That’s Not Strategy!

I started my career with one goal: do strategy. Strategy. To me then, strategy was a concept. That’s not strategy!

I achieved my goal to “do strategy” via strategy consulting, but even after doing it, I did not fully grasp what strategy is and is not. Eventually, I ended up in product management where I had to make the strategy and execute on it — this is how I came to a holistic understanding of what strategy is and why it’s critical to the success of the business.

Strategy is a plan to get you to a goal. Metrics allow you to measure the success of your strategy.

My favorite way to conceptualize this is through the lemonade stand. Pretend that your child has decided that they want a bike. After making the ask, begging for it, maybe, throwing a temper tantrum, and still not getting your credit card they’ve accepted that they will need to get the money themselves. The avenue they’ve landed on to get the money is through a lemonade stand.

Photo by John Angel on Unsplash

Their goal is simple: Sell enough lemonade to buy a $300 bike before school starts in 3 weeks. The strategy is also simple — Get $300 in profit.

This is not a strategy. There is no clear direction for what to do and no way to prioritize what to work on. You may end up with a lemonade stand placed in an area without high traffic, subpar tasting lemonade and, chiefly, no bike money. Metrics? That’s not strategy!

Let’s re-orient. Your goal is what you want to achieve, and your strategy is how you will do it. An example strategy could be:

• Make lemonade
• Sell lemonade

This is a strategy, but it is not a complete strategy. When we make a strategy, we are doing it because we believe that the strategy will help us achieve our goal in the most efficient manner possible. This strategy likely will not help achieve the goal in the most effective manner, because it is incomplete. A complete strategy will have 3 key components:

1) It will have a logical stem — this will help maximize your chance of creating an effective strategy

2) It will be measurable — we should be able to measure the success of the overall strategy and each component, this makes it faster to diagnose what is and is not working

3) It will be actionable — others should be able to pick up the strategy and understand what they must do

To create something in a logic-based manner, start with an underlying belief, then create a hypothesis on how to exploit that belief, and use this to create specific actions you will undertake. For example:

Belief: The best way to make money fast at a lemonade stand is through repeat business.
Hypothesis: Having a professional lemonade stand will allow you to optimally attract and retain customers which will create repeat business.
Actions / Execution: We will create the most professional lemonade stand. We will do this by:
· Having the best lemonade stand
· Having the best smile
· Having the best lemonade

This strategy will likely be more effective, but it is still incomplete because it is hard to measure. The best lemonade could be interpreted in numerous ways and best could vary — for some it may be taste and others it could be price. Let’s add a way to make the strategy easily measurable.

Logic-Based, Measurable Strategy:

· Have the best-looking lemonade stand
· Have the biggest smile
· Have the best tasting lemonade

This is better because now we can measure the success of our strategy (through how much money we make), and we can also measure the success of each component (e.g., we can measure if our lemonade is the best tasting through a taste test). This lets us know how our overall strategy is performing and if a specific component is lackluster, which provides crucial insight on how to continue forward.

We now have a measurable strategy, but one that is still hard to execute on. We need to make the strategy more actionable.

Logic-Based, Measurable, Action Oriented Strategy:

· Design and build the best-looking lemonade stand
· Have the biggest smile
· Create and sell the best tasting lemonade

This set of actions is more prescriptive, but still provides flexibility in how to achieve it within bounds. For the best tasting lemonade, the direction is clear — you need to create the best lemonade, not source/buy it. This additional clarity helps ensure uniformity throughout the team and puts constraints where required. Based on your organization, you’ll know best about how prescriptive you need to be.

We now have a complete strategy. The next question: is it an effective strategy?

We can assess the effectiveness of our strategy through metrics. In this case, our key metric would be revenue. Let’s pretend that after 1 week of the lemonade stand, we’ve only generated $50 in profit. We’re $250 away from the bike and there’s only 2 weeks left before school starts. This strategy is not working for your child — their vision was to have the bike before school starts!

We need a change in strategy. Strategies can fail in 3 ways: the logical stem is untrue; the related actions were improperly conceived; or the chosen actions could not successfully be executed. Let’s look at how this could come to life across any level.

Untrue logical stem: The best way to make money quickly from a lemonade stand is through repeat business and having a professional lemonade stand will allow you to optimally attract and retain customers which will create repeat business.

People buy from the lemonade stand once every few weeks, generally as an act of kindness to the child running the stand. Therefore, people are not attracted to the most professional stand, but rather the stand they feel most obligated to go to. There is also not enough time to have effective repeat business. The belief that you should focus on repeat customers is untrue.

Improperly conceived actions: Design and build the best-looking lemonade stand, have the biggest smile, find and sell the best tasting lemonade

Let’s pretend the logical stem was true; the repeat customer market is ripe, and people are attracted to the most professional stand. However, people do not think a stand is professional because it is the best looking but rather because it is the most solidly constructed. In this instance, you understood what people wanted but your action to create the best-looking stand was misguided, which led you to having a less effective strategy.

Unsuccessful actions/execution: You can’t create the best lemonade

Sometimes we have a true logical stem and conceive the proper actions to undertake, yet still do not have an effective strategy. This is because the actions you conceived cannot be or are not successfully executed. In this case, having the best lemonade is a near-impossible feat, because your child cannot have access to the best ingredients, spend time figuring out the best recipe, etc. This is also an example of where the action is improperly conceived — if the strategy has instead been “find and sell the best lemonade”, this could have been avoidable.

These ways in which strategy can fail also show how important strategy is! You clear logical thought provides transparency to your team on how to move your business forward and is a motivator. Your translation from logic into action items provides a cohesive plan for your organization to undertake. Your understanding of what your team cannot and cannot do is vital to whether you will be successful.

That is strategy.