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How Robust is your Strategy cont 2
How robust is your Transport Strategy? (continued)
Why is there no mention of a Cost node? The answer is quite simple - Cost, is Price minus Profit! So herein rests the unique strategy represented by the QUAD Strategy Initiative., it is illustrated by referring to the Secondary Link SL-1, connecting the Price and Performance nodes. In other words, if a company’s performance is insufficient to provide a “residue” margin (Profit), within the limitations of Price, then the Strategy can be considered deficient.The third Primary Link PL-3 connects the Profit and Sustainability nodes. Again, this relationship supports the rationale that, should there be insufficient margin (profit) to support investment sustainability, then the Strategy needs attention as it renders the company unviable and it will therefore consume capital. Loss of sustainability presents a severe risk to shareholders’ investment which, in turn, demands a higher ROI to justify the increased risk, further challenging the enterprise’s competitiveness for funding.Secondary Links SL-1, SL-2 and SL-3, in that order, connecting the Price, Performance and Sustainability Tactical nodes, form the foundation on which the Primary Links connect to the Principal (Profit) Node.Although the rational used here is an over simplification of a very complex subject, the intention is to illustrate that company strategy does not exist in isolation, and should be thoughtfully integrated with all the Tactical nodes supporting the intended strategic outcomes represented by the Principal node, only then can metrics be set in place to actively measure the effectiveness of each Tactical node in supporting the associated Principal node (Profit) to achieve the intended results. Ultimately, the success or failure of a business Strategy will be reflected in its effectiveness: that of delivering attractive Shareholder Value.
As the three Primary links, PL-1, PL-2 and PL-3 (Fig 2) contribute equally in magnitude to support the Principal node (Profit), they each receive the same level of importance and therefore attention in the overall strategic structure of the business. First, Link PL-1 connects the Price node to the Profit node. Second, Link PL-2 connects the Performance node to the Profit node and third, Link PL-3 connects the Sustainability node to the Profit node. As these links are unidirectional in purpose, the Profit node shares support from the three Tactical nodes: Price, Performance and Sustainability.
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Loss of sustainability presents a severe risk to shareholders’ investment which, in turn, demands a higher ROI to justify the increased risk, further challenging the enterprise’s competitiveness for funding.
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