You know it when you see it
More years ago than I care to say, as a senior manager with Creative Strategies International, I gave up trying to define strategy. During the years I was in that business, I discovered, slowly, that most people believe they are naturally good at strategy. They may not be able to define it, draw it in business diagrams, but they understand it. I think I’ve seen that most of strategy development is intuitive.
- People generally understand that strategy involves focusing on priorities, and why that’s good for a business.
- People generally understand that strategy involves playing towards strengths, and away from weaknesses.
So, whether or not you can define strategy, you know it when you see it. That’s what I’ve seen through the years.
The real problems with strategy
In one of my long-term consulting relationships, a large and very successful company would send groups of managers to 2- and 3-day offsite meetings to develop strategy. I watched in wonder as groups of very bright young managers developed brilliant strategies at these meetings, but failed, year after year, to implement them. The ideas that energized the offsite meetings were lost back in the office, drowned in the daily routine, putting out fires, answering the telephone, solving the every day problems.
I learned the hard way that the problem with strategy isn’t as much developing good strategy as it is in implementing strategy. Not that we should underestimate the importance of strategy, but we should at least be cynical about how much of business strategy remains in the realm of ideas only, and doesn’t really change a business.
Strategic conceptual models
I’ve worked with many different conceptual models used to diagram and dissect strategy. Several of them are discussed on this site, in the references below. I use more than that with seminars about strategy development. The Strategy PyramidSM is probably my favourite first because it emphasizes implementation, and also, of course, because it is my own work, my own service mark.
However, I really think that many different conceptual models are valuable, and the choice of the model doesn’t matter that much. People think in different ways. If a model works to help you see through the cloud, focus, and develop your strategy, then it is a good thing. Somebody else will use a different conceptual diagram and arrive and the same place, or at an equally good place. Some models work better for some people, and anything that helps you visualise and understand reality is a big step forward.
Some general principles of small business strategy
This is not an academic exercise and I can’t claim results of research. The following principles are based on what I’ve seen over 29 years of consulting and research, plus my Stanford MBA, and a lot of wisdom contributed by some very smart clients.
- Strategy is focus: Allocate resources where they will do the most good. Work towards your strengths and away from your weaknesses. Develop the company by doing the most important things, according to your long-term objectives.
- Strategy is consistent over the long term: Better a mediocre strategy consistently applied over several years, than a series of brilliant strategies. It takes time to develop and implement a strategy, more time for the world to react and turn in the right direction. It’s very hard to stick with a strategy, because the people executing the strategy tyre of it long before the rest of the world does.
- Your business’ strategy is unique: Context is everything. Formulas and generalizations don’t apply. Understand your situation, both external and internal, and develop your strategy to work towards your strengths and away from your weaknesses.Understand your situation, where you are, and what knobs you can turn. Imagine yourself sitting in the driver’s seat of a vehicle, and recognise that your controls are limited. You have controls for faster and slower, but not for up and down. Look at your business in the same way, understanding what you can do, and what you can’t do.
- Understand the problem of displacement: Strategy is subject to displacement, meaning that everything you do rules out something else that you can’t do. Drop a brick into a full pail of water and watch what happens: splashing. That’s displacement. Small business strategy has to deal with displacement.
Main elements of the strategic plan
A strategic plan should probably include some or all of the following main points:
- High-level strategy: Strategy is focus. It guides your growth. Strategy assigns priorities. Of the whole range of possible market segments, and the whole range of services and possible sales and marketing activities, which are your main priorities? Strategy is often a matter of understanding when and how to say no, selecting among opportunities.
- Tactical foundations of strategy: In the real world, strategy by itself isn’t enough. It’s just too easy to develop strategy and then forget about it. A strategic plan should base its strategy on specific tactics that make that strategy realistic, implementable, and trackable. The articles on the Strategy Pyramid is cited below in Related Articles.
- Specific responsibilities, activities, deadlines, and budgets: We call these Milestones. They are the bricks and mortar of business planning, critical to business success.
- Financial plan: One of the most important gains from an annual plan is the financial plan, which of course hinges on cash flow. A business needs to stress its priorities by making sure they get the right amount of money. Growth costs cash.