Strategic planning

By this time, companies are supposed to be finished with their planning for the year 2022. From conversations with friends and acquaintances, many have not done their planning simply because of the uncertainties of this coming year.

There is the pandemic which could end within the year, unless a new variant emerges which will mean another year of pandemic. Then there is the presidential election with two candidates – Marcos Jr and Leni Robredo with two contrasting ideologies and personal values. The ultimate winner of the presidential elections will change the course of the Philippine economy.

Then there are the threats to the world economy. The first is that travel restrictions in the rich world could damage the whole world economy. The second is that the inflation now spreading throughout the Western world could become a global phenomenon. The slowdown in China’s economy could result in slower economic growth for countries, like the Philippines, which have major economic relationships with China, especially in terms of trade.

It is not only business firms that must do their planning. It is also organizations like schools, churches, NGOs and advocacy groups.

The main advice I give people is that always remember that the “purpose of strategy is to attain objectives.” An organization can be flexible with strategies but not with objectives. It is unfortunate that many organizations prefer to change objectives when they are having difficulty attaining their desired objectives.

The term “strategy” traces its roots to the beginning of Greek civilization. It began as a military term. The root word for strategy was “strategos,” which means a military commander or general. Strategy began in the military world. It was introduced to the business world only at the beginning of the last century.

The father of military strategy is Sun Tzu, author of the Art of War. Some business leaders have actually applied his military principles to business strategy.

For example, Sun Tzu says that it is important for a leader to know himself. Miyamoto, who wrote about the life of a Japanese samurai, also said the same thing. However, this principle seems to be more applicable in Asia, where the success of an organization is much more dependent on the leadership of an individual than on resources.

According to Sun Tzu: “It is necessary for a wise general…to calculate distances and degrees of difficulty of the terrain. He who knows these things and applies them to fighting will definitely win. He who knows them not and is therefore unable to apply them will definitely lose.”  Knowing your organization’s environment is at the core of strategic planning.

In order to struggle for victory in a decisive battle, knowledge of the enemy or competitors is also important.  Especially important is knowing their strengths and weaknesses, including their most likely responses to moves by the competition.

According to Sun Tzu: “Hostile armies confront each other for years in order to struggle for victory in a decisive battle, yet if one begrudges the expenditure on one hundred pieces of gold in honors and emoluments but remains ignorant of his enemy’s situation, he is completely devoid of humanity. Such a man is no leader of troops, no capable assistant to his sovereign; no master of victory.”

In the Philippines, strategic planning did not become as developed as in the rich world. The concept of corporate strategy and strategic planning was developed and embraced by a business world that was becoming more and more subject to ferocious and unpredictable competition and to extensive economic, political, social and technological changes. This process developed as part of a wider process called strategic management.

This development in business management should have also started in the Philippines. Unfortunately, the coming of the Marcos Sr. era and its practice of crony capitalism made professional and strategic management play a secondary role to influence peddling at the highest level as the main source of competitive advantage.

Instead of a competitive environment that required business firms to keep improving productivity and making customer satisfaction the final arbiter, the Marcos regime created legal monopolies, allowing only a tiny number of companies. In the automotive industry, only two companies were allowed, the primary motivation to maximize efficiency and productivity to compete. Many legitimate businesses were sequestered and given free to cronies. Thereby negating the need to ensure returns on investments, which are the primary motivation to maximize efficiency and productivity.

Many of these Marcosian practices are still around. Many business leaders look for ways to avoid competition, especially foreign competition. Instead of focusing on productivity, they prefer to keep salaries low to reduce costs. This is the reason why there is such strong objection to increasing minimum wage and abolishing contractualization.

Many companies are still unable to plan how to cope with this new pandemic. The Economist magazine says: “It’s not all gloom. The world will not see a re-run of the spring of 2020 with jaw-dropping drops in GDP.” Goldman Sachs believes that firms and governments have adapted to the virus.

The road ahead may not be entirely smooth, but I am confident that if the Filipino people elect the right kind of leadership, then we will become a globally competitive nation with a quality of life for our people equal to neighboring countries like Taiwan, Korea and even Singapore.

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