I’m a fan of the “Masterchef” cooking show. I like to relax on the couch with a glass of wine and a take-away meal and watch other people slaving in the kitchen.
Developing a strategy for your business is a bit like a Masterchef team challenge. The contestants come onto the set in the morning and they have no idea what they will have created by the end of the day. The teams are given a challenge such as “You'll be making lunch for a law firm” or “You’re doing dinner for the Dalai Lama”. For a moment they stand around in shock, and it is evident that they have no idea how they are going to achieve this. There’s no picture of the finished product for them to follow. Subject to a few parameters, they have free choice as to what they will cook. They find themselves with a basket of ingredients, some of which are unfamiliar to them. They know one thing: by the appointed hour, they must have produced something to “plate up”. As a team they combine their ideas and expertise. Usually they rise to the occasion, and by the end of the day (apart from the occasional culinary disaster), they have produced a delectable meal that they can all be proud of.
Similarly, when you are baking a strategy, you are dealing with inherent uncertainty. At the start of the process, no one knows what the end result will look like. And it’s actually best if no one thinks they know the answer. Everyone has a different perspective to offer. It’s an opportunity to consider many possible futures and directions, and to set the organization on a unique path where it can compete on its own terms. No one knows what the future will hold, but you can make some educated assumptions on which strategic decisions can be based.
The Strategy Pie challenge is to combine the available ingredients so as to make the most of the organization’s resources and “put value on the plate” for your customers.
Monday, August 1, 2011
Wednesday, July 20, 2011
A Strategy is not a Document
Everyone's looking for quicker, easier ways to do things in business.
People want to get things done quickly so they can move on with the next thing. This leads to a quest for the automation of tasks. Standard forms and templates are developed to make the work easier. Standard letters provide appropriate wording for various different purposes and commonly-encountered situations, so there is no need to "reinvent the wheel".
Sometimes strategy is treated as a task to be completed as quickly as possible, so that everyone can proceed to action.
I once purchased an electronic "Build A Business Strategy" program, which promised much but delivered very little. It offered a template containing fields to insert "Vision"; "Mission"; "Values"; "Present market share"; "Desired market share"; "Goals" etc. This "paint-by-numbers" offered nothing in terms of guidance as to how to think about these issues.
With strategy, there tends to be an emphasis on completing a strategy document, so we can say that the strategy is "done". People focus on developing words and phrases that look and sound good, but which are too general to have any real meaning and are really "empty rhetoric"*. It's as if the goal is to fill every field of a template with text, then the job is done.
The aim is not to produce a document, but to produce a strategy which can then be documented. These are two different things. It's not enough to fill in the "blanks". Each of the "blanks" requires comprehensive thinking, not jargon and ready-made phrases.
Just having words doesn't mean you have a strategy. Work on developing a strategy, not a document.
People want to get things done quickly so they can move on with the next thing. This leads to a quest for the automation of tasks. Standard forms and templates are developed to make the work easier. Standard letters provide appropriate wording for various different purposes and commonly-encountered situations, so there is no need to "reinvent the wheel".
Sometimes strategy is treated as a task to be completed as quickly as possible, so that everyone can proceed to action.
I once purchased an electronic "Build A Business Strategy" program, which promised much but delivered very little. It offered a template containing fields to insert "Vision"; "Mission"; "Values"; "Present market share"; "Desired market share"; "Goals" etc. This "paint-by-numbers" offered nothing in terms of guidance as to how to think about these issues.
With strategy, there tends to be an emphasis on completing a strategy document, so we can say that the strategy is "done". People focus on developing words and phrases that look and sound good, but which are too general to have any real meaning and are really "empty rhetoric"*. It's as if the goal is to fill every field of a template with text, then the job is done.
The aim is not to produce a document, but to produce a strategy which can then be documented. These are two different things. It's not enough to fill in the "blanks". Each of the "blanks" requires comprehensive thinking, not jargon and ready-made phrases.
Just having words doesn't mean you have a strategy. Work on developing a strategy, not a document.
Wednesday, July 6, 2011
"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.
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.
Tuesday, June 21, 2011
A Strategy or a Plan?
A strategy isn’t a plan and a plan isn’t a strategy.
A strategy is a like a compass for your business. It points to the direction in which you will travel, and it also tells you where you are __not__ going. A plan, on the other hand, is like a map showing how you will get there.
A lot of people get impatient with the strategy and head straight for the plan. But without a clear strategy, the plan is destined to be generic and bland, and will not produce competitive advantage. You end up doing work that you don’t want to do, competing on price and losing market share to larger, more powerful competitors.
As Lewis Carroll wrote in Alice in Wonderland, “If you don't know where you are going, any road will take you there.” Your plan may be very creative, but if it is not pointed in the right direction, that’s all it is – creative.
To have a competitive strategy, you need to be able to state:
*Which target market(s) you choose,
*How you serve that market differently from your competitors, and
*What strategic assets you have that underpin these choices.
