A CEO’s Guide to Managing Strategic Decisions
As the leaders of organizations, chief executives wear many hats — influencer, inspirer, consultant, arbiter, among many others. Perhaps none is more important than strategic decision maker. When tough decisions need to be made, the CEO is ultimately the person making the call — and the one who gets the glory or blame depending on how those decisions turn out.
But what do you do when there’s seemingly no wrong answer? How do you decide where to focus, whether it's a technology investment, C-suite hire, setting corporate policy or one of a hundred other items on your to-do list? Picking the better of two options — even if it’s only by the slightest of margin — can often be the difference between creating tremendous value or far-reaching negative consequences.
A recent article that appeared in the Harvard Business Review offered advice for CEOs on how to better manage five specific tensions in today’s complex global business environment. They are as follows:
1. Disruptive innovation vs. leveraging a company’s core strengths: When confronted with disruptive technologies, many companies fail to align digital strategies with their core strategies. By definition, disruptive innovation challenges a company’s core capabilities. CEOs must possess the technological fluency and open-mindedness to understand fully the disruptions they face, and decide which legacy capabilities are core to the future and which aren’t — all at the speed of innovation.
2. Pursuing cost leadership vs. differentiating for value: Manage costs or add value? This is a constant struggle for leaders, especially in the rapidly evolving retail industry. Pure cost-based strategies are now rarely viable because the forces of automated production, mass customization, global supply chains, direct channels, networked devices, etc., have permanently established a new base level for both manufacturing and total cost of ownership.
However, a highly differentiated offering is no longer a guarantee of long-term value creation. Diminishing cycle times, rapidly changing intellectual property and fast R&D allow your competitors to increase market share on any breakthrough, so even the most valuable innovations can see their price premium drop rapidly.
You must constantly balance these cost/value pressures, quickly re-evaluating strategic priorities, including where to participate in the industry value chain in order to remain competitive and profitable.
3. Capturing international market share vs. managing risk: The global economy and the growth of e-commerce have presented a tremendous opportunity for retailers willing to look beyond their domestic borders for future growth. But that opportunity doesn’t come without risk. CEOs must be agile and adaptive, operating from a mind-set of continual anticipation and appraisal in order to make timely investment decisions and oversee speedy execution.
4. Responding rapidly to opportunity vs. ensuring high quality: The mandate to identify, assess and seize opportunities rapidly is indisputable, but it cannot be achieved at the expense of quality and your brand’s reputation. It’s critical to balance time-to-market with insistence on excellence — the loyalty of your customers (both new and existing) depends on it.
5. Recruiting new talent versus integrating a cohesive team: Increasingly, all businesses need access to technology talent, thereby ensuring that the pace of innovation and its subsequent implementation are sustained. However, acquiring adequate technology talent continues to challenge CEOs globally because their legacy teams often lack the know-how to effectively search the most fruitful channels.
In addition to hiring tech-savvy talent, CEOs are also tasked with creating a cohesive, high-performance culture. Integrating new capabilities within your legacy organization is critical, but poor management will bring conflict and failure. Established teams need to be motivated to embrace potentially radical ideas and approaches inherent in harnessing new talent and achieving business success.
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Joe Keenan is the executive editor of Total Retail. Joe has more than 10 years experience covering the retail industry, and enjoys profiling innovative companies and people in the space.