Medical doctors and
medical professionals use a wide range of specialized tools, equipment, and technology to perform surgeries and medical procedures in the operating room. These tools help ensure the safety of patients, aid in precision and contribute to successful outcomes by preparing and organising pieces of equipment and human resources before an operation.
One of the key equipment is the viewing lenses known as a surgical microscope. A surgical microscope provides the medical team with a magnified and illuminated high-quality image of the small structures, like separating sinew from flesh. Directors are like doctors who shoulder enormous responsibilities. Some of the key responsibilities include:
Ø Conceptualising and shaping the company’s strategic objectives and policies;
Ø Keeping tap on the progress toward achieving the objectives and policies
Ø Appointing senior management
Ø Accounting for the company’s activities to relevant parties, e.g. shareholders
Many companies spread investments across multiple projects. Getting the best out of these investments requires strategic thinking. To perform this role dispassionately directors must wear four different strategic lenses, unlike doctors. These strategic lenses are finance, market lens, operational lens, and competitive-edge lens.
The Finance Lens
In this time of economic volatility, it will be awkward for companies not to kick off their strategic planning processes by examining their financial performance. This financial perspective enables them to incorporate an external viewpoint into these deliberations and establish an impartial foundation for evaluating the feasibility of long-term goals.
Directors must ensure companies employ standard valuation techniques to estimate the performance thresholds they must attain over the long term to rationalise their current valuation. If the company meets these expectations, shareholder returns would roughly match the cost of equity, compensating investors for their foregone capital opportunity. However, this doesn't equate to value creation—it's merely the minimum benchmark by which they can deem their strategy successful.
To genuinely generate value, companies need to yield returns surpassing the cost of capital or even outperform their peers. Consequently, directors should reference benchmarks to ascertain the performance levels required to substantially exceed this baseline—potentially achieving top-tier returns for shareholders.
An impartial analysis of peers' performance assists companies in formulating a substantive three- to five-year plan aimed at achieving superior returns. Valuable insights can arise from this benchmarking exercise, revealing instances where past high returns were due to market-driven multiple expansions and elevated expectations, rather than actual performance.
Crucially, the finance lens shapes directors' decisions on resource allocation. As they assess potential investments, the lens provides a discerning view of market trends and associated opportunities, allowing them to weigh feasibility and potential returns with precision
Examining Market Dynamics through Market Lens
Directors play a pivotal role in steering a company's strategic course, and their perspective is often informed by the market lens—a lens that illuminates market dynamics and opportunities. This lens offers directors a comprehensive vantage point to gauge trends, assess competitive forces, and identify potential avenues for growth.
Directors utilise the market lens to discern pockets of expansion within existing segments as well as uncharted markets that align with the company's competencies. This approach is particularly pertinent in today's rapidly morphing business environment, where adaptability is key. This will help in proactively identifying disruptive forces, from the entry of nimble competitors to shifts in consumer preferences, enabling agile responses.
Directors' assessment of market-related risks is informed by the market lens. Through it, they evaluate how shifts in regulations, economic trends, and industry dynamics could impact the company's performance. The strategic options available to a company become clearer through this lens, whether it involves fortifying core businesses, exploring diversification into related industries, or capitalising on nascent trends that hold growth potential. Such deliberations are rooted in a customer-centric approach that the market lens facilitates. By scrutinising customer needs and preferences, directors align the company's offerings with evolving demands, ultimately enhancing customer satisfaction and loyalty.
Long-term value creation, a paramount goal, is guided by the insights garnered through the market lens. Directors appreciate that sustainable value arises from an astute understanding of market dynamics and consumer behaviors, and they steer their decisions to align with this trajectory. They continue to monitor the company's performance through the lens of the market, ensuring that strategies remain aligned with evolving market trends, while also cultivating an environment of innovation and adaptability.
The Operational Lens
Wearing the operational lens is pivotal in navigating a company's strategic trajectory. It enriches the perspective of the intricacies of the internal operations of a company. This lens offers directors a comprehensive panorama of the organisation's processes, efficiencies, and functionalities, allowing them to optimise internal workings for heightened performance.
Directors employ the operational lens to assess process efficiency, resource allocation, risk management, quality control, innovation and technology integration, talent development, supply chain optimisation, operational resilience, customer satisfaction, environmental sustainability, and continuous improvement initiatives.
This lens enables directors to have cross-functional collaboration and effective communication while fostering a culture of innovation and adaptability. Directors must recognise that operational excellence is pivotal not only for internal efficiency but also for enhancing customer experiences and environmental sustainability. Through this lens, they bolster the company's overall success and resilience in the marketplace.
The Competitive Edge Lens
In any economy, competition is always unavoidable, Directors must assume a vital role in steering a company's strategic course, adorning a competitive edge lens. This will provide an indispensable viewpoint that centers on the distinct advantages setting the company apart within its market. A competitive lens will grant directors a focused outlook on strategies that heighten the company's competitiveness and propel ongoing success.
Directors leverage the competitive edge lens to discern ways of market differentiation, competitor analysis, innovation promotion, strategic alliance exploration, brand enhancement, continuous learning encouragement, customer-centric emphasis, data-driven decision-making, risk-taking endorsement, long-term vision alignment, and ethical leadership prioritisation.
This lens will ensure Directors build a resilient, customer-centric brand while fostering a culture of innovation, adaptability, and calculated risk-taking. Directors champion a forward-thinking approach that upholds ethical leadership and transparency, recognising their role in fostering a positive reputation and sustainable competitive advantage.
Through the competitive edge lens, Directors craft strategies that secure the company's position as a leader in its industry by amplifying differentiation, customer focus, agility, and innovation. This lens empowers directors to navigate the complexities of competition while steering the company towards an enduring competitive edge and robust growth, reinforcing its standing as a beacon of excellence in a dynamic business landscape.
The world of business and strategy mirrors the meticulous precision and comprehensive perspective seen in the medical field's operating room. Just as a surgical microscope offers magnified and illuminated views of minute structures, these strategic lenses grant directors a magnified perspective of their company's inner workings and external environment. Through each lens—finance, market, operational, and competitive edge—directors gain insights that guide their decisions and propel the company toward growth, innovation, and enduring success. In essence, Directors orchestrate strategic surgeries, equipped with precision and foresight, ensuring the health and vitality of their organisations in a complex and dynamic business landscape.
and Advocacy Department, IoD Nigeria
28, Cameron Road, Ikoyi, Lagos, Nigeria