Strategy at Work: Teachable Moments from The News - April 6, 2025 - (Issue # 46)
Tariff's and Turmoil – A Reset of Orthodox & Maybe Competitive Advantage
Photo by Aurel Manea at Freerangestock.com
Tariff’s and Turmoil – A Reset of Orthodox & Maybe Competitive Advantage
Tariff’s and Turmoil have consumed the business of business over the past week (or a bit longer). The reality that we have always faced is that external shocks can dramatically impact the strategic approach an organization is pursuing. Every organization (for-profit, non-profit, governmental, etc.) is consumed by the impact of this.
The ‘good news’ (okay… maybe not good news… the ‘not as bad news’) is that when an external shock strikes an industry, it generally strikes every competitor in that industry. Over the next few months, we will see a number of executives blame these ‘shocks’ as the reason their organization is performing more poorly than their competitors. This is a false narrative. Not that it won’t impact performance, but that because of X, their organization is performing more poorly than their competitors.
Strategy is RELATIVE!
Orthodox expectations in an industry are typically assigned to and in service of customers. However, orthodox conditions / expectations also relate to the business environment that an organization operates within. Once a significant external shock has occurred (as we have seen recently), the re-evaluation of the strategy MUST take place.
Generally, once an organization has developed their strategy (that is):
1) A set of orthodox expectations that must be brought up to industry median;
2) A set of compelling competitive advantages; and
3) The understanding & approach to the markets that will enable those advantages to have the highest opportunity for success, then
Strategists would like to see an organization pursue this approach as long as is possible. Don’t change your strategy every year (Egad). Move all three elements as far as possible. Keep your employees focused on these – they take time – they take employee momentum.
When should the leadership CONSIDER changing the ‘strategy’ of the organization? It should change only when it is forced to do so.
· When there is an external shock that negates one or more of the competitive advantages or when an external shock makes an orthodox element no longer applicable:
o When a new competitor (or an established competitor) does something radically different
o A significant regulatory or legal change
o Armed conflicts that impact established or planned markets
o Dramatic changes in Consumer Behavior
o Significant potential supply-line alterations
o A Pandemic
o Others that can be categorized in a Scenario Planning Approach (generally a wider look)
Under these conditions, the executive team should evaluate the impact and decide whether or not it negates their competitive advantages (remember – that is relative to their competitors).
If it does not, then then approach to these shocks should be incremental, reassuring, and oriented toward mitigating impacts.
If it negates one or more of the organization’s competitive advantages, then an immediate ‘all hands on deck’ approach needs to be undertaken to reset the organization.
The best organizational leaders have developed plans for a wide variety of contingencies.
The big questions for investors, customers, employees, suppliers, etc. are:
· How Well Has the Leadership Prepared for the current Scenario?
· What Decisions Have Been Made over the Past Few Years that Enable this Organization to outperform its competitors?
· Is the Leadership in ‘Panic’ Mode or are they executing to a ‘Playbook’
These are the elements that really define the difference between an Executive Team that is simply collecting money for themselves – making small, incremental decisions that focus on minutia AND an Executive Team that is Leading their Organization.
Will be quite the analysis going forward. In every industry we will see those organizations that significantly outperform their competitors and those that blame ‘circumstances’ for their poor relative performance.
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Please let me know (cbamford@bamfordassociates.com) about any issues or (even better) recommendations you have for improving the value of this newsletter to you. If you see a news story about a company strategy that looks fantastic or terrible, please reach out to me.