STRATEGY AS STRETCH
On a trip back to Nigeria from the Pharmanews workshop on Health Care Innovation and Financing which held in Dubai, UAE, I was able to read the greater part of the book,Entrepreneurial Spirits by Dr Poly I. Emenike. The book tells a simple story of the audacity, courage and faith of a young man who demanded something a whole lot better than what life had offered him. Today Neros Pharmaceuticals has become a giant in the Nigerian pharmaceutical Industry.
I mentioned that we were returning from the United Arab Emirates – another story of audacity. The UAE has successfully executed a miracle to say the least. The city of Dubai is simply beyond belief, considering the territory – an Arab nation in the desert. Dubai has successfully transformed itself into a leading global city. In a recent article by Forbes magazine, the city was ranked 7th among the world’s “necessary cities”. The report listed the most influential cities, with London and New York coming first and second respectively.
The men that conceptualised the city of Dubai and, indeed, the master plan of the UAE were simply too audacious. Today, tourists from Nigeria account for a major percentage of the shopping activities in the many malls of Dubai.
Although Dubai’s economy was historically built on the oil industry, the emirate’s western-style model of business drives its economy, with the main revenues now coming from tourism, aviation, real estate, and financial services. Only 7 per cent of its revenue comes from oil. A whopping 86 per cent of its residents are foreigners and the city boasts of the largest international airport in the world.
Aster DM Healthcare, our workshop partner, is another inspiring story of audacity. Dr Azad Moopen rose up one day, after many years of managing a single hospital, and decided to build a multinational health care conglomerate. Today, his firm has over 100 pharmacy outlets, 10 tertiary hospitals, 44 medical centres and more than 10,000 employees, with operations in India, the Philippines and seven other countries in the Middle East.
The concept of strategy as stretch
In a 2003 article in the Harvard Business Review (HBR), Gary Hamel and C.K. Prahalad introduced the Strategic Discipline of Stretch. Strategic stretch, simply stated, is the incongruence between organisational resources and organisational aspirations.
Strategic stretch occurs when the little Davids of the society decide to take on mighty Goliaths. It happens when we overlook our limitations and take on seemingly impossible tasks as Dr Poly Emenike, Dr Moopen and the UAE and have done respectively. The result is that we begin to see things which we would not have seen otherwise.
In his book, The Business Angel as a Missionary, Prof Pat Utomi shared some of his many exploits as a teacher, businessman and politician – the audacity of his hopes and the enormity of his aspirations amidst the limitation of resources. Though he is not the founder of the Lagos Business School, he has contributed a lot to its development. Today, Pan Africa University (formerly Lagos Business School) is West Africa’s leading business school and has produced several leading business executives in Nigeria. What’s more, unknown to many, the university was born out of the aspirations of a group within the Catholic Church – just one very aspiring group!
The deduction from the HBR article is that the reason a David would always take out a Goliath is that, most times, the Goliath no longer has stretch. The Goliaths have succeeded and are now operating within the realms of their capacities. Unwittingly, they have placed a cap on the options they could consider, become less daring and innovative. This is almost a natural phenomenon – a full stomach and pride could stifle desire; and some things can only come from persistent desire.
The nature of our desires
The above suggests to me that when money, rather than the achievement of some definite objectives, becomes the sole object of our desires, we could also come to the position where we lose our strategic stretch.
In Nigeria, it is fairly easy to get satisfied once you are doing better than your colleagues. Hence, for strategic stretch to be sustained, it must be built on something other than just money, something more immaterial – though money is still a good source of stretch.
Strategic stretch and leverage
To illustrate the point of strategic stretch, consider a nascent pharmaceutical firm X, with very lean resources but with the dream of becoming Africa’s leading product development and manufacturing firm. Assume that this firm believes in the possibility of this aspiration and is really working towards achieving same, the following would be clear on observing the activities of the management at X, compared to that of another firm Y (the current largest firm in the industry).
