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June 2023
"Good strategy is unexpected because others do not have it and do not expect you to have it." © Richard Rumelt
It is known that 9 out of 10 startups fail. In my experience, most of the failed startups had no strategy, in the best cases - goals, in most cases - wishes. Those who had a strategy often had a bad one.
Recently I thought and read a lot about strategies. Here are some thoughts and ideas I'd like to share.
“Never quit until you win”. "Win the market". "Try harder". "Grow 20% by the end of the year and keep growing at this rate" - none strategy examples
What is Strategy?
The original definition comes from the military and gives some sense of the scale of the strategy but not much understanding of how to build it, what are indicators of the strategy or how to separate good strategy from bad strategy:
The art of planning and directing overall military operations and movements in a war or battle.
Wikipedia gives the definition:
Strategy (from Greek στρατηγία stratēgia, "art of troop leader; office of general, command, generalship") is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty.
This definition gives more insights: strategy should be long-term and suggest a plan to achieve the goal. Plus it is always built in conditions of uncertainty. But how to craft a good strategy and recognize a bad one?
"Strategy" is an overused word and one may find hundreds of definitions of the strategy or "strategic something", but I'd like to mention here one more definition by Richard Rumelt before jumping to the main topic: what is a good strategy, why is it important, and how to build one?
A good strategy is a set of coherent actions designed to tackle the identified challenge in achieving the goals by leveraging the particular insight in a defensible way.
So as an opposite to the good strategy, a bad strategy would either not acknowledge challenges, or does not provide cohesive actions to overcome those challenges, or doesn't leverage insights/advantages.
Bad strategy hallmarks are fluff, failure to face the challenge, mistaking goals for strategy, and wrong objectives.
How to build a good strategy?
Obviously, there is no silver bullet or template for the winning strategy (even though you may find a branch of templates online). But based on the definition of a good strategy we can get some tips for crafting a good strategy or at least ways to separate a good one from the bad one.
Go deep. A good strategy should be based on a deep understanding of the industry and correct diagnosis. Learn about your competitors, and know your clients and their needs. Talk to your users, or rival's users before you jump in on building your strategy.
Using the 5 Whys technique, keep searching for the key challenges and their root causes.Be wide. The best insights are coming from unexpected places. Be curious, and learn about other domains. How do they solve their problems? Do they have similar challenges?
If you can, invite experts from other domains to participate in your strategic session, or at least to review your assumptions and cross-check that there are no unforeseen circumstances.Create strength. Understanding the challenge, knowing rivals and the economic landscape, try to have educated guesses of the future. And based on your guesses create your competitive advantage, your unique strength, that will allow you to win.
“If you don’t have a competitive advantage, don’t compete.”Be agile. This suggestion sounds very controversial. How long-term could be agile? But it is important to remember that strategy is built in conditions or uncertainty and it is based on assumptions and guesses. A good strategy is first of all a guiding policy for dealing with a challenge and it should be flexible enough to allow react to the changes in the environment.
Be coherent and complete. Last, but not least, the strategy has to contain a set of coherent actions that are designed to carry out the guiding policy. The set of actions, that are aligned and connected with one another, should cover all aspects of the product, or company operations needed to achieve the goals.
"Strategy is at least as much about what an organization does not do as it is about what it does."
Don't want to read the entire post? Here are"4 simple steps" for building a good strategy: Be curious. Work hard. Use intelligence. Be honest! :)
BTW, what AI says?
Strategy refers to a set of plans, actions, and decisions undertaken to achieve specific goals or objectives. It involves analyzing the current situation, determining the desired future state, and charting a course of action to bridge the gap between the two. Strategy is commonly employed in various domains, including business, military operations, sports, and personal development.
In a business context, strategy encompasses the long-term plans and approaches adopted by an organization to gain a competitive advantage, maximize performance, and achieve its objectives. It involves making choices about resource allocation, market positioning, product development, customer targeting, and other factors that impact the organization's success.
Key elements of a well-defined strategy typically include:
1. Vision and Mission: Clearly articulating the purpose, values, and aspirations of the organization.
2. Analysis: Assessing the internal and external environment to understand strengths, weaknesses, opportunities, and threats.
3. Goal Setting: Establishing specific, measurable, achievable, relevant, and time-bound (SMART) objectives.
4. Formulation: Developing a comprehensive plan or approach to achieve the desired objectives, often involving choices on market positioning, target audience, product/service offerings, pricing, distribution channels, and competitive advantage.
5. Implementation: Executing the strategy, allocating resources, and aligning various departments and functions towards the common goal.
6. Evaluation and Adaptation: Monitoring progress, evaluating results, and making adjustments as needed to stay on track or respond to changes in the environment.
Strategic thinking involves considering multiple factors, analyzing risks and opportunities, and making informed decisions to create a coherent and effective plan of action. A successful strategy provides a roadmap for achieving goals and allows organizations to stay focused, make better decisions, and adapt to changes in their competitive landscape.
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