Understanding Strategy

Understanding Strategy

In this chapter we will explore:

  • What is meant by strategy
  • Strategic imperatives in the veterinary professions
  • How to review current strategy
  • How to assess the strategic environment
  • How to think about future strategy

7.1 Introduction

Strategy is a plan to manage long‐term direction. We all have a strategy, whether it is explicit or not. Even a lack of active management is a strategy and might allow emergence of a path from the background.

Strategy is how we choose to survive and compete, given a range of options before us, when resources are finite. It is deciding where to invest those resources for future success. A waste of resource puts us at a disadvantage. Although competition might be uncomfortable, much like the trees in a forest, if you do not compete or grow into your own niche, you run a risk of someone else taking the light. If we choose the wrong option for the environment, we may not survive. It is not a competitive strategy to try to thrive in every niche, although different groups in a wider organisation might have different group strategies (which is an organisational strategy in itself).

Strategy can be applied across a spectrum through individual life‐work plans, to teams (e.g. what areas might a research team focus on), to groups (e.g. what sector of the market might a multi‐site small animal practice aim at) to corporate (e.g. how does a national or global veterinary business compete). Strategy is not just for profit‐making enterprises. Not‐for‐profit organisations are still in need of, and therefore in competition for, both funds (to support their work) and causes to support.

In veterinary leadership, you may (hopefully) or may not have role in determining, or at least influencing, strategy. But you will have a role in delivering it. Ideally, you should always have some control over your own personal strategy. It is important to understand strategy and how it might influence you. Having clarity on the organisational strategy can also help ensure that your personal values are sufficiently aligned to be comfortable.

Understanding strategy into action is about looking at the ‘Now’, exploring options for the future ‘Then’, before thinking about the ‘How’.

7.2 Strategy Now

Chapter 6 discusses different ways to look at organisations and considers some aspects of their strategies (see 6.3.2 Organisations and professional work and 6.3.3 Organisations and inter‐connectedness). The McKinsey 7S model, for example, can be used as a tool for beginning to crystallise the current strategy.

7.2.1 Stakeholder Analysis

Stakeholder analysis helps clarify whose needs must be satisfied and might include business owners/controllers, colleagues, communities, regulators, and clients. In veterinary organisations, there are the additional, voiceless, stakeholders who have a direct interest, which are the animals under care. For most veterinary organisations there is usually an animal somewhere in the chain of activity, directly or indirectly. Clients may, or may not, be the voice of those animals, although it is to, or through, them that many veterinary professionals are contracted to provide a service, and for whom you must create perceived value for your strategy to be successful.

No strategy is sustainable in the long term without some form of resource input. What ‘clients’ (I am using client to denote those to whom professional services are provided) value represents what they will exchange resources for. Understanding the nature of the relationship between your clients and the animals concerned, and the human needs those animals satisfy, might help shed light on current and future strategies for creating value (Table 7.1).

Individual stakeholders may have complex needs served by the human‐animal bond. For a farmer, for example, the stock might not just represent a means of food production but also link to family, land, community, nature, and be a means of self‐actualisation. A veterinary practice that appreciates and engages with the farmer across the range of those needs might carry more value.

Table 7.1 How animals help fulfil human needs.

Source: From Maslow, A. H. (1943), A theory of human motivation, Psychological Review. https://doi.org/10.1037/h0054346. See also Table 5.1.

Human need Animal role Example
Physiologic Food production. Clothing. Sheep.
Safety Alarm. Protection. Watch dog.
Belongingness and love Companionship. Pet dog.
Esteem Vehicle for self‐esteem. Racehorse.
Self‐actualisation Self‐agent. The ecosphere.

Different stakeholders have different, even conflicting, needs that may have to be negotiated where they are unavoidable. In some circumstances, conflicts may be so significant to make a chosen strategy nonviable.