These questions can be really hard to answer, and even harder to answer innovatively. It’s no wonder a lot of people give up on strategy.
The strategy is often confused with the plan. The result is a catalogue of operational action items such as:
*”Hire marketing staff”
*”Develop branding”
*”Build relationships with customers”
*”Increase sales”
*”Upgrade the computer system”
*”Build a new web site”
*”Introduce KPI’s”
*”Improve internal and external communications”
*”Introduce customer satisfaction surveys”
*”Implement systems”
*”Advertise more widely”
*”Seek new customers”
*”Undertake market research”
*”Start viral marketing campaign”
These could all be valuable steps but none of it is strategy (even if you made them more specific). Without a strategy it’s just a grab-bag of scattergun actions.
Further, because each of these activities resides in some area of functional specialty, they tend to become the responsibility of the relevant “expert”. This tends to dampen any wide-ranging discussion of the possibilities. Either everyone looks to the expert for the answer, or the expert protects their “turf” by taking the lead and defending their position.
With strategy, you are all on neutral territory, because no one knows the answer. By definition, when you create strategy you are pioneering and forging a new path.
Strategy is not action. It is an exercise in conceptualization and articulation. It requires the expenditure of mental energy, and time for reflection and incubation. It can drive action-oriented people crazy. They will not find the answers because they are not even asking themselves the questions.
However, patient people who persevere will be rewarded with an original strategy which provides focus and enables the business to compete on its own terms.
Are you making a strategy or a plan?
A strategy is a like a compass for your business. It points to the direction in which you will travel, and it also tells you where you are __not__ going. A plan, on the other hand, is like a map showing how you will get there.
A lot of people get impatient with the strategy and head straight for the plan. But without a clear strategy, the plan is destined to be generic and bland, and will not produce competitive advantage. You end up doing work that you don’t want to do, competing on price and losing market share to larger, more powerful competitors.
As Lewis Carroll wrote in Alice in Wonderland, “If you don't know where you are going, any road will take you there.” Your plan may be very creative, but if it is not pointed in the right direction, that’s all it is – creative.
To have a competitive strategy, you need to be able to state:
*Which target market(s) you choose,
*How you serve that market differently from your competitors, and
*What strategic assets you have that underpin these choices.
These questions can be really hard to answer, and even harder to answer innovatively. It’s no wonder a lot of people give up on strategy.
The strategy is often confused with the plan. The result is a catalogue of operational action items such as:
*”Hire marketing staff”
*”Develop branding”
*”Build relationships with customers”
*”Increase sales”
*”Upgrade the computer system”
*”Build a new web site”
*”Introduce KPI’s”
*”Improve internal and external communications”
*”Introduce customer satisfaction surveys”
*”Implement systems”
*”Advertise more widely”
*”Seek new customers”
*”Undertake market research”
*”Start viral marketing campaign”
These could all be valuable steps but none of it is strategy (even if you made them more specific). Without a strategy it’s just a grab-bag of scattergun actions.
Further, because each of these activities resides in some area of functional specialty, they tend to become the responsibility of the relevant “expert”. This tends to dampen any wide-ranging discussion of the possibilities. Either everyone looks to the expert for the answer, or the expert protects their “turf” by taking the lead and defending their position.
With strategy, you are all on neutral territory, because no one knows the answer. By definition, when you create strategy you are pioneering and forging a new path.
Strategy is not action. It is an exercise in conceptualization and articulation. It requires the expenditure of mental energy, and time for reflection and incubation. It can drive action-oriented people crazy. They will not find the answers because they are not even asking themselves the questions.
However, patient people who persevere will be rewarded with an original strategy which provides focus and enables the business to compete on its own terms.
Are you making a strategy or a plan?
Tuesday, May 17, 2011
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?
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?
Wednesday, April 27, 2011
Utilize your unique ingredients
In the latest Fast Company magazine, there’s a story about the “The Top 50 Innovative Companies”. I bought it excitedly, but found it quite disappointing. The story focuses on the latest products or initiatives of these companies. It should be called “The Top 50 Innovations”. It tells us nothing about the companies and what has enabled them to produce these innovations.
You won’t get competitive advantage by copying what these companies have done. They probably have a completely different set of ingredients from the ones you have to work with.
When setting your strategy it’s important to understand your strengths. Today I'm going to talk about culture.
It’s been said that “Culture eats strategy for breakfast” – suggesting that it’s more important to work on your organizational culture than on your strategy.
Sure, if you have a toxic work culture, work to improve it as a priority, because if you don’t, you’ll lose your staff. But to suggest that you should choose between strategy and culture makes no sense. Culture is an ingredient of strategy.
Your organizational culture is one of those “strategic assets” I wrote about last time. It’s unique to your firm and difficult for your competitors to replicate. The question is: what does your culture enable your organization to do better than your competitors can?
