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Crisis, War, Strategy: Changing Strategy (Part 1)

The re-production of strategic objectives in companies has begun. One could have known that after the COVID-19 crisis, companies at all levels would be forced – of course, some would start on their own every 3-5 years – to define new goals, as people’s mindsets had been completely transformed and the change was by no means short-lived or even temporary. But not many people expected that all this would be compounded by a war that would take place in modern civilisation, creating an inflationary, recessionary environment the likes of which modern managers today have never had to deal with. Not surprisingly, the demand for strategic consultancy has increased dramatically. It is a feature of the market that the consultancies themselves are not prepared for these changes, most of them have been living off templates for the past decades, so there is a significant over-demand for firms that can deliver real solutions and success.

A consulting market in reverse

Everyone can build a strategy. It is not complex science. One or two or more smart people – or at least people who think they are smart – sit down and formulate ideologies, assign objectives, and a strategy is built around them. This process can be found in most companies, and even in consultancies, where there are always brave people who take a not very sharp axe to the big tree. However, the demand side has started to change its attitude and expectations on this issue in the last decade or so. This change was triggered by the global economic crisis of 2008, and then the pandemic added fuel to the dynamics. Many were shocked to see the 2020 consulting firm revenues, as almost all strategic consulting firms lost more than half of their revenues. The consternation was justified, as it is precisely at a time like this that firms are turning to strategic consulting, as they look to it for the solutions that can lift them out of a downturn or, for the more able, leave them unable to get there. Yes, but that is how trust and results are measured. It was a perfect illustration of the recognition and trust that clients have in each firm. Of course, many people explain this by the inevitable downturn in the market, but that’s where it falters, if there are counter-examples. And there have been and are counter-examples all over the world. Most company managers nowadays ask their colleagues who manage tenders – or look at them themselves – for the revenue figures for 2019 versus 2020, as these are very important figures for the expected results and success. The interesting trend, by the way, is that in the consultancy market it is mostly the smaller, professional firms with a small number of consultants but at a very high professional level that have developed and have been able to move forward in this difficult period. Typically, they do not consume dozens of clients, but develop about 20-25 partners in a given year, but they do it with great intensity and attention. This will be of great importance in the future because this market has turned around a bit. Whereas in the past, firms looking for development used to select and choose between consultancies, nowadays – although the smarter consultancies are doing serious and conscious sales – the situation is reversed, as these firms only undertake development that has a real result and success at the end. That is why, after the sales-focused presentation, they select the partners with whom they want to start the process.

People in focus

Another important change is that strategy development, traditionally focused on market research and business objectives, can no longer be successful for the client. These traditional jobs must of course be done, there should be no question about it, but in all cases the focus should be on people first. The big question is always, does the company or the person have a strategy? The question itself is not necessarily a professional one, but it is important to have guidance. Goals are for people. If I organise individuals into teams, the characters will compete with each other and a common team goal will emerge. If this process takes place in a company, we are talking about company goals. The strategy is built on the basis of these, so although we are building a company strategy, it is the sum of the strategies of one or more people, considered in different proportions. In most cases, this is why strategists focus on one main decision-maker, because it is much easier to follow and achieve the goals of one person, it is more objectively measurable and the success rate is higher. This one person can be the owner of the company or even the number one manager. From this point on, the strategy should ensure that this person is satisfied with the development. To do this, of course, you need to know the real purpose of the person, and that always requires a great deal of honesty. This is where the management world has changed a lot. The modern, successful manager is much more honest with his or her strategic advisers – selected with the right selection, of course – than the managers of previous generations. If you talk to a truly successful strategist, he or she can clearly tell you that if the client is honest, they can really set up a real set of goals, and from there it is easy to build an effective strategy. Obviously, there are many points at which the process can go wrong, but with successful and crisis-experienced consultants, this is very rare. It is a question of experience, because especially since 2020, how many years someone has spent building strategy, or how many years they have spent in a strategic leadership position, or even in the world’s largest company, is completely irrelevant. The question is: who has the strategic knowledge gained in a viral crisis and war environment. And this can only be the case for professionals in a company who have had the opportunity to work as strategic consultants in 2020.