"Best-Practice" is Not Strategy

When developing a strategy, it is important to recognize the difference between strategic and operational decisions.

Strategy is the choice of how and where to compete. Strategy determines what business the organization is in, its target market, identifies its particular strengths and how it is differentiated from its competitors. Strategic decisions establish the direction in which the organization will travel. Conversely, operational decisions determine how the organization will get there.

Operational tasks include market research, product and service development, pricing, promotion and sales, budgeting, staffing, setting key performance indicators, and measurement of results. These are functional specialties. Usually there is someone in the organization with the right expertise to get results in these areas, or it is possible to bring in an expert on a short-term contract who knows what needs to be done. Operational decisions are informed by "best practices". You look at what other people have done, and either copy them or learn from their mistakes.

When it comes to developing a new strategy, however, there is no "best practice". By definition, you are pioneering. Strategy requires reconceptualizing the organization's purpose, conceiving a new vision, to redefining your target market(s), recognizing strengths that were not previously identified, and segmenting your customer base in a new way, to identify new sources of competitive advantage. This requires challenging all your assumptions about the correctness of what is, and focusing instead on what could be.

Another distinction could be this. An operational issue is one where someone knows the answer. The expertise is available, either within the organization, or externally. A strategic issue is one where no one knows the answer, because a new path is being forged. No one really knows how your business should compete. You make a choice and then build an implementation plan based on this choice.

You don't get competitive advantage by copying someone else's strategy. Your strategy should be unique, based on the current environment, the needs of your chosen target market and the organization's unique strengths.

When you are building a strategy, the question "What are other people doing?" should sound alarm bells. Marketing guru Seth Godin says "By the time there is a case study in your specific industry, it's going to be way too late for you to catch up." Competitive advantage goes to those who choose a unique path and commit to its success.

The first step in formulating a new strategy is to accept that no one knows the answer. The complexity of this task should never be underestimated. Everyone involved needs to be willing to suspend judgment, explore the questions and resist the temptation to supply the "answers" from their own expert point of view.

Got a strategy or a Strategy?

The term "strategy" has a variety of different meanings. "Strategic" can be used as a synonym for "important" or "sensible". You can have a "marketing strategy", a "recruitment strategy", a "succession strategy" a "success strategy"; a strategy for installing the new computer system or a strategy for getting the staff to reduce their number of sick days.

None of that is what I am talking about when I refer to Strategy (with a capital S). When I refer to Strategy I mean "Competitive Strategy", and it has a very specific meaning.

Competitive Strategy is "the choice of how and where to compete". It's like a recipe for how you plan to achieve competitive advantage.

The three components of a Competitive Strategy are:


1. The market in which you choose to compete

2. The way in which you intend to differentiate your offerings from those of your competitors, and

3. The identification of the strategic assets which you possess and which support the approach you have chosen.

How often does your organization analyse or review these matters? Does the discussion lead to a genuine exploration or is it a perfunctory "covering-off" of these points? The questions required to formulate an original strategy are the "dumb questions" that are often avoided, because the answers can appear obvious and no one wants to look stupid. They can't be answered comprehensively in one afternoon. Many people are impatient with such discussions and gloss over the issues, fast-forwarding to the action items.

Your Competitive Strategy is the compass which should guide all your other business decisions and activities.

Your "big S" Strategy is what makes your business unique. Can you afford not to have one?

Use what you've got, to get what you want!

Business strategy is your plan for achieving competitive advantage. It's your choice of how and where to compete.

Your business strategy is different from your marketing strategy (your plan for communicating what you offer to customers or clients).

Your business strategy sets the agenda for all your business activities. It establishes criteria for all your business decisions. And if you're going to innovate, it should be in pursuance of the business strategy.

Your business strategy should be unique. How do you get innovative with your business strategy?

Competitive advantage is achieved through:

your strategic assets and
how you choose to use them.
The equation is: What you have + how you use it = your competitive advantage.

In other words, "Use what you've got, to get what you want".

To get innovative with your strategy, get creative with both parts of the equation. Think more deeply about your strategic assets (these are usually intangible things) and reconceptualise the way you view them. Then consider how these can best be applied in ways that your customers or clients value.

Sounds easy? The hard part is to see beyond the current reality and to forge a unique path, rather than copying what others have done. What's required is vision, the art of seeing the invisible.

More on this next time.