It’s important to be honest about what kind of culture you have. If your culture is truly conducive to innovation, then base your strategy on being innovative, and invest in maintaining and heightening your capabilities in that area. If not, don’t pretend. Differentiate on some other basis. In time, you could perhaps create a culture of innovation, but it won’t happen overnight, or by proclaiming it on your web site. Perhaps there is something else about your culture, or some other strategic asset, that gives you an advantage over your competitors. Nurture and develop that instead.
Focusing on what competing companies have done is a way of getting stuck in precedent. Utilize your unique ingredients to create your own path.
You won’t get competitive advantage by copying what these companies have done. They probably have a completely different set of ingredients from the ones you have to work with.
When setting your strategy it’s important to understand your strengths. Today I'm going to talk about culture.
It’s been said that “Culture eats strategy for breakfast” – suggesting that it’s more important to work on your organizational culture than on your strategy.
Sure, if you have a toxic work culture, work to improve it as a priority, because if you don’t, you’ll lose your staff. But to suggest that you should choose between strategy and culture makes no sense. Culture is an ingredient of strategy.
Your organizational culture is one of those “strategic assets” I wrote about last time. It’s unique to your firm and difficult for your competitors to replicate. The question is: what does your culture enable your organization to do better than your competitors can?
It’s important to be honest about what kind of culture you have. If your culture is truly conducive to innovation, then base your strategy on being innovative, and invest in maintaining and heightening your capabilities in that area. If not, don’t pretend. Differentiate on some other basis. In time, you could perhaps create a culture of innovation, but it won’t happen overnight, or by proclaiming it on your web site. Perhaps there is something else about your culture, or some other strategic asset, that gives you an advantage over your competitors. Nurture and develop that instead.
Focusing on what competing companies have done is a way of getting stuck in precedent. Utilize your unique ingredients to create your own path.
Wednesday, April 6, 2011
Strategy is Like Job-Seeking
Competitive advantage comes from a combination of:
1. what you have, plus
2. how you choose to use it,
to create value for your chosen market.
The phrase “what you have” is a reference to your “strategic assets”. These are not what we normally think of as assets – land, buildings, equipment or “Our people are our greatest asset”.
Strategic assets are unique to the organization and are usually intangible things. They include:
• Intellectual property
• Acquired consumer information
• Lines of capital
• Core competencies (those that are embedded in the organization, not individual staff skills)
• Operational, monitoring, planning, communication or decision systems
• Organizational culture
• Brand awareness
• Brand image and reputation
• Secured distribution
• Relationships with suppliers, customers and intermediaries
Strategic assets are:
• Costly or difficult for competitors to acquire or copy,
• Path dependent – they result from the experience of your business and
• Firm specific – they cannot readily leave with departing staff members or be sold
Whatever strategy you choose must be underpinned by strategic assets which equip you to out-perform your competitors.
Therefore, identifying your strategic assets is a crucial step in developing a strategy.
__Strategic assets often go unrecognized. Innovative strategy depends on your ability to conceptualize your strategic assets in a creative way.__
Here's why strategy is like job-seeking. Most people looking for a job don’t recognize their own strengths. In their resume they provide a list of generic skills and qualities. Mostly, these are bland and superficially-expressed. They do not differentiate the individual from other job-seekers. It is not until they analyse the unique path they have taken and what they have gained as a result, that they can truly describe what they uniquely have to offer an employer.
Don’t get stuck in old ways of conceptualizing “what you have”. Break free from that precedent.
1. what you have, plus
2. how you choose to use it,
to create value for your chosen market.
The phrase “what you have” is a reference to your “strategic assets”. These are not what we normally think of as assets – land, buildings, equipment or “Our people are our greatest asset”.
Strategic assets are unique to the organization and are usually intangible things. They include:
• Intellectual property
• Acquired consumer information
• Lines of capital
• Core competencies (those that are embedded in the organization, not individual staff skills)
• Operational, monitoring, planning, communication or decision systems
• Organizational culture
• Brand awareness
• Brand image and reputation
• Secured distribution
• Relationships with suppliers, customers and intermediaries
Strategic assets are:
• Costly or difficult for competitors to acquire or copy,
• Path dependent – they result from the experience of your business and
• Firm specific – they cannot readily leave with departing staff members or be sold
Whatever strategy you choose must be underpinned by strategic assets which equip you to out-perform your competitors.
Therefore, identifying your strategic assets is a crucial step in developing a strategy.
__Strategic assets often go unrecognized. Innovative strategy depends on your ability to conceptualize your strategic assets in a creative way.__
Here's why strategy is like job-seeking. Most people looking for a job don’t recognize their own strengths. In their resume they provide a list of generic skills and qualities. Mostly, these are bland and superficially-expressed. They do not differentiate the individual from other job-seekers. It is not until they analyse the unique path they have taken and what they have gained as a result, that they can truly describe what they uniquely have to offer an employer.
Don’t get stuck in old ways of conceptualizing “what you have”. Break free from that precedent.
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