There are three components essential to creating a winning strategy. These components are analysed and the results are compared with the case of Enron to see where the company went wrong.
Strategy Fit: A winning strategy has to fit the needs of the industry as well as the resources and capabilities of the organisation. In fact, it should be a balance between the two. What happened in the case of Enron was that its strategy of asset-light was in tune with the company’s strengths, but ignored its incompatibility in areas where such a strategy could not succeed.
Competitive advantage: When formulating a business strategy, it should be ensured that it will make the company achieve a competitive advantage over its rivals. Enron did have a winning strategy in gas and electricity when it pursued the policy of asset-light. But that advantage was undermined because it followed the same strategy in areas that would not work.
Performance and profitability: A winning strategy should ensure better performance and higher profitability. It should also ensure sustained competitiveness for the company and a good stand in the market. The problem with Enron was that it lost all its advantages mentioned above because it ventured out of its areas of core competency due to its entry into pulp, water and broadband. “Three questions can be used to test the merits of one strategy versus another and distinguish a winning strategy from a so-so or flawed strategy.”
However advantageous a company may be in terms of manpower, technology and size, what is more, important is the vision and the winning strategy developed by it that will ultimately decide its fate.