SIDEBAR: What is strategy? Competitive strategy is about being different. It means to deliberately choose a different set of activities to deliver a unique mix of value.
After more than 10 years of working with companies on their strategic planning initiatives, we have found many companies are great firefighters, spending most of their time solving operational problems. In some cases, the managers have even become “experts” at operational efficiency and these short-term solutions in lieu of making long-term decisions. Having a strategy forces companies and management to think long-term and for some, move out of their comfort zone.
In order for a company to be successful in strategic planning, certain conditions apply:
1. Strategy works when it’s simple enough to be implemented.
World-class companies like P&G, Walmart and Southwest Airlines deliver value to the customers they serve by excelling at a few things: P&G – market research and branding, Wal-Mart – vendor relationships and IT systems, Southwest Airlines – cost control. The great strategies are simple, critical, long-standing, and well understood by all.
2. Strategy means focus and requires making choices.
“The essence of strategy is about choosing to perform activities differently than rivals do,” Michael Porter writes in What is Strategy? Great strategies are based on a limited number of large opportunities. For small business, this means taking advantage of current niches. The key is to couple the assets with market opportunities. During the strategy development phase, we challenge our clients to exploit their strengths and de-emphasis their weaknesses.
3. Good ideas alone don’t cut it.
During planning, strategic objectives should pass the SMART test: Specific, Measurable, Attainable, Relevant, and Time Specific. Organizations struggle with accountability because action plans are not well documented and understood. The most successful strategic plans tie specific activities necessary to achieve the goal with the person responsible to complete the tasks and the expected timing.
4. Strategy is not a one-time activity.
Companies must maintain both continuity and continuous improvement. Porter puts it best: “Companies have to be very schizophrenic” – moving in a clear direction, yet ready to change!
At the end of the day, winning companies have strategic thinking as part of their culture. To succeed in the long-term it is essential to remain focused on what it is you wish to accomplish.