RE-EVALUATING CORPORATE

STRATEGY POST COVID-19

PANDEMICPresentation to

DCSL Webinar Series

August 7, 2020

Opeyemi AgbajeFounder

RTC Advisory Services Ltd

OPEYEMI AGBAJE

Founded RTC Advisory Services Ltd, a strategy and business advisory firm focused on economy and business strategy, research and policy, management consultancy and organisational transformation in 2004 and was its CEO from 2004-2019.

He currently serves as Executive Secretary/CEO of Ogun State Security Trust Fund.

Previously taught strategy and business environment at Lagos Business School leaving the faculty as Head of Department of Strategy and Entrepreneurship.

He rose to Executive Director in banking before voluntarily leaving the sector to focus on strategy and consulting. A member of the global Strategic Management Society and Representative for Africa of its Strategy Practice Interest Group from 2017-2019.

Has served as Director of CAP Plc and Lagos State Security Trust Fund and Chairman of The Convention on Business Integrity.

APPLICATIONS OF “STRATEGY”

Individuals

Crafting and implementing a plan of life, charting a route to “success”,

recognising and avoiding the pitfalls, dealing with and negotiating obstacles

and finishing well

Nations

Choosing an economic and development “vision” and “strategy”

3rd National Development Plan, SAP, Vision 2020, National Economic

Empowerment and Development Strategy (NEEDS)

Singapore: From Third World to First!

APPLICATIONS (CONTD.)

Military/Warfare

The Original Sphere of “Strategy”

Planning to win specific battles and present and future wars

Defeating the adversary or adversaries

Maintaining military superiority

Spiritual Warfare

The Perpetual War between the kingdom of “light” and “darkness”

Sports

Winning each game, and ultimately the championship

Love and Friendship

Winning hearts and minds

APPLICATIONS (CONTD.)

Business

“Succeeding” in business

Creating and Sustaining a Successful Business

Gaining and Sustaining Competitive Advantage

Securing, Preserving and Extending Market share

Dominating a market space

Making and delivering superior products and services

Being the leading innovator in a market space

Creating value for investors and stakeholders

Being very profitable…being the most profitable

CONTEXTS: FIVE (5) ‘P’S FOR STRATEGY

Strategy as a PLAN

A consciously intended course of action

Made in advance

Developed consciously and purposefully

Military-drafting the plan of war

Game Theory-a complete plan, specifies what choices a player will make in every possible situation

Management-a unified, comprehensive and integrated plan…designed to ensure that the objectives of the enterprise are achieved

CONTEXTS: FIVE (5) ‘P’S FOR STRATEGY (CONTD.)

Strategy as a PLOY

A specific maneuver intended to outwit an opponent or competitor

Competitive moves or “tactics”

Strategy as PATTERN

A pattern in a stream of actions

Consistency in behavior, whether or not intended

Crafting, rather than planning; emergent not deliberate

Emergent Strategy-the view that a successful strategy is less the product of

deliberation and planning than of the collision of intentions and reality,

whether internal or external

CONTEXTS: FIVE (5) ‘P’S FOR STRATEGY (CONTD.)

Strategy as POSITION

A means of locating a company in an environment

Strategic Positioning and Competitive Strategy

Strategy as PERSPECTIVE

The company’s way of looking at the world; Worldview

Firm Personality; Culture and People; Values

STRATEGY VS TACTICS

STRATEGY TACTICS

Long Term Short Term

Comprehensive Specific

Integrated Isolated

Proactive May be Reactive

Synthesis Decomposition

Focused on winning the war! (League) Thinks about winning a battle (Game)

STRATEGY-A DEFINITION!!!

The choice of a future for the company, and of a way to reach

that future, understood as the plan or pattern that coordinates,

unifies and integrates the company’s decisions and actions

ADDITIONAL UNDERSTANDING

Strategy is “the overarching plan for marshaling an organisation to

succeed in an uncertain environment and against opposing forces”

Every business must make choices that FIT together in a holistic,

consistent way in order to succeed in an environment marked by

competition, structural forces and uncertainty

The very purpose of strategy is to enable a business achieve superior

performance in its industry

A good test of effective strategy is internal and external FIT and

CONSISTENCY…do all elements of the strategy fit with the value

proposition? Are they mutually re-inforcing and do they lead to

optimisation of effort?

CHOICE OF A FUTURE

Vision, Mission, Purpose

Strategic Intent

Objectives, Goals and Targets

Trade-Offs

The Intangible

Element

Values and Philosophy

Culture

CURRENT POSITION ASSESSMENT: SWOT

ANALYSIS

SWOT ANALYSIS

Strengths (internal)

Weaknesses (internal)

Opportunities (external)

Threats (external)

SWOT ANALYSIS IN THE PANDEMIC

ERA

Will SWOT Analysis consider technology competences as a major

barometer of corporate strength or weakness?

Would your strategy analysis have identified a global pandemic as

a threat? Or the dangers of global (especially China!) supply

chains?

Are there ways the pandemic could be an opportunity?

BUSINESS ENVIRONMENT ANALYSIS:

SPELT-G

Social

Political

Economic

Legal/Regulatory

Technology…and…

Global

16

• Relevant Factors

• Sources of Risks and Uncertainty

• Trends and Discontinuities

• Scenario Projections

Social

Political Economic

Legal/Regulatory Technology

©RTC Advisory Services

Ltd.