Who are your clients, and what represents value for them? Once again, there may be a simple client map (e.g. the pet owner who pays for a consultation), or it may be more complex (e.g. providing care to a service dog where the immediate end‐user is the handler), but the value may be determined indirectly by the service organisation. In this case, it might be conceived that there are two clients to satisfy, and potentially with different needs in different ways.

7.2.2 The Strategic Constraints of Professionalism

Strategic considerations are limited to, and bounded by, the constraints of professional status, which creates a protected space in which to compete. Whilst the global shift towards conglomeration and corporate ownership in some areas of practice brings a strategic complexity that was not present in more traditional practices, professional privileges come with constraints that bear strategic consideration. These include the following:

  • Regulation. Professional practise is regulated, and we are expected to work within boundaries. These constraints are often written for practise ‘then’ and have to evolve with changes in practise as expectations, technologies, and capabilities change. There may be a hinterland where new ways of practising have not undergone any regulatory testing. This offers both the risk of regulatory sanction and an opportunity to exploit. An example is the challenges of designing regulatory principles for remote consulting and practise, even as they emerge and evolve.
  • Standards. Professionals are expected to practise within a set of minimal standards or risk claims of negligence or professional misconduct. Standards include behaviour, record keeping, quality of work, quality of premises, and continual professional development. Minimal standards impose an unavoidable cost‐base, including that of professional indemnity, which has implications for strategic planning. If a potential customer base does not have the resources to sustain these professional obligations, this has to be considered in strategy.
  • Comparability. For the customer, professional status is a form of guarantee and competition on the basis of status alone is not feasible. Different customer groups will compare the available professional services depending upon several factors, such as the resources they have available and how well informed they are (Figure 7.1).
  • Identity. Becoming part of a profession is typically the end result of years of commitment and hard work. The professional identity, in and of itself, places constraints on strategic choices. Activities that do not fit with personal and professional values and identity, even if they are considered perfectly reasonable by others (including governance), are not sustainable. Strategic choices, therefore, should align with professional values and identity.
  • Animal welfare. The need for veterinary professionals to place animal welfare ‘above all’ is an overriding strategic constraint. Any strategy that fails to take this into account is at significant risk.
Schematic illustration of most customers will judge their experience of professional services according to their own knowledge, experience, values, and resources.

Figure 7.1 Most customers will judge their experience of professional services according to their own knowledge, experience, values, and resources. Professional qualifications are necessary points of entry but not often points of comparison; basic competence is assumed.

7.2.3 Resources and Capabilities

Available resources and capabilities determine the strategic choices available. These can be considered with a VRIO analysis (Johnson et al. 2018):

  • Value. What is valued by customers and enables the organisation to respond to environmental opportunities or threats? For professional services, this might be based on specific knowledge or skills, or a combination of personnel and multidisciplinary capability which has not been assembled elsewhere. It might be premises which allow you to practise in ways that outperform competitors. It might even be a technique or piece of equipment that takes significant investment of time or money to acquire.
  • Rarity. Do you have something competitors do not? If you are the expert in the left leg of the camel, it is likely that your knowledge and skills are rare and, in the right marketplace, might be a significant strategic resource. Or you may have access to someone who is exceptional in developing a loyal customer base, once again creating strategic advantage.
  • Inimitability. Can resources and capabilities be readily imitated? In professional services, what is rare and/or valuable, unless it is protected in some way (e.g. by patent) can, ultimately, be copied and the associated strategic advantage lost. For professional service firms, this commoditisation of ‘rare’ services is a constant pressure, with a need to constantly innovate and replace; particularly for ‘rocket science’ practices (see Table 6.1). Complex processes, which efficiently integrate professional expertise with market conditions and customer needs might, in and of themselves, be difficult to imitate.
  • Organisation. Are current organisational resources adequate or does a strategy require investment in organisational change? Competitive delivery of strategy requires the right resources in the right place at the right time. This might be as simple as ensuring, for an ambulatory practice, that the veterinary professional is on time, with the right equipment available. This, nevertheless, needs organisation and, if done well, creates significant competitive advantage through reputation. If done poorly, it is costly.

