Whether you are an entrepreneur being asked for an investor pitch or the CEO of a Fortune 500 company starting a 5-year strategic planning exercise, your strategy should answer a few simple questions – Where are we going and why? How will we get there? How much is it going to cost, and is it worth it?
But what is strategy, really? From our experience, we’ve learned a few things that might surprise you – especially if you have a classic business education.
Strategy is alignment – Strategy building and the drafting of any plan are really about putting in place a systematic process. This process usually consists of a large amount of work structured around a series of meetings where hypotheses are generated and validated, and alignment is created among key stakeholders. While most strategic planning exercises focus on the generation and (especially!) the validation of hypotheses, our experience shows that it’s actually the alignment of people that really matters. These people are the ones who have to buy into the plan to make it actionable and increase its chances of success. This means you should spend significant time and attention on ensuring that all key stakeholders (executives, founders, investors, board members, employees, etc.) understand the why and the how of your proposed strategy. If your strategy involves tough decisions, an innovative approach or a break with tradition and orthodoxy, this process of alignment becomes even more crucial to its success.
Take Roger’s recently ousted CEO Guy Laurence for example. While he had amazing ideas and we’re sure was a very good operator, Laurence failed to build alignment with the company’s board of directors and this failure to take into account the people side of strategy cost him his job.
Strategy is iterative – Strategy is developed in conditions of uncertainty – no matter how expensive a consultant you hire, you won’t be able to predict the future. And as the old adage goes – no plan survives contact with the enemy. Yes, you do need to have concrete plans in order to make key decisions (investments in capital, distribution of resources, communication of a strategic vision, etc.), but it’s important to ensure that all of your plans, systems and mindsets remain open to evolution and amendment. Change is the only constant, and organizational adaptability is the key characteristic of successful organizations. Adaptable, evolutionary organizations don’t change course every day, but they do realize that strategy is an ongoing process where new information may affect the course, and exceptionally, the destination previously chosen. Nintendo is a good example of this evolutionary approach, recently shifting from a 40 year strategy of restricting games to its own hardware to making its products also available on mobile. With Pokémon Go, and the announcement of the availability of a Mario Bros iPhone game, Nintendo is showing that although changing your core strategy might be hard, adapting to changing markets and trends is crucial to achieving sustained success.
Strategy is making choices – Strategy is also about what opportunities you won’t pursue. In a world where millions of smart people are trying to change the world every day, making a difference and profiting from it means rejecting options, even ones that look good on paper. You need to have the courage to double down on the choices you make and push hard to make them happen. Diluted and weak ideas are the direct result of struggling to make hard and bold decisions. Ambitious aspirations can help, but you also need to take the risks that making choices require. A classical example is the case of stubborn Warren Buffett. When the dotcom bubble came around in the late 90’s, people were making fun of Buffett for not investing in it. His answer to passing up the opportunity? “I don’t invest in things I don’t understand”. We all know who got the last laugh.
Strategy is a difficult, yet important and exciting challenge for any organization. It can result in bold changes, renewed enthusiasm, and inspiring actions. Alignment, an evolutionary approach and the courage to make real decisions are three all-too-often forgotten components to getting this right.