Strategic Thinking Example
"We take Care of The Essential", Says British Gas
Let us look at strategic thinking example.
A few years ago, British Gas in the UK changed its mission and wanted to expand its business activities. The new “mission” statement indicated a new direction for the company, “We take Care of the Essentials” they announced.
This mission statement suggested that British Gas intended to enter new businesses in order to achieve its mission i.e. utilities must now expand to include electricity, telephones, water as being "the essentials".
Other essentials such as roadside recovery services, home appliances maintenance and so on and so forth were now needed to fulfil this new mission.
This in turn meant creating a “gigantic” IT System to cross sell products from all these "essentials" also became an "essential" and a major strategic initiative on its own right.
British Gas went on and bought the AA (The Automobile Association), which was certainly a “strategic thinking” move and essential to the overall company mission and corporate strategy at the time.
The AA in its infinite wisdom decided to buy a “golf club” to establish a new business and facility for its members.
Such a business is certainly not strategic because it is not in line with the overall company mission of "we take care of the essentials", unless of course some of the senior management at the time thought it to be an "essential"?
How such a new business venture was approved by the main board of the company is beyond anyone’s understanding or comprehension Nevertheless, speculating on the continuity and success of such a business venture must really have been a child play.
Low and behold, within two years the business was closed down as not being "strategic" or in line with the company overall strategy, in other word, not a strategic business.
Now, when British Gas decided to change its direction completely and focus solely on energy; which was forced by the turmoil in the energy market, most of its newly acquired businesses instantly became non-strategic.
The demise of these non-strategic businesses to the trained eyes of any real “strategic thinker” was just a matter of time.
As it happened, within a couple of years, British Gas sold its banking business, the Automobile Association, and its Telecoms business.
Thinking "Strategically", the company started to search for more energy assets to secure Gas supply for its customers in line with its new mission and corporate strategy.
The above story demonstrates to you that the same thinking i.e. buying the AA and then selling the AA were both “strategic thinking” and absolutely correct at the time of execution (of course the AA to buy a golf club, was never strategic).
Strategic Thinking - Part One
In business and even in life, we sometimes relate strategic thinking to something very expensive or very clever. In reality, this is not the case.
Strategic Thinking - Part Two
You Are Here!
An Example of Strategic Thinking from British, Gas when they decided to buy the AA.
Strategic Thinking - Part Three
Our Conclusion on Strategic Thinking and how Complex or Simplex it could be..
You may also be interested in...