Principles of Strategy
In broad strokes, strategy is decision making—but not in the way one might think. The most important part of your strategy is deciding what you’re not going to do.
What is Strategy?
Strategy, simply stated, is how you get from Point A (where you are now) to Point B (where you want to be). You want your organization to grow from $100M to $500M. That requires decisions on which customers to serve (and not serve), what products/services to sell, where to focus the company’s resources and what capabilities you need on your team. It might seem simple to read here in black and white but in practice, it’s not simple; in reality, strategy requires clear and objective data, and often, help from someone outside the business to assess the current situation. Think of it as you would self-diagnosis when you’re not feeling well: sometimes you know what to do and you heal swiftly, but sometimes, when the situation is serious, it’s best to call a doctor—an expert trained to assess, diagnose, and solve the problem.
The same reason you’d trust a doctor to diagnose an illness is the same reason you should trust a consultant to craft your strategy. Consultants make decisions based on clear vision, on sound data, and with no agenda in mind other than helping you get from Point A to Point B. Consultants know what constitutes good strategy and, maybe more importantly, we know how to implement what we know so you can reach your goals.
Strategy requires discipline. It requires external perspective. All too often the clients we work with work in an echo chamber: the opinions heard are the opinions of the team, without a voice from the outside. Let me give you an example: a former client is a boat manufacturer that sells thru a dealer network. The primary information flowing back to the manufacturer came from the dealer network, not the end customer. The information, while important was filtered through the dealer network, which, inevitably, delivers the information that is most important and beneficial to the dealer network, not the end user. The manufacturer thought they had a complete picture of what the customer wanted, but it was only part of the full picture.
This is a natural barrier that we see in companies regardless of industry. It takes work to get the most pertinent, most important information—and it almost always takes a consultant, someone with zero internal biases, to get and assess objective facts.
Consultants come to each client with a clean slate: there are no personal biases, no internal allegiances, no history of having been there or tried that. Rather, consultants are interested only in getting every client on the right path. We make decisions on data, not anecdotes. And sometimes consultants make an executive team uneasy by questioning long held “conventional wisdom.” It is a consultant’s job to never take any statement at face value, but to look for objective ways to verify what we are hearing.
It can be hard to hear, but part of a consultant’s job is delivering hard truths. It is our job to tell you what’s not working; it’s imperative we tell you the team you love isn’t structured correctly, or that the person who’s been your most loyal employee should be in a different position.
It’s that kind of clarity that makes strategy successful.
Big Dreams Aren’t Strategy
Long-term objectives are not strategy, but this is a mistake that owners make all the time. It’s common for people to be unrealistic about what they want to achieve. Strategy is balancing risk and return. It’s knowing what to prioritize and how to shift paradigms. It’s showing a business owner—with clear, objective and fact-based knowledge—what internal changes are required to achieve the most ambitious, most profitable goals.
What’s consistent is that these are not unique challenges. While each business is different, the challenges of growth are fairly consistent. Success will always involve change, it will always involve risk, and it will always require discomfort in some way, shape, or form. Strategy requires hard work, but not in the conventional “if you work harder you’ll be successful” way; rather, the hard work comes in being open to change, in removing people from the team, in seeing that working IN the business and ON the business are very different—and finding time the time to work ON the business is very challenging.
There’s a very human element to strategy that is necessary when it comes to human resource considerations. Most people we work with like their teams: they’ve found a work rhythm, they’re loyal, they got the business to where it is now. The hard truth is that some of those same people likely won’t get a business to the next level.
Part of a consultant’s job is helping a management team understand that a challenge or an uncertainty isn’t a new phenomenon and that they are not experiencing something that no other company has ever experienced. Ironically, the reward for solving the problems you face today is that you’ll face bigger, more complex problems in the future. This is the nature of growth—as business expands, new problems have to be solved.
I’ve yet to work with a client with whom I didn’t see a path to daylight. The path, of course, can vary greatly; but the constant is that most companies experiencing growth also experience growing pains. The good news is that big changes really can solve big problems.
Some clients need completely new products or services to grow. Others simply need to re-envision how they help customers. One such client had a product that was in steady decline, but the underlying need was still in demand. So the solution was a 90-degree pivot of solving the same problem, but with a different, more modern product. By focusing on what this client did well—and by researching the market and understanding the true customer need—this company survived a dying market.
I’ll admit that we’re not reinventing the wheel here; the principles we apply to strategy are commonplace in business. But there’s nuance in the mid-market for these principles and there’s skill in deciding what is appropriate for companies in a certain size range. We know this from working with countless clients over the years.
The worst mistake you can make with strategy is not writing it down. You can do all the right things: you can meet monthly, talk about where you’re headed, brainstorm new ideas and come to what you think is an agreement. But to be truly sure that everyone is rowing in the right direction, you have to write it down. You have to give it structure. You have to be absolutely certain that the questions your team has have been answered—because if they’re uncertain of the strategy, they could be rowing in different directions.
Think of it as a recipe of sorts: your business has succeeded over the years by developing a recipe, thru trial and error, that really works for your customer. To grow you need new recipes. The more your team is working to improve that recipe from something written down with ingredients, measurements, temperatures and times, the more confidence you will have everybody is headed in the same direction, and you will get there faster.
The second worst mistake you can make is relying on anecdotes and opinions rather than facts and objective information. In discussion, a new growth idea can sound very compelling. When you get the data on market size, growth rates, competitors, how buying decisions are made, you can make a more objective assessment. Countless times with clients we have analyzed growth opportunities that the executive team loved, only to find that with better and more thorough information, it was not a good opportunity at all. Better to learn that in the evaluation phase, than to have committed time and capital to a bad opportunity.
Want to know if you’ve built an effective strategy? Make sure you can answer these questions.
Who is your target customer? What products or services are you offering? What sales channels work best? What marketing channels will you use? Why is your product the one they should buy? Where are your customers located? How will you beat the competition? What new capabilities does your team need?
Strategy requires asking the right questions, writing down the answers, and working as a team to execute the plan. And on occasion, calling a “doctor” for a second opinion.
What have been your experiences with strategy?