Strategy lessons from transport sector

08 Nov, 2019 - 00:11 0 Views
Strategy lessons from transport sector

eBusiness Weekly

Joseline Sithole
Lately, I have seen an upsurge of articles on strategy in the media. Just as it should be at this time of the year!  I have thus decided to put my foot in it as well. (Read article in the Manica Post issue 01 November 2019 by Simon Bere). The months of September to November are traditionally known in the business fraternity as Strategy Season. This is the time when large corporate companies (with the financial clout) fly their top executives to destinations “yonder” to plan and review their company’s goals.

Those who cannot do this book local hotels or exotic Zimbabwean destinations to conduct strategy sessions.

However, amidst all this pomp and fanfare, fine food and wine in exotic locations, there has been known to be a lot of “gnashing of teeth”. Sometimes in these sessions, product lines are phased off and new product lines are brought into being.

Similarly, whole departments can be dissolved or merged with others. A growing trend in Human Resources management is outsourcing this function to outside dedicated consultant firms.

One company I know, decided to let go of the whole Human Resources department and outsource to outside consultants, thus cutting out substantially on salaries. In turn, they upgraded their Information Technology systems to ensure efficiency across all their departments.

Generally, strategic planning is concerned with three things, setting of long term goals, how to implement these goals and resource allocation to achieve agreed targets. In short, a strategy session should enable a company to gain a competitive advantage over its industry rivals and in the same breadth make “insanely” big profits.

Michael Porter, a strategy guru, says this about this concept: “Strategy is choosing what not to do.” The same author also says that “Strategy is about setting yourself apart from the competition. It’s not a matter of being better at what you do. It’s a matter of being different at what you do”. It is also important to note that within overall strategies, companies will also have, segment strategies such as: market strategies, customer care strategies, human resources strategy to name just a few.

I have often stressed how MSMES are major contributors to their economies. However, it is worrisome to note that the issue of strategy is neither spoken about nor even implemented in this sector.  This constituency of MSMEs always develop a lot of bravado when faced with issues they cannot deal with. So when asked if they conduct yearly strategy session, one MSME wanted to know; “Ko chinyiko ichochi, Zvinomboitirwei” (What is it and why do you do it?)

A sizable number on MSMES (78 percent) were not aware of the need to perform yearly strategy sessions. Another large number (82 percent) thought that strategy was only for big corporates who had the financial clout to perform such tasks and had nothing to do with MSMEs.

A closer look at literature, shows that there are several barriers that prevent MSMEs from conducting strategy sessions. Some of these barriers include: lack of both human and financial resources, and inadequate knowledge on how to conduct strategic sessions.

In Zimbabwe, dire economic conditions also affect the outlook for strategy sessions as MSMEs concentrate more on operations rather than the soft skills.

It has also been argued that MSMEs-owner manager relations severely hamper the implementation of strategic goals, as they are intricately woven with owner perceptions.

Failure by owners to view strategy as a priority will ultimately result in non-implementation of this function.

I interviewed Andrew Jemedze, one of Zimbabwe’s strategy gurus and managing director of Head Hunters International, a Pan African Human Resources and Organisational Development firm.  His sentiments were consistent with findings in the MSME sector.  It seems as if on the whole Zimbabwean companies, small, medium and large can do well in implementing strategy the right way.

To begin with, Jemedze, pointed out that the process of strategy planning was not inclusive, as 90 percent of company employees were not aware of their companies’ strategies.

By awareness, I mean, most employees and executives cannot articulate their strategies in one line. For example, Louis Vuitton’s strategy is the “constant and sustainable growth of multiple brands”. The Airbnb strategy is to “create the ultimate living room bed and breakfast platform.” If company’s employees cannot articulate the company strategy in simple terms, then how are they expected to implement it?

Jemedze also pointed out that though companies were big on resourcing departments such as, Human Resources, Information Technology, Finance, and Marketing, the strategy function is not well resourced and budget allocation is practically non-existent.

Despite this dismissal outlook of strategy implementation across sectors, the transport sector can offer us a few examples of strategies that are clear and well executed though of course some of them are not written down.

The “Mushikashika” strategy — offering low cost product with convenience

Mushikashika as the word connotes, means aggressively solving transport shortages through somewhat unconventional approaches. Mushikashikas provide a very low cost product that promises to get you there as uncomfortably but as quickly as possible. You will have noticed that these Mushikashikas do not have any taxi ranks (As they were banned from operating from taxi ranks). So they pick up and drop passengers along the routes they use. Forget about being treated with respect and dignity in a Mushikashika vehicle but expect to get to your destination as quickly as possible.

Key Lesson: Be clear about your product offering. Low cost offerings for the mass market always require a little more aggressive market as there are many competitors here.

Inter Africa Bus — Offering affordable one stop service to trans-urban and rural passengers

Traditionally, long distance travel was divided into two legs. For example if you boarded at Mbare going to Chipinge, you would have to drop off in Mutare and pick up another bus. Inter Africa Bus service offers a one-stop service to passengers who want to cross urban lines to rural areas. In addition, the fare is also slightly cheaper when compared to a two segment journey.

A favourite with rural-based MSMEs, Inter Africa Bus offers convenience and comfort to long distance travellers without the inconvenience of connecting transport on your journey.

Key Lesson: Making profits requires that one does some things differently from competitors.

Beta Buses —Exceptional customer service at affordable price ranges

Beta Buses has pioneered a lot of innovations in the transport sector. Beta buses were the first to introduce swiping machines in their buses making it very convenient for customers who were hard pressed to acquire cash. At one point the bus also introduced a reward system for customers. The bus offers modern conveniences such as charging your cell phone on board and offers various types of entertainment.

Key Lesson: One will never go wrong with a strategy that incorporates a customer centric approach

City Link — high end luxury transport brand for passengers

I remember with nostalgia the now defunct Blue Arrow and Express Motorways. These buses catered for the high end market. Currently, the Mutare route has no such luxury brand but Bulawayo has. The City Link bus offers a luxury service which includes a host/hostess and some lunch. The bus is an elegant and exudes class and elegance.

Key Lesson: Be clear on your target market and stick to it

The above examples have shown how transport operators in Zimbabwe have successfully executed their strategies to gain an edge over their competitors. Therefore, this sector continues to thrive amidst poor macroeconomic indicators.

Jemedze advises MSMES to conduct strategic readiness assessments and measure the organisation’s strategic capacity. In addition, MSMEs need to resource and manage the strategic functions. He urges MSMEs to create what he terms the Office of Strategic Management (OSM). It is also important for MSMEs to shed off their individualistic way of doing things and broaden their horizons through broadening their strategic vision

Just a quick one.  After reading this dear reader, do say out your company’s strategy in one line to the person sitting next to you. I will conclude with a quote from Vince Lombardi “Hope is not a Strategy”.

Joseline Sithole is an SME Consultant and is the Managing Consultant of Southern Africa Development Consultants (SODECO). Get in touch at [email protected]

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