Tag Archives: strategy needs a strategy

Creating Strategy Without a Strategy– It’s Business Without a Plan: Choosing ‘Right’ Strategy is Biggest Challenge…

Business strategy is all about decision-making… If there are no decisions, there is no strategy; if there’s no strategic decision-making, there is no success. According to Roger Martin; business won’t survive without a strategy…

When a strategy succeeds, it seems a little like magic; unknowable, unexplainable… then it becomes obvious in retrospect… But actually, it’s not really– strategy is about making choices to win in the marketplace…

According to Tara Gentile; creating a business strategy that breaks through the noise is about declaring ‘yes’ to some things and ‘no’ to others. And as you might guess; ‘yes’ and ‘no’ are not about right and wrong…

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Making a decision to drive the business in a different direction is to make a choice, and the more intentional you are with decisions, the stronger the strategy… However not every strategy works, but to even have chance at success it must be based on– focus and intentional decision-making… Every intentional decision provides an opportunity to put the business in the best possible position for success…

When thinking about a strategy, most businesses tend to follow classical rules, e.g.; study the market and competitive situation, define goals and draw-up step-by-step tactics to get there… typically strategies sort into five categories– Be Big, Be Fast, Be First, Be Orchestrator, Be Viable… But in today’s business environment, which is characterized by; fast change and uncertainty… ‘one size’ does not fit all…

Getting a strategy ‘right’ depends on the critical components of a business environment, which includes;  predictability, malleability, harshness… A classical approach assumes that an industry environment is relatively; ‘predictable’, e.g.; the Oil Industry holds few surprises for strategists; its relatively predictable and changes very little, over time… whereas, the Internet Software Industry is highly volatile and very susceptible to disruptive change, over time…

Clearly, strategies that work in the Oil Industry are highly unlikely to work in a far less predictable and highly disruptive tendencies of the Internet Software Industry… Hence companies in dissimilar competitive environments must– plan, develop, deploy… strategies in very different ways… but, research shows that all too often, they do not…

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In the article Which Strategy When? by Christopher B. Bingham, Kathleen M. Eisenhardt, Nathan R. Furr write: Just when a business thinks it has settled on the right strategy… then markets change, competition shifts… and business is forced to rethink its strategy… By understanding the forces shaping a company’s competitiveness, business must choose the most appropriate strategic framework…

Hence, whatever business circumstances, managers must forever ask the same questions: Where do we go from here, and which strategy will get us there? Do we fortify our strategic position, or move into nearby markets, or branch out into radically new territory? To help guide through these decisions; business must– know, understand, explore… the smorgasbord of strategic frameworks and decide which one is the ‘right’ one, and when…

It’s a continual process, including; jumble of strategic ideas, market analyses and hefty binders of information and data of; 5-forces analysis, 3-Cs analysis, review of core competencies, examination of profit and loss, competitive landscape, and so on… But inevitably the question is– Which strategy is most effective for business right now? Most managers recognize that not all strategies work equally well in every setting, but how do you choose the right one, at the right time…

An analysis can provide some insight: First, different strategic frameworks break into three models; strategies of position, strategies of leverage, strategies of opportunity… And the right strategy for a company depends on its– circumstances, available resources, and management ability to combine resources effectively… Second, many assumptions about competitive advantage simply don’t hold, e.g.; although some strategy gurus talk about strategically valuable resources, sometimes ordinary resources when assembled well can provide the required competitive advantage…

Or, sometimes it makes good sense to bypass the largest markets and focus instead on markets where resources fit best… Or, in other circumstances, it may be preferable to ignore existing resources and attack an emergent market… Or, in some situations basic rules of thumb work better than detailed plans Surprisingly often simple strategies can be more effective than complex ones…

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In the Your Strategy Needs a Strategy by Martin Reeves, Knut Haanaes, Janmejaya Sinha write: Most businesses lack a systematic way to match their strategy-making style to the particular circumstances of their– industry, markets, core competencies… According to BCG survey of 120 companies around the world in 10 major industry sectors; executives are well aware of the need to match the strategic processes to the specific demands of the competitive environments… However many executives still rely on a classical approach,  which assumes the business environment is– predictable, stable… even though their own environment is known to be highly volatile or mutable…

Fully three out of four executives understood that they need to employ different strategic styles in different circumstances. Yet judging by the practices that they actually adopted, the estimate was that the same percentage are using only two strategic styles and they were the Classic and Visionary– which are best suited for predictable environments… And that means only one in four are prepared, in practice, to adapt to– unforeseeable events, or to seize opportunity that could shape an industry to their company advantage…

Understanding how different the various approaches are and in which environment each best applies can go a long way toward correcting mismatches between strategic style and business environment…

Setting strategy is an art, and perhaps you could use a palette, i.e., a ‘strategic palette’ acting as a unifying framework of choice for strategic formulation, and it could provide various ways to approach strategy in this complicated, turbulent world… According to Martin Reeves; it’s not that we lack powerful ways to approach strategy; it’s that we lack a robust way to select the right one for the right circumstances… The ‘strategic palette’ can be applied to different parts of a business, it includes:

ClassicalI can predict it, but I can’t change it…

AdaptiveI can’t predict it, and I can’t change it…

VisionaryI can predict it, and I can change it…

ShapingI can’t predict it, but I can change it…

RenewalResources are severely constrained…

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In the article Have You Tested Your Strategy Lately? by Chris Bradley, Martin Hirt, Sven Smit writes: What’s the next new thing in strategy? According to Phil Rosenzweig; that’s the wrong question: Rather than looking for the next musing, it’s probably better to full understand what you already know is true, and make sure you do that well… Let’s face it: the basic principles that make for good strategy often get obscured… Sometimes the culprit is torrents of data, reams of analysis, piles of documents that can be more distracting than enlightening… but ultimately strategy is a way of thinking…

To stimulate that thinking and the dialogue that goes along with it, there should be a set of tests aimed at helping executives assess the strength of their strategies– testing the strategy itself (i.e., outcome of the strategic process), rather than just frameworks, tools, approaches that generate strategies… There are two issues; first, companies develop strategy in many different ways, often idiosyncratic to their organizations, people, markets… Second, many strategies emerge over time rather than from a process of deliberate formulation…

This may sound more complicated than validation using, e.g.; the 3-Cs (competitors, customers, company), or the 5-forces (barriers to entry, buyer power, supplier power, threat of substitutes, degree of rivalry)… But pressure-testing can help pinpoint more precisely where a strategy needs work, while generating a deeper, more fruitful strategic dialogue… The ability to pressure-test is especially timely in this highly competitive environment, where business only get one chance in the marketplace– testing can help expose– obsolesces, or reveal weaknesses, or force companies to confront choices and trade-offs that are delayed…

But than: What is the biggest mistake companies make with strategy? According to Henry Mintzberg; there is a very human bias towards perceiving business environments as more predictable and more controllable than they actually are… It’s very comforting to believe that one can control and predict the surroundings… Also, a big trap is to be stuck in one way of doing strategy; most often business implement the Classical approach, i.e., analyze, plan, execute… and it may very well be best the approach under ‘right’ circumstances, but it can also be the ‘wrong’ approach…

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In highly volatile markets, there are a couple of capabilities that companies need to have to succeed:

First, adaptive capability— ability to undertake disciplined experimentation…

Second, shaping capability— ability not just to participate in their environments– but actually to shape them to their advantage…

Third, capability of ambidexterity— ability to run different approaches to strategy in different parts of the organization…

Hence, it’s time to ‘kick the tires’ and possibly rethink your business strategy…