Strategy is a unique game plan designed to gain a position in a specific market. It is unique because it takes advantage of a companys specific strengths while minimizing or neutralizing its weaknesses and exploiting the weaknesses of its competitors. OK, no duh. Obviously, this is easy to say but very hard to do. Strategic development is complex because markets are fluid; they change rapidly and they change all the time. This is what the military refers to as the fog of war. However dense the fog, a plan does need to be developed, tested, implemented and revised as circumstances dictate. As I see it, there are six steps in developing a business strategy: 1.Development of a concise mission statement
2.Articulating a clear vision
3.Development of a hypothesis on how to achieve that vision
4.Testing and revision of the hypothesis
5.Implementing and executing the strategy (the outcome of the hypothesis)
6.Tuning the strategy as circumstances warrant. Unfortunately, where most business strategies go awry is in three areas: 1. The mission/vision development is either skipped or is so broad and full of feel good fluff that it means nothing to the employees or the customers. 2. The business jumps directly from its strategic hypothesis right to implementation. Thus skipping the appropriate due diligence that would dramatically increase the odds of success. 3. The business spends far too much time on the due diligence. Getting stuck in paralysis by analysis and thus missing out on the opportunity. Strategy can be an elusive and slippery thing to manage. It takes the view from 40,000 feet through to the subatomic particle approach to develop. It takes team work and thinking like a general manager. And it requires constant, dispassionate evaluation and adjustment. The Vision Thing Before a company can develop a strategy; it must articulate a vision for itself. The vision that will guide and focus the business must address three questions: 1. Who are we?
2. Where are we going?
3. How are we going to get there? If the vision includes too much in an effort to be all things to all people, it will become unwieldy or worse, meaningless. Including too much in a vision is probably the single biggest mistake that companies make when drafting a vision statement. Ive heard intelligent presidents and CEOs say they dont want to state a vision because it could be too confining. Ive always assumed this means one of two things: either the leader is copping out because he or she lacks vision, or the leader truly believes the statement and doesnt understand that the lack of vision ensures a lack of focus. Managers are faced with countless decisions every day that can steer the company left or right of their intended course. A clearly articulated vision is like a compass; it helps steer decision making in the direction the company has planned to go. Yogi Berra once said, If you dont know where you are going, you might not get there. As usual, he was absolutely right. Development of a Strategic Hypothesis While consultants certainly can help in the development of a strategic hypothesis, I don't think it's smart to rely exclusively on consultants to test a hypothesis. Testing of a hypothesis is also a readiness assessment of the organizations ability to execute the strategy. The testing phase will flush out internal objections to the plan and organizational barriers to instituting the plan. More importantly, only the companys actual employees have the industry experience to really put the hypothesis to the test. If your people arent part of the process, it's unrealistic to expect them to take responsibility and accept accountability. Avoiding Paralysis by Analysis No strategy ever succeeds without having to be changed. Remember the militarys fog of war? It can be deceptive. You may not always see things clearly. Testing and evaluating the strategy for flaws and opportunities never ends. One of the measures of a good leader is the ability to change course when necessary. Simply recognizing and acknowledging that you cannot know all that is knowable and that you will have to adjust on the fly, will help keep you from fooling yourself into waiting to move while you are still in the search for100% certainty. The rule of thumb I like to use is 60% for low cost/lower risk decisions and 70% - 80% for high cost/higher risk decisions. In other words if I have 60% of what I believe is the knowable universe than I pull the trigger on a decision on the lower cost/risk decisions. Then I monitor the results and adjust as circumstance warrant. In the final analysis, strategy is an art. If it was pure science, the DOW would be at 50,000 and guys like me would stop writing opinions on business strategy. |
