The Principles of Good Strategy: Turning context into strategic advantage
(and let’s face it, there’s a lot of it around)
Why do I say that everyone needs strategy?
Strategy is the art of identifying and making choices. What is life itself, according to the collective wisdom of the philosophers and the sages, but one damn choice after another?
I’ve spent the last twenty-five years working with private, public and non-profit organisations to develop strategy. Here’s the central paradox: everyone needs strategy – you simply can’t get by without it – and yet most of the time the process of making strategy, the strategists who devise it, and the strategy itself all get terrible press.
As individuals, we’re faced with a constant stream of far-reaching personal decisions: this career path versus another; living here or somewhere else entirely; the country or the city; getting married; having kids … the list goes on.
Companies need roadmaps to growth, market share, and that elusive holy grail, shareholder value, and they must choose between many different paths to the future they seek.
In the public sector, government departments need to use tax revenues in ways that are productive rather than wasteful, and NGOs need strategy to turn disparate activities into real impact.
That strategy is necessary is hardly a controversial point of view (of course, you could just close your eyes and jump, but most people don’t do that and even the most reckless organisations have some kind of plan). Why, then, does strategy have such a bad rap--how does it carry such negative baggage? Why do we, as strategists, face such scepticism when we tell people what we do?
I see it in my clients’ eyes at the start of an assignment: CEOs and CFOs wondering if they’ve just made an expensive mistake; senior managers filled with an anticipatory resentment that they will have to spend valuable time with a bunch of under-informed, over-paid consultants; and officials in the public and non-profit sectors wondering how they will justify the expense to their procurement officers, their Boards, and their donors.
It’s an uncomfortable place to be, but the reason is not hard to find; everyone acknowledges the need for good strategy. What clients fear is that the fruits of their labour will be rotten: that they will be faced with strategy’s evil twin – bad strategy, and let’s face it – there’s a lot of bad strategy out there.
Bad strategy manifests in a number of different forms:
Public relations exercises falsely advertised as strategy sessions – events, off-sites or retreats billed as opportunities to come together to create strategy, but which turn out to be team-building exercises (at best) or expensive empty gestures (at worst). These events may have some benefits, but coming up with meaningful and compelling strategy is not among them. (See the accompanying boxes for a couple of particularly egregious examples.)
Wishful thinking – making long lists of things you wish would happen and hoping that something – blind faith? The power of repetition? Magic dust? – will make it so. I once met a CEO of a large company whose declared strategy was to acquire low cost, high growth, high margin firms flying under the radar (who were heretofore invisible to competitors and the market at large). The CEO expected a list of about 20 potential targets from which to make a choice. I had to laugh.
Refusal to make choices – organisations which don’t want to alienate people (employees, customers or other stakeholders) or close doors to future options, and which favour breadth over depth, end up with strategy like a lumpy porridge: all things to all people and nothing of substance to anyone in particular.
Inability to prioritise – this is a close relative to going broad rather than deep. Here, everything is equally important and urgent, so that in a five-year strategy everything is front-loaded into the first six- to twelve-month period. The result is a flurry of working groups, an explosion of meetings and some impressive wheel spinning, followed by the inevitable sense of let-down and disillusionment.
Unrealistic expectations – these tend to be strategies which look exciting and ambitious on paper, but are simply not feasible. Gaps in resources and capabilities, or a fundamental lack of understanding of what it takes to succeed, can derail even the most sincere attempts to turn strategic goals into real action and change. Clunky bureaucracies are particularly prone to this fallacy – declaring that they will become agile, entrepreneurial dynamos, with no sense of the cultural change required for such a transformation.
Stating the obvious – a cousin of wishful thinking, this pathology does the greatest damage of all to the cause of strategy, and comes about when organisations confuse goals with strategy – i.e., the specific, tangible, choices and activities required to achieve the outcomes they desire. Wanting to increase market share, grow revenues, cut costs, raise customer and employee satisfaction levels, be innovative, path breaking and disruptive, and offer an industry-leading work-life balance are all great aspirations, but is it a strategy? No.