Leveraging Growth with Business Strategy Formula

In the past few years, the world has become a much more turbulent place as a result of the spread of pandemics, the outbreak of wars, geopolitical upheavals, collapse of the traditional order and the rise of AI.

- Yao Rongjun, Liu Xuewei

Such unprecedented and momentous changes are having a profound impact on the business world, affecting both the internal and external environment of business operation and strategy management.

In the past when the business environment was relatively stable, the basic hypothesis of strategic management was that industrial boundaries and economic conditions would remain stable for a period of time. This enables decision-makers to formulate strategies that could ensure the steady growth of their companies. Today, however, the complexities and uncertainties of both the internal and external environment have risen dramatically, causing greater variations in the strategy management hypotheses and complicating the decision-making process.

Based on 14 years of consulting experience with dozens of Chinese enterprises, The Leverage Consulting has identified two major challenges that companies face in strategy management within the context of the new economic era.

Firstly, many Chinese enterprises are still operating under traditional management models, with the competition among companies being highly homogenized, causing low profits and sluggish growth. Upon analyzing the underlying causes, we found that these Chinese companies are similar to Japanese enterprises several years ago—they have yet to break free of the paradigm mentioned by Michael Porter, where operational efficiency is substituted for strategy.

Although these companies strive to make breakthroughs in strategy management, they inevitably end up focusing their resources on areas like products, technology, distribution channel building, and using platforms like the internet to capture traffic, making these their business priorities. What they fail to realize is that whatever they can do, their competitors can also do.