Management should evaluate strategic positioning -CIMA Global President

Ramani KANGARAARACHCHI

Organisations that abandon strategic thinking not only run the risk of undermining the chances of advancing their business when the economy improves but they also endanger their ability to weather the storm, said CIMA Global President Glynn Lowth making a presentation on ‘Strategy under stress and managing strategy in a downturn’ held at JAIC Hilton Colombo on Tuesday.

Lowth was in Sri Lanka to make this presentation to coincide with the CIMA 90th anniversary and the event was organized by the project SMED of the Federation of Chambers of Commerce and Industry of Sri Lanka.

Lowth said that at times of economic upheaval and low availability of finance, there is a real danger that corporate strategy can take a back seat to survival and avoid this situation.

“CIMA has long advocated a clear framework to help boards and management engage with strategy using the CIMA Strategic Scorecard which demonstrate how any organisation can apply its key steps to drive better decision making, both during a recession and in preparation for the subsequent upturn”, he said.

According to Lowth the CIMA Scorecard has four dimensions which prompts directors to ask constructive and searching questions of management and help them to determine the key points at which they must make decisions. The dimensions are strategic position, strategic implementation, strategic options and strategic risks. A typical top level strategy should be short and clear, setting out the main goals for the organisation. It is up to the board to ensure they are properly aligned to the overall goals of the business, he said.

The board should evaluate strategic positioning with particular emphasis on future trends and it must ensure that there is a clear ownership of the different inputs. This provides clear accountability and leadership ensuring that strategic factors are neither ignored by the board or unmonitored by staff within the organisation.

However, the key to strategy under stress is discipline. At one level that means looking clearly at strategic positioning, planning and execution, then analysing how that long term strategy can be maintained in a depressed economy. Managements who are confident in their ability to make reasoned decisions will do a better job securing the long-term future of their business as well as their survival, he said.

Highlighting the role of Chief Finance Officers in companies, Lowth said that the role of finance professionals has changed now and there is a war for talent. Cost management, risk management, challenging unrealistic assumptions, focus on cash crisis plans and understanding of financials to determine the impact of downturn are important roles of the Chief Finance Officer, he said.