Is Your Strategy Strategic?
There are many “experts” out there talking about strategy, and they all think they've cornered the market on the perfect approach. The truth is that there are a lot of ways to skin the strategy cat, and it's for you to decide what works best for you.
Instead of telling you how to develop your strategy, I challenge you to consider if your strategy is strategic. I put together a checklist of five questions to help myself and my clients to evaluate the quality of their strategic plans.*
Does it challenge your business to be something, instead of doing something?
Does it redefine your understanding of your customer?
Does it frame what makes your business different and better than the competition?
Does it help you say “No?”
Can it be changed quickly with new information?
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1. Does it challenge your business to be something, instead of doing something?
A strategy is not a to-do list and not a financial or numerical metric, otherwise known as a goal. A strategy is a collection of choices that help you achieve a goal. Perhaps you want to double your business's revenue next year (goal). Your strategy, then, describes the choices you make that will help you win with customers and beat the competition so you can reach the goal. Here are some examples:
Goal = Increase profit margins +2 points
Strategy = Discontinue your low margin SKUs
Goal = Grow market share 10%
Strategy = Shift to a subscription business model
2. Does it redefine your understanding of your customer?
A strong strategy empathizes with your customers and their needs. It should clearly articulate who your ideal customer is, demographically and attitudinally. It should identify the job that the customer needs to be done.
Bad = People
Better = Women, ages 18-44, who went to college and are nurses.
Best = Tina is a 44-year-old mother of two, living on a single income and struggling to provide wholesome meals for her busy family. She wants to provide healthy meals for her active boys, but she can't afford to spend money on food they won't eat.
3. Does it frame what makes your business different and better than the competition?
It's probably easier to tell me how Apple, Southwest, or BMW are different and better than their competition than it is your own business. It's a hard question to answer because we're too close to our businesses and know so little about our competition.
I remember a time at the grocery store in my Conagra Brands days when a work colleague commented on how I didn’t have any of “our brands” in my shopping cart.
At that moment in my career, I had eaten more of our meals than 10 people combined. I didn’t need more experience with “our meals.” I needed to experience how the competition did things so I could do things differently and better.
This is where most teams should invest most of their strategy–building energy. If you can’t articulate why your business is different and better in a brief statement, then I have bad news for you: it isn’t different and better.**
4. Does it help you say “No?”
In my two years of managing a small business, I’ve learned that it’s harder to say “no” to new business that it is finding work to pay the bills.
The situation goes like this: I get hired to facilitate a meeting, and everything goes great. The customer is happy and then calls me a few months later and says, can you emcee a reception for me? I am, of course, flattered that anyone would willingly give me a microphone and want to pay me for it.
Do I take the gig because a bird in the hand is worth two in the bush or do I stay in my lane and grow our workshop facilitation business?
The saying goes good work, leads to more good work.
I see lots of mature businesses playing in so many services and products that it becomes difficult for them to articulate exactly what it is they do.
If it’s hard for you to describe what your business does concisely, then how hard do you think it is for your customers?
Playing in too many categories dilutes what differentiates you in the minds of your customers. Saying "no" to work that doesn't support your strategy is one of the most strategic decisions you can make.
If you look at your strategy and don't feel like you took options off the table, then you have some hard choices left to make.
5. Can it be changed quickly with new information?
True story: An executive once said to me "Do I need to be involved in communicating the strategy to the rest of the organization or can you guys do that?"
I couldn’t believe he would ask me that. I thought I was being punk'd.
I said "Yes, of course, you have to be involved... it's your strategy!"
He went on to tell me that he had spent the last 12 months developing the strategy with the other leaders and was too tired to attend more workshops or engage employees.
Strategy doesn't need to be so difficult. Set your goal and write up a list of choices (not steps) that you need to make to achieve the goal.
Write it on a single sheet of paper, and try it on for a while. If it helps you make good decisions and avoid bad ones, then it's working. If it doesn’t, then change it.
Spending 12 months on a strategy seems pretty silly if the day you’re done with it, your top two competitors merge and now own 75% of the market share and are slashing their prices.
Final thought: Your strategy is a tool, not a document.
Too much emphasis is placed on getting the document just right with all its supporting facts, figures, and analysis. It doesn’t have to be pretty or in a binder. Give me a smart one-page strategy with coffee stains on it over a thick binder any day.
It might be helpful to think of your strategy like a carpenter’s measuring tape. It can be something you carry around with you to use when you make decisions. An experienced carpenter knows the board is 5 1/2 ft, but he also knows that it’s better to measure twice, and cut once.
Use your strategy to test your thinking by asking yourself, “Does this decision align with my strategy? If not, why not?” Then ask yourself, “Should I make a different decision, or is this a sign that the strategy needs to change?” ***
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Notes:
*I’m a big believer in the power of checklists to help us be intentional. Read the Checklist Manifesto by Atul Gawande and you will agree.
**Before you tell me your customer service sets you apart from the competition, let me share a story about Gramercy Tavern. It's a 3-Michelin-star restaurant in New York City that has over 160,000 visitors per year. If you live in Iowa and visited the restaurant last year and then visited again this year, they will remember you, greet you and ask you if you'd like to have the same dirty martini, with gin and three stuffed olives like last time. So just because Martha answers the phone every time when someone calls, that doesn't mean you have excellent customer service.
*** Hold a high-standard for changing your strategy. I certainly wouldn't suggest changing it willy-nilly, but you should continually test your own thinking.