The Importance of Strategic Thinking

The world-renowned billionaire investor Warren Buffet recently purchased an American rail company that he believes will be around for the next 200 years or so. Think about that for a second. Most of us make investment decision with, at best, a 20 year outlook - most valuation models become obsolete if you evaluate projects for periods longer than this. So what can we take here from Mr Buffet? Simple. Think strategically.   

Businesses have increasingly become more and more short term focussed over the last few decades or so. This statement shouldn’t be misinterpreted however. There’s nothing wrong with a company closely managing their day-to-day operations and shorter term goals should be in place as part of a broader long term strategy. The risks are definitely too big to ignore if you don’t have the necessary long view. Some of these are listed below: 

Unanticipated problems 

The worst thing for any businessman is if they are faced with something that caught them completely by surprise. This often happens if management doesn’t play close enough attention to the way their sector is moving, the trends and the outlook.  The result is that they are unprepared for the challenges they face. This crucial mistake can easily lead to a complete downfall of the company.  

Lack of Motivation 

People are always inspired by visionary leadership. A company that is run by a management team that clearly articulates their vision and strategic goals is usually a business that has a productive and effective workforce. This is no coincidence. Strong leadership, underpinned by a solid strategy leads to a happy workforce. 

Financial Planning issues 

From normal households right through to large corporations, everyone needs to compile budgets. These important financial instruments serve as the very roadmap that a company follows in order to achieve their financial goals. Successful strategic planning will provide a framework within which budget planning can flourish. Without these well formulated strategic goals, financial planning becomes increasingly hard to do.   

It’s clear that just considering these above issues makes for a compelling case as to why you need to have a solid, strategic longview in place for your company. Luc Chaudhary Consulting assists our clients in putting in place strategies and plans that work and that work well.