#28. Strategy, Management & Teamwork for 2022 — Part 3 — Strategy in Action.
This article is dedicated to my mother on her birthday. Happy Birthday!!!
Lesson #1: First comes the Strategy (Plan) then comes the Strategy (Action)
Lesson #2: Apply Management and OKRs
Lesson #3: Review and Feedback
Lesson #4: Strategy not Working? Check your Biases
Today we would be looking at Strategy in action — defining a practical approach to apply it.
In my first article, I defined Strategy as the -
“coordinated means by which an organization pursues its goals and objectives”.
“It is about differentiating yourself from your rivals to achieve a competitive advantage in the marketplace”.
“It could be performing different activities from your rivals or performing similar activities in different ways”.
Today, I believe Strategy is simply the unique way in which a firm seeks to create value and compete in the marketplace.
Common discussions around Strategy seek to separate Strategy from Execution, but I believe Strategy starts as a plan, and becomes an action.
Now that we understand the WHAT and the WHY, we shall look at the HOW.
HOW: Strategy (Plan) to Strategy (Action)
Strategy starts with your vision. Vision is the desired destination or change you want to bring to the world, your firm’s fundamental purpose: its Raison D’être.
Based on this vision, you identify your strategy to get there — increase revenue/profit, introduce a new product, increase market share etc.
With this in place, we tie the objective to a clear metric for success: increase revenue by 25%, resulting in our Strategy (Plan).
To implement any strategy requires an understanding of the environment we are in. This is where frameworks come in (see previous articles).
- Macro Environment — Use the P.E.S.T.L.E framework — Political, Economic, Social/Cultural, Technological, Legal, and Environmental trends — (see previous article).
- Micro-environment — which refers to industry analysis, use Porters five forces — (see previous article).
- Internal environment — which refers to the analysis of your own firm, use the SWOT Analysis — Strength, Weakness, Opportunity, and Threat — (see previous article).
Example: Here is a Strategic Analysis I did on Netflix, with a useful takeaway for your career.
The goal of these analysis is to identify the optimum position for your company to compete and succeed, answering questions like –
Is the market growing?
Are there few players?
Do you have the innovation/expertise in your firm which you can leverage to gain market share and achieve your strategic objective?
Once the plan is clear, and the action to be taken is defined, then comes Management.
Management uses the Objective and Key Result (OKR) method to pursue and achieve the target Strategy.
From our previous article we learnt that:
A manager’s output = the output of his organization(team) + the output of the neighboring organizations(teams) under his influence.
Review and Feedback
Every Strategy needs active review against the success metrics to determine if it is working. I advise biweekly, monthly, and quarterly reviews.
Markets are dynamic, so our strategies need to be flexible — adapting to market changes.
Strategy Not Working? Check your Biases
A 2017 Harvard Business Review Article showed that companies often stick to a once successful but failing strategy — Escalation of Commitment — due to number of mutually reinforcing biases.
These are: The sunk cost fallacy, Loss aversion, The illusion of control, Preference for completion, Pluralistic ignorance, and Personal identification.
“In combination, these biases lead a company’s decision makers to ignore signals that their strategy is no longer working”.
This article provided an excellent case study of the British music company HMV that went from a 40% share of the Britain’s music market to receivership in just over a decade.
Their business model involved high street stores where customers could browse and listen to music in-store before buying a CD.
Despite early warnings from 2002 by their employees and advertising agency — on supermarket chains selling CDs, online retailers like Amazon, and downloadable music through Apple’s iTunes store — HMV’s management stuck to its strategy.
HMV did not open a digital music store till 2010, by then it was too late.
In January 2013 HMV went into receivership.
We can go from Strategy(plan) to Strategy(action) through our company’s vision, defining our unique expertise and value proposition, market position, and competitive advantage.
Strategies that inspire action lead to faster results and feedback. Management can drive these actions using OKRs. Checking our biases, and constant review, would ensure our strategy is on track to achieve the desired outcome.
I have kept this piece high level and ACTIONABLE and left out other important factors such as getting firmwide buy-in around the Strategy.
Thanks for reading and see you next week.
Racing Towards Excellence.
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