While there are different schools of thought about how strategy comes about, researchers generally agree that strategic focus is a common characteristic across successful organizations. Strategic focus is seen when an organization is very clear about its mission and vision and has a coherent, well-articulated strategy for achieving those. When a once high-flying firm encounters performance problems, it is not uncommon to hear business analysts say that the firm’s managers have lost focus on their customers or markets.
Example 5.1 Strategic Focus
Ladder Capital Corp., the New York-based real estate investment trust, is seeking strategic advice from investment bank Moelis & Co. as the mortgage-finance company facing the impact of the coronavirus pandemic. The trust’s share price plunged by 80% since the beginning of the year and is valued at a fraction of its value from two years ago — $400 million versus $1.5 billion. But the REIT has more than $300 million in cash after paying a quarterly dividend and has met all margin calls. REIT is a small “focused” portion of the $16 trillion (in 2018) U.S. commercial real estate market.
Source: Bloomberg, Gillian Tan, Mortgage Financier Ladder Taps Moelis for Financing Advice, Siyuan Wang, 2020Sp
The spirit of focus is echoed in the following two sections where we introduce you to the complementary notions of strategy as trade-offs and strategy as discipline.