Many tactics can be mistaken for business strategy.
Have you ever been part of a “strategic” effort that just doesn’t feel … strategic? For example, I’ve written about how “strategic” cost-reduction efforts can become merely “whacking.” That’s the kind of thing I have in mind, but there are many others.
I’m reminded of a classic (to me) scene from the movie “Revenge of the Nerds”. John Goodman, playing a college football coach (and looking as svelte as I’ve ever seen him), delivers a speech to his team on the field about the importance of homecoming. He gets the players really fired up about it. They get so amped up, in fact, that they—as victims of a practical joke involving jock straps and liquid heat balm—run off the field and into the locker room after the speech. Here, see for yourself:
The coach, oblivious to the practical joke, simply yells “Shower up!” at the end of his speech. As his players frantically sprint into the locker room, he looks at the ground and says a powerful thing, almost in passing:
“Sh*t, we forgot to practice.”
It’s that end point that’s important: “We forgot to practice.” The coach expends all of his and his team’s energy on a speech and forgets the core activity of the moment.
How often do you go through strategy efforts and end up saying “Sh*t, we forgot to do the strategy”? Here are some examples I’ve seen.
- Forming a strategic “show” for the board vs. a strategic plan for the business. The board wants a strategy; you deliver a shiny document. Seems like a fair trade, right? No. The dazzling document is the equivalent of the coach’s speech above. It makes the business the object of the conversation vs. the subject of the conversation. The board is the subject.
- Mistaking a financial model for business strategy. A good financial model has to underpin a good business strategy, but a business strategy is not a financial model. If your strategy is to gain 200 bps of margin through SG&A reduction, you’ve set a goal, but you haven’t set a strategy. This brings me to my next point …
- Mistaking organization for strategy. This one cuts both ways. It may be very strategic to reorganize, but tell me why. If your answer is that you end up with lower costs, then great. Tell me about your cost-leadership strategy: How does that create a sustained competitive advantage in the market? If you can’t answer that, you’re likely not forming a strategy. The same can be said for a strategic hire. I once advised a CEO that his VP of HR would be the most strategic hire he would make—in this case because of shoddy systems, style, engagement, and a host of other ills that the hire would be tasked to cover. There was strategy behind my recommendation, but too often our shiny new hires come with no strategy behind them.
- Missing the market. Management teams often fall into this. They forget that the reason for a company’s existence—really any organization’s existence—is to serve someone else. That’s the only way value is created. However, too many strategy efforts are focused inwardly. In fact, points 1-3 above can be summed up that way: They are internally focused failure modes. If you’ve forgotten the market, you’ve forgotten your strategy.
- Using “strategy” as code for “my agenda.” You don’t see this one too often, but occasionally executives spin up elaborate strategy efforts to get to answers they already have in their heads. That can be fruitful if the answers are grounded in fact and built for the market, as it brings other people on board. However, if the strategy effort is simply a ruse to quiet the masses while pursuing an adverse agenda, the executive has missed the point.
Those are a few examples, but there are many other ways to forget strategy. Some of them come while running the business and others while leading people. Strategy synthesizes market, organizational, financial, and other knowledge sources into direction via a logical argument. If you take only one element and make that the strategy, you’ll fall short.
Don’t be left staring at the ground and saying “Sh*t, we forgot to do the strategy.”
What do you think?