essence (noun): The fundamental, true, unchanging nature of things. This definition makes people think, what is the essence of strategy?
If there is a “thing” that needs to be returned to its “basic, true, unchanging essence,” then that thing is strategy. Like a ship adrift in the sea without an anchor, strategy has lost touch with its true meaning. It has become meaningless.
A study of 400 companies showed that more than half (55.7%) did not have a common strategy definition. If you have any doubts about what the strategy breakdown means, take a look at some of your company’s plans to see if there’s a consistent understanding of the strategy. Then go to some conferences and hear how it’s used. Do you think the word strategy is used clearly and consistently? For most people, the answer is no.
In fact, the word strategy has become so conflated that it is now combined with terms like “command,” “pillar” and “goal” to the point that many managers really don’t know what they are talking about. Put the word “strategy” in front of another word and suddenly you’re getting attention and generating new initiatives. But like the emperor without clothes, sooner or later, the loot will be revealed.
Strategy is not…
When determining the nature of something, it is helpful to start with what the thing is not. Think of ABC’s. Strategy is not oneinspiration. How often do you see a vision or goal disguised as strategy? A vision is a future wish for where you want to be in 10 or 15 years. A goal is usually something you want to achieve. Becoming the market leader or the premier supplier of your secret sauce, or the world’s most sustainable product are noble aspirations. Just don’t confuse them with strategies.
Strategy is not Secondest practice. If you benchmark your competitors and then adopt best practices, you haven’t developed a strategy. You’ve aligned yourself with your competition, rather than moving away from it. Strategy aims to differentiate your products and company from the competition by providing superior value to your customers.
strategy is not Ccautious. Find me a strategy that doesn’t involve reheating last year’s leftovers and sprinkling them with some salt and pepper to make the bunch go down a path they’ve already walked a dozen times before and make it even more palatable. Find me a strategy that isn’t afraid of upsetting certain customer segments because it actually involves real trade-offs that aren’t designed to appeal to everyone, especially the unprofitable ones that you should have dismissed years ago , high-maintenance customers. Find me a strategy that won’t bore those who want to implement it because it doesn’t contain any new insights. As Disney’s former CEO Bob Iger Said: “The most dangerous thing we can do is maintain the status quo.”
The strategy is…
Strategy is the intelligent allocation of resources through a unique activity system to achieve goals. Simply put, strategy is how you plan to achieve your goals. Microphone dropped? Not exactly. Let’s break it down into its three main components:
1. Resource allocation 2. Unique activity system 3. Achieve goals.
Resource allocation. How you use your resources—time, talent, and budget—makes up your strategy. You may have your strategy written down in a PowerPoint, but if you show me how your people use their time, talent, and budget every day, you’ll see real strategy. Discipline is the key factor. Especially in a remote work environment, aimlessly devoting hours a day to tasks that don’t directly support your goals may seem productive, but it can undermine your chances of truly succeeding. If you don’t clearly write out and communicate that strategy on a consistent basis, then it becomes a matter of opportunity where people allocate resources. Good leaders don’t leave strategy to chance.
Unique activity system. Perhaps the most common mistake is mistaking operational efficiency for strategy. As we all know, operational efficiency is a wolf disguised as strategy. It means performing similar activities in a similar way to competitors, trying to do it better or faster. However, relying solely on operational efficiency without strategy is like racing against a competitor, hoping to run faster. An integrated strategy shows that we will take a different course from our competitors—a course we have designed ourselves to win. A study of more than 200 companies found that 93% of the top 20% of companies by financial performance had a strong form of differentiation at their core. you? If your strategy doesn’t include different activities or similar activities performed in different ways, then it won’t create unique value. The beatings don’t begin until you’re off the beaten path.
How to achieve your goals. In my strategy coaching work with senior executives, I review approximately 300 plans a year, many of which are too complex, too long, or both. A good plan only needs to answer two questions: 1) What do you want to achieve? 2) How will you implement it? Your goals represent the answer to the first question—what you want to achieve, and strategy answers the second question—how you will achieve it. While it may be tempting to start by developing a strategy planremember that you must first determine your destination before you can determine how to get there.
Three pitfalls to avoid
When you sit down to strategize, there are three common pitfalls to avoid.
- Combine strategy with tactics. Both strategy and tactics answer “how” to achieve goals. Strategy is how to achieve goals generally, and tactics is how to achieve goals specifically. Strategy is abstract, like leadership or love—you can’t reach out and touch it. Strategies, on the other hand, tend to be more specific. Use the touch rule to differentiate between strategy and tactics: If you can reach out and actually touch some part of it, then it’s probably a tactic. As the Chinese general and philosopher Sun Tzu said: “Everyone in the world can see my battles, but none of them can see my plan for victory.”
- There is no direct link between strategy and objectives. In planning and PowerPoint, it’s easy to get caught up in the slides and forget about the purpose of the strategy. Recall that this strategy directly answers the question, “How will you achieve your goals?” I’ve seen programs proudly tout strategies that actually had nothing to do with their goals. Use the Conversation Quiz: You should be able to walk up to any leader, peer, or direct report and ask them, “What do you want to achieve?” and their response is “How will you achieve it?” Pretty soon, you know them. The nature of planning. The same applies to your written plan, it’s best to answer the what and how questions on the first or second slide.
- Failure to develop strategies based on insights. One of the reasons most strategic plans aren’t used to drive people’s day-to-day activities during the year is that they quickly become irrelevant. Why? They are not based on insight. Insight is the combination of two or more pieces of data or information in a unique way to come up with new ideas, new methods, or new solutions. Simply put, insight is learning that brings new value. A strategy that isn’t built around insight means it doesn’t bring new value. If we think back to the definition of competitive advantage—delivering superior value to customers—then a strategy without insight is worthless. Is your strategy based on insight?
Sometimes in the sea of emails and video conferences, fire drillwe ignore what research shows is a leader’s most important role: setting strategic direction. It’s time to get back to the essence of this statement. It’s time to get out of the tactical weeds of your business and forge a new path. It’s time to stop pretending you’re all on the same page and actually co-write the page by having effective strategy conversations.
Next time you’re in a meeting and someone starts using the word “strategy” excessively, or combines it with other terms, or confuses strategy with different planning terms, take the needle off the record and share strategy’s What it really means: Intelligent allocation utilizes resources to achieve goals through a unique activity system. Strategy is how you plan to achieve your goals. Now you can put down the microphone.
