Understanding the importance of strategy in an era of disruptive change

Professor Pieter Klaas Jagersma is a leading authority on global strategy. Once the youngest chair professor ever in the Netherlands (ABN AMRO Professor of International Business at Nyenrode), he is a private equity and hedge fund manager, supervisory board member at an array of international companies and family offices, and professor of business administration at various universities and business schools and lectures in international business, strategy, and alternative investments. He is the author of 27 books, over 500 research reports, and many scientific, management, and newspaper articles (over 400).

Jagersma is one of the many top faculty at our International Veterinary MBA. I have had the opportunity to be in his classes for three days with 10 human medicine specialists and doctors and would like to share some of his ideas and philosophies on strategy with you. This includes some of the content of one of his books called “Mondiaal Management”. Unfortunately, this is only available in the Dutch language but perhaps this blog can serve as a partial excerpt of the content.

At first sight, having a full module on global strategy might look a bit over the top for the veterinary profession, but every company, even at a local level, needs to develop an idea on which direction to take. This is what he calls Strategic Management or Strategy. During this module he first takes the students on a trip through international companies and how they compete in an era of disruptive change by explaining the “Economic Zone of Death” for managers, professionals and entrepreneurs. This is the time between when companies produce distinctive products, innovate, provide customer intimacy and have mainly organic growth and the situation where products are more standardized, there is a lot of imitation, operational excellence becomes important, efficiency and inorganic growth (corporatization or listed firms). In this “economic zone of death” companies are stuck when they have no strategy or decisive power. Business margins become lower because of the economies of scale and the pressure from other companies.  By analyzing success and failure of well-known local and global companies he painted the right pathway to understand how to “crack the code” of success for any business, including a veterinary company and how to be successful again.

This really resonated with me, and I could picture a lot of veterinary practices that now are trapped in this “zone of death”. The veterinary playing field is rapidly changing. Larger, multinational companies are taking over practices faster than anybody anticipated. This creates momentum where some practice owners become paralyzed and others make quick decisions.  Our profession is not unique in this respect and there is a lot to learn from other industries.

One of the most important critical success factors is the right timing, whether it’s a local or a global company. The veterinary world is getting more and more global and there are opportunities, but also threats to our profession. Doing nothing is not an option and very often you are too late with change. For the transition out of this trap, the profession needs the right skills to move forward.

Basic requirements for successful Strategic Management are:

1) Focus on Customer Needs, think “outside-in” and ask what do customers need and value.

2) Fit between will and skill, skills can be learned, will is more in people’s genes. In other words, are the people in the organization have the will to change their direction

3) Fitness of Front and Back Office. Do you have the right people in place with the right skills to move in the new direction of the company?

4) Flexibility of the Total Organization since change will always happen and you must be able to anticipate.

All of this is easier said then done and it takes systematic thinking throughout the whole process of the strategy formulation. First the environment must be scanned, both externally (how is Brexit going to change your playing field) and internally (do we have the right people on the bus). What are the forces at work that are going to influence your practice in the near future? How certain is it that these are going to influence your company and how much impact will they have on the success of your business? Building possible scenarios is the next logical step and from there you can start making strategic decisions.

Who you are now and what your business/practice is, is your mission, but the further horizon, the place where you want to be in the future, where you are heading, is your vison. Objectives are soft/qualitative translations of your vision whereas goals are the hard, quantitative translation of your vision. Finally, strategy is how we get there, the actions!

There are different organizational styles to get your practice or company to the envisioned future i.e. implement the strategy. There are many roads leading to Rome.  The two most extremes are the strategic planning road, where the planning is very influential, and the financial targets are more flexible, and the other is the financial control road where planning is less influential, and financial control is key.

What kind of company you want to be defines your organizational style and will also resonate in your company culture and core values.

Working for three days with a group of colleagues on developing a survival strategy for a company that is in the “economic zone of death” and presenting your findings to your peers makes all these terms come to life. Professor Pieter Klaas Jagersma can translate his academic, entrepreneurial, and other business experiences into interactive education. He leads the students on a “business trip” that for sure will have an impact on the outcome of their own practices and businesses. In this he takes a holistic approach that helps you to understand and comprehend the complexity of strategy development and at the same time provides you tools to deal with it. The veterinary profession can learn a lot from other industries since we are not as unique as we think.

Joop Loomans

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