The second question is – where do you want to grow?
I will stay with my experience in China for a while yet. However, before I go into that I will quote, and expand upon a statement that I heard from a professor of strategy at INSEAD, Singapore. In his view, strategy – or strategic design – consisted of answering two questions:
- Where, in the market, do you want to play?
- How, in the market, do you want to play?
To these, I added two more:
- What capabilities do you have, and where are the gaps?
- Do you have the will, and the resources, to acquire them?
So, the focus in this article will be on the first of the questions that the good professor posed. They are indeed, very good questions.
Once again, I will divide my time in China into two phases. The first, which was the zero-growth phase and the second, which was the growth phase.
Our consumer health business, strangely, was dominated by sales to hospitals and, the segment that we concentrated in, was the digestive segment. When we examined the global portfolio of our organization, we found that the cupboard was largely bare.
Accordingly, and given the stage of growth of our organization, we decided to focus on our strengths, which were in the hospital segment of the gastro-intestinal market.
A few years down the line, things had changed dramatically. We had completed the foundational work, to prepare the organization for growth, and we now had a larger portfolio, thanks to a global acquisition.
We redesigned our strategy, this time focusing on growth – organic as well as inorganic.
What did we do?
First and foremost, we decided to invest in the retail segment of our gastro-intestinal business. We also decided to focus on the analgesic market, as well as the Vitamin C market.
The other brands in our portfolio were to receive minimal support to allow them to grow with, or slightly faster in the market. However, we designated the three brands that would be our growth drivers.
Further, we studied the market, to locate large gaps where we could possibly play. We identified two segments, and then proposed to acquire a company in one of these segments – cough and cold. Apart from being a large segment, it was less fragmented than the segment that we decided to ignore. Additionally, there were more targets in the “western OTC” kind of business, which would make the task of integration that much easier.
We had a clear vision of where, in the market, we wanted to play. This is critical, and is often overlooked again by many organization. While this statement may be hotly disputed, a cursory study of the companies that have failed in their strategic vision – organic or inorganic, bear testimony to my statement.