7.2.4 What Is the Current Strategic Environment?

A PESTLE analysis is a structure for taking account of the overall strategic macro‐environment, which will influence not just competitors but stakeholders:

  • Political. The political environment accounts for both governmental (e.g. animal health policy) and nongovernmental (e.g. pressure from civil movements related to animal use/welfare). Border and regulatory issues might have direct implications for many areas of veterinary activity, e.g. animal movement, availability of supplies.
  • Economic. The background economic conditions will influence availability and cost of resources, cost of finance, purchasing power of customers, discretionary spend (e.g. what sort of pet and level of spend of pet care), even choice of if, and where, to make charitable donations. Judging and forecasting trends will influence timing and choice of strategic direction.
  • Social. Social trends might have significant influence of choice of strategy. Reducing consumption of animal products, increasing efficiencies in farming practice, some animal‐based sports becoming less popular; all of these are driven by wider social changes, which, whilst beyond the ability of many veterinary organisations to influence, might have significant implications for the viability of veterinary organisations.
  • Technological. Machine‐learning, miniaturisation of testing equipment, robotics, remote working, and consulting. All of these will likely have, or have shown, the potential to significantly change and disrupt ‘traditional’ ways of delivering veterinary services, and it is inevitable that as‐yet unidentified technologies will do similar, offering both challenge and opportunity to the veterinary sector.
  • Legal. The legal protection offered by professional licencing is significant, but this changes over time and might create both threat and opportunity as, for example, paraprofessional activities are brought into legally backed regulatory frameworks.
  • Environmental. With the impact of climate change, considerations of how this might impact veterinary activities (e.g. choice of anti‐parasiticides, sustainability) are coming to the fore. Climate change can have a direct impact on biosecurity and disease. With the veterinary professions’ growing recognition and acceptance of their role in One Health and protection of the ecosphere, environmental considerations might have dramatic impact on strategic choices (Nieuwland and Meijboom 2020).

7.2.5 What Are the Competitive Forces?

Analysis of the competitive forces acting on a particular strategic space can be achieved using the Porters Forces framework (Figure 7.2; Porter 2004). This looks at the following:

  • Barriers to/risk of new entrants to the market. How easy would it be for someone new to break into the current space? This is often limited by regulatory barriers, in the first instance. It might also include access to finance, personnel, and clients.
  • Barriers to/risk of substitutes. How easy would it be to replace current offerings with something completely new? An example might be in‐house laboratory testing replacing external clinical pathology.
  • Purchaser power. What choices do purchasers have when selecting services, and how does that influence pricing, profitability, or service uptake? The availability of remote consultation and prescription significantly alters the previous geographic constraints placed on veterinary services, for example.
  • Supplier power. How much can suppliers control access to material, personnel, other resources? How competitive is their sector and how much influence can you have over pricing/access? The larger the market you offer to a supplier, the stronger your position – hence, the capacity for consolidators and larger businesses to drive down consumable costs.
  • Competitive rivalry. Who else is in the space? What are their strengths and weaknesses? Where might there be a direct clash with any proposed strategy, or where might there be a niche to exploit? Is the space completely unexplored where there is no competition, so‐called ‘Blue Ocean’, which offers opportunity for a whole new model of activity (Kim and Mauborgne 2004)?
Schematic illustration of the Competitive Force Framework.

Figure 7.2 The Competitive Force Framework.

Source: Porter, M. E., (2008), The five competitive forces that shape strategy, Harvard Business Review 86, 79–83.

For an analysis of the UK small animal veterinary market using Porter’s Forces, see ‘Further reading 20:20 vision (British Veterinary Association, 2014)’. Whilst formulated for business, consideration of competitive forces acting on any organisation is valid and helps to understand the risks and potential of any given model. It could even be applied on an individual level.

Nov 6, 2022 | Posted by in SMALL ANIMAL | Comments Off on Understanding Strategy

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