First of all, If you have a strategy, you have a natural advantage because your competitors often do not have one, and they don’t expect you to have one either. For many companies, their strategy is to “spend more and try harder.
Strategy is not only about what you want to do. It is also about what you don’t want to do as well. There are not enough resources or enough time to do everything. You have to stay focused. A good leader must be willing to say no to a wide variety of actions and interests. Strategy is as much about what a company does not do as it is about what a company does.
According to Richard Rumelt, in his book “Good Strategy/Bad Strategy”, you want to gain insight into new sources of advantages and opportunities as well as weaknesses and threats.
A good strategy is about discovering power
Wal-Mart is a good example. Common knowledge was that a full-line, discount store needs a population base of at least 100,000 people. They put big stores in small towns and broke conventional wisdom.
They created a store distribution system that had trucks taking products (just-in-time inventory) to small-town stores daily – in a designed loop that brought the trucks home again each night. Stores had enough inventory but didn’t need the massive floor space of the big box stores. Their trucks would also pick up inventory to bring back to the warehouse on their way home.
But, their strategy didn’t stop there. They had low prices, used barcodes — when that technology was new — to keep track of inventory and sales daily.
Their competitor, K-Mart failed to see or acknowledge the dynamic changes Wal-Mart was making. Wal-Mart had a network of 150 stores and reached a population of millions. K-Mart went out of business and today, this strategy is called supply-chain management.
You can see this situation happening again and again. Blockbuster didn’t want to give up their 9,000 retail stores even as Netflix was eating their lunch. Blockbuster owned the stores but Netflix owned the customers.
.What is a bad strategy?
Bad strategy is long on goals and mission statements and short on policy and action. A good strategy defines a critical challenge, the policies the company will use to position itself in the minds of the customers and use a coherent, focused execution plan.
There are many bad strategies out there. I have already mentioned so many are goals and mission statements that are simply wishes, not strategies. Also, a lot of strategies are filled with meaningless fluff. We will be the number one company in this industry, but have no strategy, or execution plan to back up this statement.
What they are doing is ignoring the problem that needs to be solved or the opportunity they want without a creative strategy or the resources to back it up. Or they have a lofty, BlueSky objective with no idea how they are going to achieve it.
A good strategy takes a lot of work.
A strategy takes diagnosis, creative insight, a well thought out general policy on what the company will do and what it will not do. Pus, focused, cohesive use of company resources. It involves focus and therefore choice. And choice means setting aside some goals in favor of others.
Template-style strategy
A lot of people think you can simply get a template and write out your strategy. It’s not that simple. Yes, it takes lots of research, data, and analysis. But it also takes creative problem solving and creative opportunity ideas to get a strategy that will make your company, your products, and services the valued leader of your industry.
Be sure to read the articles on strategy in this section. E-mail us if you have a question.