- Though the aspirations of firm X is about the same as that of firm Y, the stretch on the management of X would be greater than that on Y.
- What Y would take as a given, X would consider more carefully. X would be humble and hungry – learns more, networks more, and is more willing to borrow others’ ideas and capacities.
- X would find the best option (in terms of efficiency and effectiveness) if it exists simply because it has no other choice.
- X could persevere in a given direction that has long-term benefits but short-term appeal to gain market share, seeing that it would be naïve to take on Y in areas where Y is strongest.
- Y could find it difficult to change fast as it could have other vested interests that would favour the status quo.
- X would be more focused in the application of its energy and resources.
- X would be more daring and quicker in evaluating new knowledge and possibilities.
- For its team, X would look for believers and not just employees. It would employ other compensation packages to retain good talents.
- X could actually fail – but it is below already!
- X would complement and balance its resources more. In X, you won’t find the sales department quarrelling with productions, for example. The firm is too small and fraternal to have such squabbles. They are more like a team – united by one purpose. Company Y could have specialists in every field but X would have more of generalists – people who think in systems. For example, at Aster DM Healthcare, the doctors managing the hospitals are more businessmen than doctors – they simply understand the business of health care.
Essentially, at X, leveraging is a lifestyle, that is, making the most of the available resources – of materials, money and men.
Small is not the point
The emphasis here is not that small companies do better. There are no inherent benefits in being small; a small company with a sub-par aspiration would do worse. The difference is in the level of motivation which can exist even in large firms. Thus, it is wise to say that the job of leadership is to create this stretch.
In the light of the ever-changing competitive landscape, it is evident that these differences in motivation and, consequently, in strategies explains why that there would always be newcomers to displace old legends; especially when the legends actually begin to see themselves as legends. These analogies form my conviction that Nigeria could become a mega power if she so desires, likewise for any young firm out there.
Our aspirations need be far greater than our resources, or we may not be able to see the invisible. This larger-than-life aspirations are, most times, God-given and could attract some jeers, but this, dear reader, is our greatest asset.
It is only this strategic stretch that will help us question our assumptions, seek cheaper options, lose old habits, become better managers, and deliver the much-needed results with few resources.
The source of stretch
How do we create stretch? How do we make a health care system administrator desire to develop a health care system that caters for over 170 million persons in a cost-effective manner? How do we make such a person move in a particular direction when some indicators point to the futility of that course of action? How do we help the person persist till he or she finds the strategy that will work?
This is one thing business schools don’t teach but it is valid none-the-less. Faith is the currency of strategic stretch. People who will be the David of tomorrow must be told to be comfortable believing in the impossible – to get used to it. We may not agree with you, but you must agree with yourself.
Stretch is created when a leader wakes up and tells the team that he has a dream – a fresh big dream. It needs not be financial; for example, yours could be to build a university network that would be able to produce a 50,000 student population per annum, or to lead a research facility that others could look up to when the next epidemic like Ebola crops up.
Also, individuals who no longer have the stretch should rather be in management positions and not in leadership positions. A leader should have stretch; maintaining the status quo is simply not good enough.
Stretch as risk
Stretch is not irrationality; it only looks so in the beginning, until you find that strategy that will work. For Dr Moopen, it was all about understanding and implementing venture-financing and resource management. For Dr Poly Emenike, it was the idea of importing Artesunate from Vietnam. For the United Arab Emirates, it was their blossoming tourism industry, airports, skyscrapers and the brand of being the ultimate business destination. (Note: the Dubai International Airport accounts for about 250,000 jobs and 28 per cent of the country’s GDP).
These individuals, organisations and nations used the resources at their disposal to connect to a strategy that works. Stretch is risky when we don’t spend the time to build the required knowledge base and when the needed collaborations are not identified and built-upon.
Generally, risk reduces as knowledge grows; and as knowledge grows, one’s capacity to advance grows with it.
Nelson Okwonna
MD/CEO
Octopus Venture Capital Limited