Strategy is “Future Competitive Advantage”.
This definition works both at the level of the firm and at the level of the individual.
What will the future look like?
How will the marketplace change with evolving customer needs and expectations?
Who will the competition be not just now but in the future?
Relative to these future needs and competitors what advantage will we or our firms provide?
It is a simple way to understand and apply strategy. Here’s is the process laid out on one page on how every firm and individual can apply strategy including some key questions and approaches.
But so many get strategy wrong.
Four Strategic Mistakes.
In a piece called The 4 Most Common Strategy Mistakes one set of these mistakes are discussed.
Mistake 1: Strategies that limit one’s competitive set or category definition by the companies one currently competes with. (Many key opportunities and threats come from outside the way we currently define a competitive set or our categories.)
Mistake 2: Strategies built by extrapolating today’s realities into tomorrow. (Like scale matters or population will keep growing or interest rates will always remain low.)
Mistake 3: Strategies focused on technology trends. (Today it is AI! AI! AI!)
Mistake 4: Strategies that do not incorporate talent dynamics. (People will eat strategy for breakfast, lunch, and dinner.)
There is, however, one overwhelming reason that so many companies and individuals really make a mess of strategy.
Blind to Reality: How many times have we all experienced where our firms or our customers seem to exist in a fairyland disengaged from reality?
Nobody calls out the “turd on the table” because either we do not want to acknowledge the pain that we are on the wrong track or somebody is terrifying or being terrified. Everyone pretends that the brown moist thing in the middle of the table is a brownie when it is a piece of waste.
The problem will solve itself. The issue will dissolve. It is just a short-term hiccup.
But we all know that the issue is real, but to confront it means taking on challenges that will be hard to resolve including:
- We no longer have relevant products or services (AOL as the Internet became more popular.)
- Our marketplace has changed with competitors who have different economics (any traditional media company.)
- Our leaders and even ourselves have outdated skill sets and mindsets. Therefore, unless we learn new things and unlearn old things, we are growing irrelevant (too many senior people especially those who use fear and power to rule.)
Every one of us want to look away and hope we do not have to deal with the challenges. The smart companies and leaders twist themselves into new shapes realizing that transformation is about people.
Short-sightedness: This is a focus on the short term. Results must be delivered this quarter or this year. Either because the urgent crowds out the important, or there are misaligned incentives, or short tenures, or a focus on the scoreboard of a stock price (even though, in reality, markets punish companies for not preparing for the future.)
Too many executives align the way they allocate their time with the way they allocate their budgets. Most companies allocate 90% or 95% of their budget on the coming year but that does not mean senior executives should allocate their time that way. The smart ones allocate a quarter of their time to tomorrow, delegating some parts of managing today to their teams. The future cannot be delegated to an innovation group or a futures group (both of which may be important as focal points) but needs a lot of time and commitment of senior management since only they have the expertise to make hard calls, see the patterns and most importantly by doing so signal to the company that the future is important.
Long-sightedness: A form of myopia is long-sightedness which is not being able to see things clearly that are near.
We all have heard the refrains of “this will not happen till I retire”, or “this will happen many years from now so we will worry about it later” only to realize later that 1) change often scales exponentially and what looks like a gradual slope suddenly goes vertical and 2) it takes time for organizations to change (often years) and so waiting is not a form of maximizing strategic options but kicking the ball down the road.
Companies and individuals who wait limit the ability to a) be an early mover and gain competitive advantage with partnerships or pricing and, b) limit the downsides of making mistakes before something has scaled and can truly hurt the organization.
The good news is that strategic myopia can be corrected.
Here are some ways that do not allocate huge budgets or need organizational re-designs.
1. Annual Re-Think: Once a year senior executives should challenge the key assumptions of their strategy. Three key questions to ask are:
You will be surprised how different the future may look after these exercises.
2. Look outside for inspiration and cautionary tales: Most companies are too focused on their categories and competitors and therefore get defensive if someone says they do not get it or miss that the challenge is not from their existing competitive set. By asking external partners, going on road-trips, and attending conferences to learn with a focus on the following questions:
- What are examples of companies that re-invented themselves and created great economic value (Domino’s Pizza, Microsoft, Abercrombie and Fitch, New York Times) and what can we learn from them.
- What companies tried to re-invent themselves and failed and why?
- What companies failed to change and dwindled away (many newspapers and other print media companies, Blackberry.)
Great strategies are often only seen at a distance (away from one’s category) just like great architecture can often only be appreciated from a distance.
Strategy will grow more and more important as the rate of change and transformation speeds up.
Contributed to Branding Strategy Insider by Rishad Tobaccowala, Author of Restoring The Soul Of Business: Staying Human In The Age Of Data
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education
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