Strategy

by Cees Quirijns on 25 July, 2011

Every company needs a strategy. A strategy for solving the most important challenges a company faces in its market.

Few companies actually have a strategy though. What they do typically have is a set of ambitions and/or goals and mistake these for strategies.

For example: “Our strategy is to become the leading provider of product X “. This is a goal, not a strategy. Strategy is a coherent set of actions that you should take in order to accomplish your goals. So how you will become the leading provider of product X.

One way to start, is to pinpoint the most important hurdles that you have to overcome in order to reach your goals. The next step is to detect ways to overcome those hurdles.

Whenever you have to answer that “How-question”, it becomes immediately clear that it requires making choices. There are always different paths to Rome.  So you have to decide. This is the path that I am going to follow. If you don’t make choices, you don’t have a strategy.

Making a choice is hard. It requires thorough analysis of the possibilities, picking the ones that are logically most beneficial, and gearing up specifically for that journey. It’s much easier to don’t do this hard work and simply start moving with everything we’ve got, only making decisions when the situation forces them upon us.

A good strategy isn’t a blue print though. It’s a substantiated hypothesis of how you think the world works, that nevertheless requires testing and, if necessary, restatement of the strategy when practice doesn’t meet theory. In other words: strategy is finding the most effective and efficient route to your goals, through focused trial-and-error.

A good strategy takes into account everything you know and believe about shooting a specific moving target. This doesn’t quite guarantee a hit, but it surely beats the odds of taking a shot in the dark.

The problem with many company “strategies” is that of shooting in the dark; the belief that simply stating the desired end-state will mysteriously lead to actions that will accomplish that goal. This however seldom happens because it leads to scattering organization’s resources: people will either start running into all kinds of different directions, or they won’t do anything at all.

Good strategy is as much about creative vision as it is about concerted effort. And it is as much about diagnosis as it is about action.

Bad strategies merely set goals, refrain from making choices and result in management mumbo jumbo.

Good strategies identify the most important hurdles, come up with sound principles of how to overcome them, and culminate into a set of coherent and practical actions.

Before you dive into your next strategy session, take the above into account and read Richard Rumelt’s latest book for more guidance about what separates good from bad strategy.

Update 18 August 2011: Bloomberg wrote a nice summary of Rumelt’s book which is worth the read.

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