books on the subject.

With regard to how to better attune the company to the needs of its customers, the situation is much the same. Again, there are many good references on the subject. One of the best ways, however, to begin making immediate improvements in customer satisfaction is to consider the criteria of the National Baldrige Award. The purpose of the Baldrige Award is to teach companies how to continuously improve performance and ever-improve their value to customers—and to motivate them to do so. A complete write-up of this extremely useful tool can be found on the NIST (National Institute of Standards and Technology) Web site.

Corporate success is not a random walk. As Benjamin Franklin stated, “By failing to prepare, you are preparing to fail.” Good strategic plans, well implemented, will straighten out your path to the future.  //

Copyright © ASTM, 2001