Through the course of my career as an operating executive and advisor, I’ve had the opportunity to lead, participate in and witness the design and implementation of myriad strategies, in a variety of industries. And whether it’s the founder of a high-growth challenger brand, or a c-level exec responsible for an innovation portfolio, the business leaders I work with all want to know the answer to the question “how good is my strategy?” But what does it even mean to have a “strategy”? Let’s start there.
Despite frequent appearances in Powerpoint and Keynotes across the business world, strategy remains one of those mysteriously squishy business terms that, I would submit, few could clearly define if shaken awake in the middle of the night. That doesn’t prevent us from bandying it about in an effort to bring more gravitas to a plan, though, or to make it seem like we’ve given something a lot of thought and now know what to do. We don’t just have a plan, we have a business strategy… right?
But, is it a good strategy? What does this even mean? And how can you tell whether the last strategy you saw or built was anything more than just a wild-ass guess as to what to do next? Here’s a short guide to answering these questions that I like to call:
1. It’s not a plan
Let’s begin in an area that’s frequently a breeding ground for poor strategy…. planning. While a coherent set of tasks and activities are an important part of any good strategy, it’s important to remember that a list of planned activities does not, in and of itself, constitute a strategy.
Said differently, plans are great, but they aren’t strategies. The difference is in the emphasis. Strategy’s focus is first on the what, and then on the how. Plans on the other hand, are almost exclusively focused on the how.
As international businessman, author and Columbia B-school Professor, Willie Pietersen, likes to say:
“Strategy is about doing the right things; Planning is about doing things right.”
“Sure”, I hear you say, “that’s all well and good, but how do I know if we’re doing the right things?” That’s a great question, and it brings me to the next sign.
2. It solves a problem
By definition, business strategies exist to achieve a major or overall aim. They go hand-in-hand with specific objectives and the obstacles that lay between where you are and where you need to be. But how can you know if you’re doing the right things, without first knowing what it is you are trying to solve for?
Often, as strategists and business leaders, we tumble headlong into mapping out what we think needs to happen, before taking a moment to clearly define the issue at hand and what we need to overcome in order to succeed. The truth is that it’s really hard to come up with a great solution to a problem, and even more difficult to execute the solution, if you’re not entirely clear on what that problem is to begin with. If you want to build a good strategy, you have to first define your problem. Take the time to properly diagnose the challenge at hand before trying to devise a strategy to overcome it. If you can explain it in a simple and succinct way (to others, yes, but also to yourself), then you’re one step closer to having a good strategy.
Once you’ve defined the problem, keep reminding yourself of what it is. If you stay focused on the challenge you’re trying to overcome, without realizing it you’ll make micro-adjustments in every decision so as to resolve that problem. And always remember the words of one of America’s most renowned inventors and industrialists, Charles Kettering:
“A problem well-stated is a problem half-solved.”
So now that we know what we’re trying to solve for, we’re ready to create a plan, right? Not just yet… while there’s room for a good plan in every good strategy, before rushing to create one, we need to make sure it relates back to the problem in the right way.
3. It has the right shape
UCLA’s Professor Rumelt, one of Harvard Business Review’s Top 50 management gurus, explains this well in pointing out that every good strategy has an underlying structure, which he calls the Kernel. It’s this shape you’ll want to make sure you mimic to ensure your strategy is a good one. Here’s what it looks like:
- At the head is the Diagnosis, a clear and simple articulation of the problem – we covered in this in 02;
- The body, then, contains a high-level Guiding Policy. You can loosely think of as “things we need to do”, and it’s important to be able to draw a straight line between each point in the Guiding Policy and the Diagnosis, including compelling reasons as to why following the guidelines or policies will remedy the problem or help you surmount your obstacles;
- And finally, the legs contain a set of Coherent Actions that must be taken in order to implement the Guiding Policy, complete with individual goals, measures, owners and deadlines – in other words, you need a plan.
What’s the shape of your strategy? Is it long on goals, but short on policy and action (a clear sign of a bad strategy according to the Prof), or does it have a solid Kernel?
4. It makes a difference
Next up, we have to examine Impact and Intent. Classic marketing theory encourages us to be different in order to stand out in a world flooded with commercial messages. Perhaps, at times, you’ve also found yourself slaving away at the marketing coalface like me, trying desperately to craft a compelling USP (Unique Selling Proposition) for your products in the belief that success depends on it.
But is this really what distinguishes good business strategies from bad, or makes companies like Apple, Instagram, Airbnb, Uber and MOO great? Is their phenomenal success really driven by how different their products and strategies are from the competition, or is it more about the difference that their products and strategies make in the lives of their customers?
This thinking is at the heart of the Difference Model, a wonderful school of thought proffered by Bernadette Jiwa, whom some have referred to as “the female Seth Godin.” According to her, difference happens at the intersection of truth, opportunity and action. And I believe that good strategy lives there too.
Ms. Jiwa also likes to say that you can’t build successful businesses, sustain great ideas, or create difference without empathy. But great strategies are no different… they’re borne out of an in-depth and personal appreciation of the problem(s) the strategy is designed to resolve.
Do you have the empathy required to ensure a good business strategy? If not, you’ll want to make sure you involve those who do, if only as contributors or reviewers, to ensure that your strategy creates a difference.
5. It’s round
The business world is full of strategies gathering dust in beautiful binders on office shelves and hard drives across the world. Perhaps you have one (or more) in your possession right now? Some describe plans that have been fully implemented, while others remain untouched. But they’re all static, and none are good.
Great strategies are dynamic. The best will evolve over time to accommodate externalities and changing market conditions, as well as changes (positive and negative) particular to your team or organization. To facilitate this adaptability, it’s necessary for strategies to be characterized by a period re-assessment or situational analysis, coupled with structure and discipline in tracking key metrics impacted by the strategy. Another way to say this is that Good Strategy is a working concept, not a final deliverable.
Strategic Learning, proposed by the same Prof. Pietersen we met earlier, is a leadership process that generates a cycle of ongoing discovery and adaptation, and is a great model for designing an adaptive business strategy based on measurement and iteration. You can read more about it here.
So there it is… The Good Strategy Sniff Test: 5 Signs You Might Have a Good Strategy. I hope it’s helpful to you in building and evaluating your own business strategy. As always, I’d love to hear your thoughts.
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