Strategy Pocketbook Preface
Napoléon Bonaparte wasn’t the first General to apply strategies on the battlefield. However, he has been one of the most studied Generals for his mastering of strategic thought. His famous tactic was to divide an army to make it easier to conquer, but his most effective strategy was to build alliances to suffocate his adversaries. Tactics involve knowing what the next move is when it’s obvious versus a strategy is knowing what to do when the path is not obvious. While Napoléon’s enemies were playing checkers and toiling in tactics, he was strategically playing chess.
Strategies move an organization down a long-term path, they put the business in a position to take advantage of their competitor, and they theorize on how to achieve greatness. Strategy, like an organization’s culture, is harder to define than to understand. Instead of defining strategy, philosophers have offered maxims to understand the subject. For example, if everyone is going in the same direction, then that wouldn’t be a strategy, it would be common knowledge.
The dictionary defines strategy as a plan of action or policy designed to achieve a major goal or overall aim. The business definition is the plan that dictates where the company will be in the future and a signal indicating where to shift resources. A strategy is a multi-level process of how an entity can determine where they are in comparison to their competitors, where they can take a competitive advantage, and how they can win in the future. Above all, a strategy is the creation of something novel and unique.
No matter how a person defines strategy, it is the heartbeat of the organization. The lifetime of companies continues to shrink due to poor strategies. New ideas and products are followed by cheaper competitors who have improved upon the original design. Successful products in the past would be able to carry a company for decades. Now companies can achieve limited revenue growth before they are squeezed out of the market. This puts the creative tension on a company to continue to innovate and reinvent their strategy. Their only other option is to stagnate and experience a slow death.
A strategy separates the have and have nots in the corporate world. Large enterprises can use one of the “Big 5” consulting firms that tap into their industry experts. These exclusive consultants conduct deep research and analysis to determine how the company compares to its competitors. They identify market gaps and provide inside information about the competition’s strategy. Taking this data, the consultant can tell the company where to go and how to invest their resources. Unfortunately, the strategy processes have little variation, and all produce similar directions for growth. This results in the fact that the advice that a company receives varies little from the same advice their competitors get. This leads to a stalemate in the market place.
Smaller organizations run into different strategic issues. The first roadblock is being able to pay for the price of employing a “Big 5” consultant. Next, these organizations struggle to keep up with day-to-day operations. Having a lack of time for the formal strategic process forces small businesses to turn into boutique firms or create a limited strategy by themselves. For that reason, companies then piece together plans on gut feelings and intuitions when they don’t have the resources to develop a detailed market analysis. This is the makings of a half-baked strategy.
There are numerous issues that reside in the development of many strategic plans. The first issue is when a company bases its strategic plan on their revenue goals, which is not a strategy but simply a financial plan. Strategies are not on a routine cycle and the outcomes of the annual financial plan are neither strategic nor creative.
A separate issue in the planning process is when the plans are not specific and just aspirational. These plans are then not actively supported or funded. This situation is known as the curse of having too many great ideas. That leads the organization to stay in its routine.
The third issue with company strategies is that they create a rigid and inflexible plan. Once a company places a significant investment in its strategy, the organization will then struggle if the market conditions change. This leaves the organization in a position where they will be unable to adjust to match the dynamic nature of the market.
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