Strategy Demystified - The 3 Key Components of Proper Strategies
There's a lot of unnecessary mystique around the subject of business strategy. Most organisations get that they need to have a strategy, but many don't know where to start or how to move from box-ticking soundbites to delivery of true value.
Sadly, there are plenty of organisations and consultants out there peddling strategy-by-numbers and other pre-fabricated models, many of which ignore one of the most important things about strategy: it completely depends on the unique characteristics and context of the organisation in question.
A good strategy is about taking your organisation's relative strengths (and overcoming, neutralising or working around its relative weaknesses) and applying a coherent set of actions based on those things to turn that position into sustainable success.
There's a lot packed into that previous sentence - maybe more than you'd think - and we'll unpack some of it in future articles. For now, though, the headline is that, when it comes to strategy, one size definitely does not fit all.
Does this mean that there are no guiding principles that everybody can apply, because everyone's too different?
Fortunately not. There are three key components of any excellent strategy: diagnosis, definition and drive.
However unique or specific each organisation's situation might be, paying proper attention to these three key components will go a long way to setting you on the path to having a proper strategy.
Diagnosis is where all excellent strategies start.
It's also where many failing (so-called) strategies failed to start.
What is it you're really trying to address? How do you know you're trying to address the right things?
By taking a structured, unbiased look at your competitive advantages, your marketplace and the wider world you operate in, you help to ensure that whatever you're aiming for, it's right for you.
Some organisations need help with identifying the right questions to ask; others know (most of) the right questions, but need independent support in analysing the relevance or reliability of their answers, or even just some constructive challenge to help uncover different perspectives and ideas.
Whatever your unique needs, it's crucial to make sure you prime your strategy for success by properly diagnosing the challenges you're addressing.
An excellent business strategy builds on a proper diagnosis to define the broad approach to the challenge ahead.
For example, if the diagnosis shows that an organisation's competitive advantage sits heavily around the expertise of its people, the strategy might be defined as "preserve and make the most of our knowledge base".
Many organisations mistake this stage of strategy-setting for being about goal-setting (and those goals often then become very generic, unrealistic and divorced from the diagnosis). Goals might feature, but this is more about defining the overall direction and priorities.
When doing this, it's really important to look at all the relevant options and make clear, courageous decisions about what matters most to you. Again, a sensible external person can help with this - someone who knows and gets strategy is best, but anyone with natural intelligence and a willingness to help is definitely better than nothing.
Excellent strategies are underpinned by a clear, comprehensive and coherent set of actions to deliver them - without this, the strategy has no drive.
The most common pitfalls are:
not properly going through the diagnosis and definition stages of strategy-setting (so actions are aimed at the wrong things and lack any real coherence); and
assuming that once the direction is clear, the implementation will take care of itself (so there is no real follow-through or accountability for delivering the strategy).
Using the example from above, to preserve and make the most of the organisation's knowledge base you might see a range of top-level actions around things like:
Motivating and retaining existing talent.
Identifying and addressing critical failure points (what happens if Joanna or Joe leaves the business?).
Launching a targeted recruitment campaign.
Ensuring employees have appropriate restrictive covenants in their employment contracts.
Exploring ways to turn nebulous know-how into a clear and marketable product.
Everything the organisation does would then be considered in light of whether or not it contributes to the identified actions.
Put bluntly, driving a proper set of coherent implementing actions for a strategy isn't rocket science - but it's not always easy either.
Perhaps this is why so many organisations opt for the easier path of paying for one-I-made-earlier strategies which don't require them to ask or answer any really tricky questions, or just stop at the stage of announcing grand goals and visions, without any real plan of how to achieve them - it's all easier than actually doing it properly.
But then, famously, good things don't come easy - much like sticking to New Year's resolutions in fact.
So do yourself a favour, and resolve that this year your organisation will put in place a proper strategy (or refresh its existing strategy), based on the three components described above. Do that, and this could be the year when you really fly.
© 2018 Candid Commercial Limited
If your New Year's resolution is gym-based, you often hire a personal trainer; if it's strategy-based, then consider engaging Candid Commercial to help you stay on track - we'd love to be involved.
Further reading: we recommend Good Strategy / Bad Strategy - The Difference And Why It Matters by Richard Rumelt.