BUSINESS

ENVIRONMENT

ANALYSIS:

RTC’S

SPELT-G

MODEL

UNCERTAINTY! UNCERTAINTY!! UNCERTAINTY!!!

Will there be a cure? When?

Is the Hydroxychloroquine cocktail a cure? Will the scientific/medical community agree?

Will there be a vaccine? When? At what cost?

How long will the pandemic last?

Will TRUMP be re-elected in November?

Who will be alive? Who might die?

Can schools re-open?

Are air flights safe?

Can businesses safely re-open?

UNCERTAINTY! UNCERTAINTY!! UNCERTAINTY!!!

(CONTD.)

What will happen to oil prices? What will average oil prices be for

the rest of 2020?

Will Nigeria have a recession or depression? A brief recession or a

deep and prolonged recession?

Will the Economic Sustainability Plan (ESP) be implemented? Will it

work?

IMPACT ON PLANNING CYCLES

What is the ideal planning cycle in the pandemic era?

Plan-as-you-go?

Short Term-1 Year?

Short Term-18 months-2 Years

Normal 3 Year Cycles?

Defer planning until Pandemic is over?

…or as some have suggested, have a narrow plan-Survival???

PORTER’S FIVE (5) FORCES FRAMEWORK

THE VALUE NET

REVISED PORTER FRAMEWORK

SIX (6) FORCES

INDUSTRIES ARE CHANGING…?

Technology and Communication is the big winner!

E-commerce

Hotels, Airlines, Travel…the big losers

What is the outlook for oil and gas? Continued volatility? Regular cycles of price collapses (2008-9, 2014-15, 2020, ….when next?) A downward spiral? What next?

Government’s continued reliance on oil and gas for budgets and FX may be sub-optimal in most plausible scenarios!!!

Agriculture a likely winner; and Healthcare.

Real estate-another decline?

Selling and providing services (professional services-consulting, law, engineering, tele-medicine, marketing communications, education etc.) virtually!

INDUSTRIES ARE CHANGING…?

Business models dependent on FX purchases are in mortal danger,

except those with (say) less than 25% FX input or with very large

margins

Government’s economic policy may have to change in favour of

private capital and investment (instead of oil revenue and

borrowings)…the current policy direction is probably unsustainable!

Happily the ESP makes the right calls on the major structural policy

changes; remains the implementation challenge.

Imperative to restructure public financial and revenue

management

Erosion of consumer purchasing power in the context of recession,

higher poverty and unemployment and weak outlook

GENERIC COMPETITIVE STRATEGIES

BASIC CONCEPTS

Differentiation

A strategy based on offering products and services that command a price

premium because they are superior in quality, reliability and/or prestige

Cost Leadership

A strategy based on becoming the industry cost leader with the

accompanying strategic advantages of pricing flexibility, larger volumes and

margins

Focus

A strategy based on narrow rather than broad market approaches that seeks

domination of geographical, product or other market niches through differentiation, cost leadership or other generic approaches

GENERIC COMPETITIVE STRATEGIES

COMPETITION AND ADVANTAGE IN THE PANDEMIC ERA

How does a virtual business environment affect customer experience and the customer definition of value?

How might it re-define customer perceptions of differentiation or firms’ cost structures?

How will it affect business processes, organisational structures, innovation, management information systems, HRM and management systems?

Will the post COVID 19 era be expected to accelerate the pace of disruption in conventional or mature industries?

How is it or will it re-shape competitive advantage? Is the concept of sustainable competitive advantage defunct or will advantage become more transient?

How will it re-define corporate profitability?

VALUE CHAIN ANALYSIS

BLUE OCEAN STRATEGY

RED OCEANS

All the industries in existence today-the known market space.

Industry boundaries are defined and accepted, and the

competitive rules of the game are well understood. Competition is

(usually) intense and prospects for profits and growth are reduced. Products turn into commodities, and increasing competition turns

the water bloody.

BLUE OCEANS

All the industries not in existence today-the unknown market

space, untainted by competition. Demand is created rather than

fought over.

CREATING BLUE OCEANS

Creating completely new industries

Create blue ocean from within a red ocean when a company alters the

boundaries of an existing industry

What new and uncharted competitive spaces will be discovered or

created in this virtual era? How will working from home change firms?

How could global supply chains evolve?

How will innovation trajectories evolve in this era?

RED VS BLUE OCEAN STRATEGY

Red Oceans Existing Market Space

Beat Competition

Exploit Existing Demand

Make Value/Cost Trade-off

Choose Differentiation or Cost

Blue Oceans Uncontested Market Space

Make Competition Irrelevant

Create and Capture New Demand

Break Value/Cost Trade-off

Pursue both Differentiation and Low Cost

BLUE OCEAN STRATEGY: EXERCISES

Think back 100 years

Which industries existing now were unknown then?

Think back 25 years

Any industries which didn’t exist then?

Think of any phenomenally successful company existing today-in Nigeria and internationally: Were they in a blue or red ocean when they had their business breakthrough?

Think forward 25 years; think forward 5 years…

How many (or which) industries unknown today, might exist by then?

EXECUTION

How will firms manage execution in the post COVID 19 era?