Any Strategy is Better than No Strategy
Provided, of course, that what you call “strategy”, is indeed a strategy.
Meaning, your strategy answers to 5 basic questions (see)
- What is you winning aspiration
- Where to play
- How to win
- What capabilities you need to win in the chosen arena
- What management system is needed to support your other choices (with a simpler expression I would call it discipline)
“Answer” in this context means more than just a guess, it has to be
- a clear choice (also indicating that something is not chosen) in itself
- consistent with ll athe other choices in the set
- based on tested hypotheses in terms of “what needs to be true in order for this to be a viable strategy” (see later the post Tested Hypotheses are Better Than “Good Ideas” — on my todo list yet)
- embracing the inherent risk of every business, coming from the fact that the ultimate decision makers about its revenues, and partly about its costs, are outside of the organization, namely its customers.
The strategy creating process shouldn’t begin at the top of the list, with the winning aspiration, but with the 2 following questions making up the “heart of strategy”:
- Where to Play and
- How to Win.
Starting from here, the set of consistent answers can be built up through iteration. At the end of the process, the winning aspiration is equally important to the other choices, because this is going to be the hallmark of your strategy, the statement that will be known to the whole organization and inspire them in their daily work.
- The (often missing) link between “strategy” (put between parentheses because understood are here some of the first 4 statements, not the whole set of 5 choices) and “execution” is what is called here “management systems”, or what I would call with a simpler expression discipline. The daily routines that influence the decisions of the individuals making up the organization from the bottom level to the top: incentives, KPIs, reports, decision making mechanisms (see for decision making: RAPID is Better than RACI).
- Strategy is not (only) the job of top management. In a large organization there are several levels of strategy, that have to be consistent with each other. So if you go through the strategy building process at all levels, you end up with a vertically and horizontally aligned matrix of choices, that support each other in every direction.
Here are 3 figures from the book Playing to Win, to illustrate the main ideas:
It turns out, that for an organization the relevant question is not if its strategy is good or bad, but if it exists at all: if it exists, in the sense of the things written above (clear choices for the 5 basic questions, consistent both horizontally and vertically, based on tested hypotheses, embracing risk), and revises it constantly and communicates it efficiently throughout the organization, it has done its homework.