6 thoughts on business strategy in changing times

In the time of activist investors, unlikely M&A pairings, business changes driven by digital transformation and more, it's no surprise when high-performing leaders take a step back to gain clarity and reassess their own strategic goals.

To brush up on how bright business minds think about strategy today, Scott Becker, partner with McGuireWoods and publisher of Becker's Healthcare, hosted a Q&A webinar with four leaders to gather their thoughts on which companies are executing strategies well and what they've found most effective in their respective lines of work when it comes to executing business plans.
Below are six points from their discussion, edited lightly for length and clarity. The webinar in full is accessible here.
Featured panelists
    - Chris Bishop, CEO, Regent Surgical Health
    - Geoffrey Cockrell, Partner, McGuireWoods
    - Barry Tanner, CEO, Physicians Endoscopy
    - Amber McGraw Walsh, Partner, McGuireWoods
    - Moderated by: Scott Becker, Partner, McGuireWoods
1. Don't underestimate the power of clarity when it comes to business strategy. When asked to name a business strategy that's easy to follow, Mr. Tanner pointed to Amazon. The Seattle-based company evolved from an online purveyor of books to one of the most successful companies in the history of the stock market. In July, Amazon's stock market value surpassed $500 billion. Investors who purchased $1,000 in Amazon stock in July 2002 would have more than $83,000 (in 2002 dollars) today.
Amazon may not seem like a simple company on paper. Consider how many verticals it plays in; how CEO Jeff Bezos has diversified his investments and entrepreneurial pursuits; and how difficult the company is to categorize. Yet Mr. Tanner attributes Amazon's success to a rather straightforward goal and strategic clarity.
"Look at what [CEO Jeff] Bezos has been able to achieve by really focusing his entire strategy on, I think, becoming the most efficient and broadest distribution and warehousing company in the entire world," said Mr. Tanner. "For years and years, I watched ... him plow money back into focusing on strategy and sort of not even worrying or seemingly caring about the bottom line, but staying focused on, 'How do I build this huge distribution network?' That kind of a strategy — it's simple, focused, easy to understand. I think that's part of why it's achieved unbelievable success."
Ms. Walsh summed up a simple rule for leaders when it comes to strategic clarity: "If it's not clear to the whole team, then it is a murky strategy," she said. "We have to have the same vision and it has to be clearly communicated."
2. Allocate resources and position people with an eye toward strategic priorities. Once a start-up airline servicing only Dallas, Houston and San Antonio, Southwest now serves 101 U.S. cities and eight countries and has defied the trajectory of every other major airline in several ways. First of all, Southwest is the only major airline that has not filed for Chapter 11 bankruptcy. For 44 straight years, the airline has recorded positive net income.
Mr. Bishop attributed the company's success to its efficiency, while Ms. Walsh pointed to its distinct company culture as a driver of its popularity.
"They are the no-frill airline," said Mr. Bishop. "Their goal is to very efficiently and with a smile deliver their customers from point A to point B, which is essentially what you pay for — quality service and on-time arrivals. Just as a surgery center thinks of efficiency as turnaround time, Southwest has really embodied the efficiency concept — let's keep it simple, let's keep it on time and let's keep [delivering] high-quality service to the customer." 
As an example of the efficiency Mr. Bishop mentioned, Southwest is the only major airline that primarily flies passengers on one basic type of plane. Of its roughly 700 planes, the majority are two different varieties of Boeing 737s — the 737-700 and the 737-800. Using a standard plane model results in big savings in pilot training and maintenance.
Ms. Walsh said Southwest not only has an attractive strategy, but the company owns it. The airline is known for its snappy, colorful and lighthearted messaging, and Founder Herb Kelleher was known for encouraging employees to show their personalities.
"It is unabashed. They came out of the gate, so to speak, and when they came on the national scene everyone knew what they were trying to be," said Ms. Walsh. "They were immediately differentiating themselves. They were not just attempting to differentiate themselves, but they were doing it well and owning it in a way that is very tongue-in-cheek compared to the rest of the industry. The fact that two of the three of us choose Southwest because their strategy is so clear and also has been so effective — we know how they've performed vis-à-vis their competitors."  
3. Relevance is the ultimate competitive edge. In an increasingly digitized and consolidated world, reputation and recognition is of equal value to businesses as traditional market share. As a result, many leaders are focusing their energy on becoming the best performer in niche areas to remain top of mind with their audience.
"We are clearly not big enough to say we're dominant in any one particular geography," said Mr. Tanner, "but what we're trying to focus on strategically to achieve that vision is to become the absolute best at all of the things important to the success of the gastroenterologist. We can deliver the day-to-day success and do it very efficiently, such as billing, collections, scheduling, payer contracting, human resources and IT. We've tried to focus on — How do we become the best within all of those functional areas so we can achieve that vision of being the go-to company? When people think, 'As a gastroenterologist, who can help us?', we want them to think Physicians Endoscopy first." 
4. The caliber of a leadership team matters just as much, if not more, than the firm's dominance. For many businesses, market or niche dominance is a luxury. These companies are not the No. 1 or No. 2 players in their market or sector. When this is the case, the men and women who hold leadership positions in these companies are held under a granular lens with greater scrutiny of their character, judgment and abilities compared to other leaders.
"More often I see investors principally concerned about the quality of the management people," said Mr. Cockrell. "They can live without market dominance and a niche, but they cannot live without high-caliber people."
5. Abandoning a strategy is not a sign of weakness. Just because a business abandons a strategy does not mean it abandons its vision or mission — the company may just need to take a different route to get there. The need to end a pursuit may be clear, but determining how or when to do so can prove difficult. One of the most daunting parts of deciding whether to abandon a strategy is determining how to measure effectiveness of the strategy in question. Ms. Walsh said measuring strategic effectiveness in the legal world may take more time than in other industries, where leaders must assess effectiveness faster. "Abandonment is absolutely critical, it just may not be one-size-fits-all for all different companies in all industries," she said.    
6. Do not obsess over crafting the perfect strategy. "Even in this quickly changing world of different converging forces and changes, in healthcare and outside of healthcare, many of you have focused less on the perfect strategy and more on picking a clear strategy, executing that strategy and staying with it very clearly until it bears fruit," said Mr. Becker. He pointed out that the panelists repeatedly mentioned "tweaks" they made to their strategies — not overhauls or redesigns — as they remained attuned to the business environment.
It's healthy to take strategy with a grain of salt. There is no such thing as the perfect strategy — a concept the highest performing leaders and executives know well. What's more, they understand that strategy is merely a theory unless the entire company understands and executes it. Therefore, the bulk of time should be spent on the latter parts of the equation. 

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