Strategy is a terribly misunderstood term. While of older vintage, it’s right up there with ‘Artificial Intelligence’ and ‘Blockchain’. Words which sound nice but are often used in the wrong context. All the management gurus seem to have a different definition of Strategy. Exploring all the different definitions could fill up a lot of paper. So, instead of exploring those, this article looks at what Strategy is not. With the intent that busting these 9 myths will give us a clearer understanding of Strategy.
And the 9 myths are…
Myth #1: Strategy and planning are the same
Strategy and planning are quite different. Plans are largely centred around budgets. How do I allocate my finite set of resources? How much money should I spend on marketing and how much on product development? In contrast, strategy is about making an integrated set of choices that differentiate your company from competition.
When approaching strategy from the perspective of budgeting, its common to focus on matching ‘strategic initiatives’ to budget numbers. Strategy by number crunching is boring. And it doesn’t work. For instance, your strategy can’t be to sell fewer units at higher margins. That’s obvious and doesn’t tell anyone how you’re going to do it. And it doesn’t differentiate you from competition in any way. That said, every successful strategy needs the support ofa plan to make it happen. Only, the strategy should give direction to the planning. Not the other way around.
Myth #2: Strategy is focused on what I should do
Strategy does help you choose what you should be doing. Yet, what is equally (and in many cases, more) important is what you choose ‘not to do’. That sharpens your focus significantly and prevents you from chasing every new opportunity which you come across. It’s quite simple to fall into the trap of doing everything. Once in this trap, it’s difficult for customers to know what you do. It’s difficult for you to have a differentiated offering. It’s fine being open to new opportunities. Yet, if you don’t have a framework to decide what your business won’t do, it will save you valuable decision-making time.
Myth #3: Strategy requires fancy frameworks
Somehow, good strategy has become inextricably linked to fancy frameworks. It all started with the BCG Matrix. While that’s a fairly simple and useful framework for larger businesses, that can’t be said for some of the newer (and fancier) frameworks developed since then. The less frameworks, the better. Frameworks (fancy or otherwise) are useful to frame the current situation. A great example is the SWOT (strengths-weaknesses-opportunities-threats) analysis. Properly done, a SWOT is very useful for articulating the current situation. For the future, stay away from established frameworks like the plague. They force you to fit your future into a box (or some other fancy shape) and constrain thinking. That said, if your strategy is well explained by a custom-made, simple framework, go for it. Only, make sure that the strategy comes first- not the framework.
Myth #4: You can have the same strategy as another company
If you successfully copy another company’s strategy, either that company, your company or both of you are going out of business soon. Thankfully, it’s difficult to copy strategy. Uber and Lyft look very similar on the face of it. Dig a little deeper, and their strategy differs significantly. So, while it’s important to look at competition while developing your strategy, don’t obsess over them. Your focus should be on developing your business into something unique; not making your business a clone of your competition.
Myth #5: Strategy is complex
Strategy should be simple. If you can’t explain it to someone, it isn’t simple. Your strategy, or at least relevant parts of it, should be understandable by every employee in your business. Only when all your employees understand it can your organization move towards realizing the strategy.
Yet, while strategy should be simple, it’s important that detailed reasoning goes into the development of the strategy. It’s also important to document reasoning. This is helpful when you are revisiting the strategy or trying to analyse why your strategy isn’t working. Having that reasoning will help you understand what paths you have chosen in the past and help you course correct quickly
Myth #6: Strategy is a science
Following a fixed process to develop strategy is useful. Yet, strategy is more art than science. The most important ingredient? Creativity. Game-changing strategies are developed through creative thinking. A spark of intuition, a connection between different ways of thinking, a leap into the unexpected. That said, don’t take forever to formulate your strategy. Set timelines and make sure you complete developing your strategy and plan in those timelines.
Myth #7: The leader develops strategy
Many strategy development exercises turninto the group agreeing with the senior-most persons ideas. If this is the case, your strategy might be limited to the thinking of the senior most person. You’ll miss out on the hands-on, customer facing experience and knowledge of the people lower down the line, which might prove invaluable to your business.It’s important that the leader performs the role of a team member rather than the leader in a strategy development exercise. Everyone should be encouraged to speak their mind. Involve people from outside your industry: ‘Outsiders’ can bring in refreshing, unconstrained ideas. Involve people from other industries or invest inan advisor to bring perspective to the strategic planning exercise.
Myth #8: Building a great strategy is enough
Your strategy is your company’s roadmap. Use it as a guidance tool. Not as a guarantee to success. Companies should always be aware of disruptive forces and be nimble-footed and flexible enough to execute emergent strategies. Emergent strategy is the strategy you develop in reaction to disruptive forces. An example of not responding to disruptors is the Polaroid Corporation. While a pioneer in instant photography in the 1960s it did not react to the digital camera revolution which made instant photography a niche market.
Myth #9: Strategy implementation is easier than development
It’s not. It’s more difficult for three reasons. One, for successful implementation, everyone needs to know and believe in the strategy. Two, there often need to be organizational changes to ensure that appropriately skilled employees are in the right positions. Three, implementation of initiatives to realize your strategy needs constant program management.
Closing thoughts
Ensuring you’re working on the right thing brings more and faster success than working harder. And you need a strategy to identify and ensure that you are working on the right thing. Your effort sets the foundation of your business. Your strategy sets your ceiling.
Strategy is one integrated set of choices. What’s your winning aspiration? Where will you play? How will you win? What capabilities are required? Focus your energies in answering those questions. If you do that and avoid falling for one of the 9 myths, chances are you’ll develop a great roadmap for your company’s future.
