Business Strategy
This week we’re looking at the Debunking the Dark Art of Strategy, because there are almost as many definitions of strategy and how to create one as there are opinions. We’re constantly bombarded with sales pitches that somebody’s strategic planning tool is the best – we’re going to explain why there is no single perfect strategic planning tool.
But first, some statistics to set the scene:
68% believe their organization is good at developing strategy, down from 80% in 2012
67% of leaders believe their organization is good at crafting strategy but only 47% believe their organization is good at implementing strategy.
Only 2% of leaders are confident that they will achieve 80-100% of their strategic objectives
33% of leaders rate their organization as poor or very poor at implementing strategy
67% of well-formulated strategies failed due to poor execution
4.5% of strategy potential is lost to poor action planning
40% say their company is good or excellent at feeding lessons from successful strategy implementation back into strategy formulation
In an alarming 49% of organizations, leaders spend only one day a month reviewing their strategic implementation.
Only 41% of respondents say their companies provide sufficiently skilled personnel to implement high priority strategic initiatives.
30% cite failure to coordinate across units as the single greatest challenge to executing their company’s strategy
What is Strategy, exactly?
There are so many different definitions of strategy that it can be confusing. Is it planning? Is it direction-setting? Is it creation? Is it culture?
I’ll let you in on a secret – there is no perfect definition of Strategy!
It’s the “thing” that drives planning, direction, creation, culture, and other aspects of your business. The key is to find a definition that makes sense to you – here are some quotes on strategy to get you thinking:
"The future is already here – it's just not evenly distributed." — Willian Gibson, American science fiction author
"In real life, strategy is actually very straightforward. You pick a general direction and implement like hell." — Jack Welch, former CEO of General Electric
"The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time." — Henry Ford
"The essence of strategy is choosing what not to do." — Michael E. Porter, American economist and founder of strategic management
"Strategy is not the consequence of planning, but the opposite: its starting point." — Henry Mintzberg, management thinker
"The real challenge in crafting strategy lies in detecting subtle discontinuities that may undermine a business in the future. And for that there is no technique, no program, just a sharp mind in touch with the situation." — and again Henry Mintzberg
"Winning should be at the heart of every strategy." — A.G. Lafley & Roger L. Martin in their book Playing to Win: How Strategy Really Works.
"Culture eats strategy for breakfast." — Peter Drucker, American economist and pioneer of modern management theory
"Transient advantage is the new normal." — Rita Gunther McGrath, Professor at Columbia Business School
"By failing to prepare, you are preparing to fail." — Benjamin Franklin
"If you're competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering." — Jeff Bezos, Founder & CEO of Amazon
"Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win." — Sun Tzu, Chinese philosopher and military strategist
"Today, no leader can afford to be indifferent to the challenge of engaging employees in the work of creating the future. Engagement may have been optional in the past, but it's pretty much the whole game today." — Gary Hamel, American economist and business consultant.
“A goal without a plan is just a wish.” — Antoine de Saint-Exupéry, French writer and pilot
· "Someone is sitting in the shade today because someone planted a tree a long time ago." — Warren Buffett, American business magnate, investor and philanthropist
"Strategy execution isn’t something other people should worry about while you are doing something far more important." — Jeroen de Flander, Dutch expert on strategy implementation
"Business opportunities are like buses, there's always another one coming." — Richard Branson, British business magnate, investor, and philanthropist
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter Drucker
"The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption." — Clayton Christensen, American economist best known for coining the term disruptive innovation.
"A higher rate of urgency does not imply ever-present panic, anxiety, or fear. It means a state in which complacency is virtually absent." — John P. Kotter, world renowned expert on change management.
"Sticking with a plan when you are winning sounds simple, but it's easy to become overconfident and get caught up in events. Long-term success is impossible if you let your heat-of-the-moment reactions trump careful planning." — Garri Kimowitsch Kasparow, Russian chess player and politician
"The biggest risk is not taking any risk... In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks." — Mark Zuckerberg, Founder & CEO of Facebook
"A vision is not just a picture of what could be; it is an appeal to our better selves, a call to become something more." — Rosabeth Moss Kanter, American sociologist and Professor at Harvard Business School
There is clearly little agreement to what strategy is. If you’re a business owner/manager (ie the people developing and executing strategy) you need to have a clear understanding for what strategy means to you.
Developing your business strategy
Once a year I help mark final assessments for high school Business Studies students. They have learnt a range of strategy analysis tools in the course of their study and apply them to several case studies to advise owners/managers. It’s immensely interesting because the marking guides mirror real life:
There is no perfectly correct solution (unless you can predict the future)
Successful strategic plans include:
Identification and analysis of factors impacting the business in it’s external and internal landscapes;
Alignment of the strategy to the business’s/owner’s goals clear
The analysis of those factors to support the proposed strategy makes the strategy understandable and implementable.
One crucial aspect of the assessments is that no one strategy tool is used for every case study. The students are taught a range of models because there is no single strategy tool that is better than the others – Often a tool is used because somebody is comfortable with it.
Everybody would be familiar with some of these common strategy tools– the key is to use the one that works for you and your business:
SWOT Analysis
Porter’s Five Forces Analysis
Balance Scorecard
McKinsey 7S Framework
Ansoff Matrix
PEST / PESTEL Analysis
VRIO
Value Chain Analysis
Business Model Canvas
By now you understand the purpose of a strategy planning tool is simply to focus your attention. If one (or more) works better for you and your management team, use it.
If the strategy planning tool isn’t the most important aspect of strategy planning, what is?
The main barrier to developing a good business strategy is our thinking. Because we’re all working in our businesses every day, every week, and every month it’s difficult to step outside that to objectively view the business in a different way. It’s a skill that needs to be practiced regularly to be effective.
How to exercise your Strategic brain:
Know your business and industry well – competitors, products/services, regulators/regulations, suppliers, customers, staffing, supply chain etc.
Schedule time for strategic thinking – clear the decks for some dedicated time away from putting out bushfires (mine is a Friday morning – don’t try to call me then).
Improve your communication skills – communication is a two-way street, so this includes improving your listening skills.
Develop your problem-solving skills – find ways to solve situations with ambiguity and incomplete information.
Upgrade your creative and critical thinking skills – If you were still in school I’d suggest joining the debating team.
Get better at forecasting and managing risk – you rarely find what you’re not actively looking for.
When your brain is exercised enough you'll be ready to:
Understand your Goals
Develop your Strategy
Use that to develop an actionable Plan
Execute the Plan
Review progress, Adapt where necessary & when needed
You’ll find more on this topic in this article.
Here are some additional useful links for building strategic thinking skills: