The Death Of Strategy

……… Jim Love

Somewhere along the line, strategy got a bad rap. Even large companies, which have traditionally invested in strategic planning, now question it. Why? First, when people are very busy, time spent on planning seems wasteful. Second, things are happening so fast that strategies may become outdated even before it takes effect. Third, given today’s frenetic pace of change, three to five-year strategic time horizons, are now an eternity. Why plan for a future we can’t predict? Didn’t the Internet make strategic planning obsolete?

Given these views, it’s no wonder that many companies view strategy as, at best, a luxury, and at worst, a relic of an older time. These myths disguise the real facts, however. Having a strategic plan was never more important. Consider the following.

I interviewed the president of a large firm that sells through multiple channels. He was keen to set up an Internet presence. "What’s your strategy?" was my question. "Don’t have time for that sort of crap," he replied. "I want to get on the Internet and sell lots of products."

It became apparent that real problems existed, which he had not, or would not, address. In the end, I had to admit I could not help him. Certainly, we could have built him a web site. But his idea was fundamentally flawed and sometimes, even as a consultant, one is better off not pursuing business where the customer is determined to fail.

Did his company believe it had a strategy? Certainly. The strategy was to sell over the Internet. They had a budget and sales targets and visions about to whom they would sell. Who? Why everyone! They even had ideas about using their call center — which only did outbound calling — to take inbound sales orders. They saw this hodgepodge of wishful thinking as a strategy. Their logic was fresh from the Net magazines. "Isn’t it more important just to get up on the Internet and experiment? You’ve got to move at web speed!"

Speed is not enough

Let me address another myth. No matter what anyone tells you, web speed is NOT an excuse for making mistakes faster. Your brand — the trust that customers have in your ability to deliver on your promises — is fast emerging as one of the biggest assets in the e-business marketplace. Every time you take this precious asset into the marketplace, you’re taking risks. What kind? That’s exactly what having a strategy would tell you.

This company’s feeble strategy was a minefield of potential mistakes. Many unanswered questions might drive the project beyond its deadlines, force enormous reworking, and cause significant damage through flawed implementation. In addition, some of the channels, which produced the company’s main cash flow, might perceive its new venture as competition. Would they continue to represent its products and put their best efforts into selling them?

These dangers had not been diagnosed and assessed. No competitive analysis and no market segmentation had been done. No plan was in place to re-skill the call center staff. The list went on and on. The failure to plan properly made the plan little more than a blueprint for failure.

Most of these issues would have been discovered and addressed in a good strategic plan. This was not done here. Action was better than planning. But good strategic planning provides the best of both worlds. A well-developed strategy is not just a plan — it’s a plan of action. Strategizing in four steps A proper strategic plan has four main components, each of which takes concrete actions to enhance business value. First, it assesses the current state of things. It looks at the world and the markets in which you operate, and focuses on both the opportunities and threats to your business. It makes you identify who your customers are and why they buy from you.

It also forces you to ask difficult questions. What are my capabilities? How do I bring value to customers? Even this one — what things make it difficult for our customers to do business with us? Honest answers to these give you the straight goods, not just selected facts to justify current hunches.

Second, a strategic plan has a view of the potential future. It provides a well-thought out set of alternative scenarios, with some real out-of-the-box thinking, which assesses ways you can bring value in each alternative. Channels are increasingly being reinvented. The future is an uncertain world of fast-paced alternatives that represent both opportunities and threats. To be nimble and react quickly, you need to consider these alternatives and develop strategies for them — not just react to crises as they happen.

Third, you need to know what is really important. It may sound old fashioned but when things are in flux, vision and values remain constant strengths. Vision excites and energizes customers and employees. It provides reason to carry on when times are tough. Values provide the other dimension — an assurance that we are not just carrying on, but that we are doing the right things.

Measuring strategies

A great article from the Harvard Business Review defined values as those things you would respect even if you lost money doing them. If this seems overly philosophical, ask yourself why so many of the best companies, which define the new economy, are ones which have most successfully enacted — not just written down — their vision and values.

In fact, one of the ways we measure strategy is not by asking about what the company will do, but asking what it won’t do. What did you say no to in this process and why? Market leaders, especially in difficult times, focus on what is really important. Strong vision and values give you the focus that lets you make the tough calls.

In ‘The Disciplines of Market Leaders’, one of the best books written on strategy, Michael Treacy and Fred Wiersema maintain an organization can focus in one of three ways, which they call "market disciplines." You can be a product leader, a highly cost-effective organization or what they call "customer intimate" — knowing customer needs and offering them the best "all round" solution. They do not claim that any of these is superior. They do insist that trying to be more than one dilutes focus and ultimately sub-optimizes your organization.

Saying no may be rare, but it is extremely powerful and positive.

This brings me to the fourth component of your strategy for the new economy — metrics. Once you have determined where you want to go, you need a plan for the journey. In the wilderness you use a map for guidance. In the corporate world, a strategic plan driven by business metrics provides the map.

Metrics are measurable key result indicators that show exactly how you are doing. Bill Gates calls it "managing with the force of facts" in his book ‘Business at the Speed of Thought’. Good metrics are part of an effective early warning system. They provide the ability to evaluate your plan’s progress and see problems early — while you can still take action to address them. Strength of strategyThese four components are all critical to knowing where you are going and why. That’s what a great strategic plan gives you. In the new economy, success will be distinguished from failure by the strength of strategic thinking and the quality of leadership. Fortunately, these two characteristics often go together. But you can’t be a leader without a team, and, in a world where, as Peter Drucker says, "The best and the brightest are volunteers." No team will follow you without a compelling plan. The days of blind loyalty are gone forever.

So is strategy really dead? Not for real leaders. As we wander through the minefields on our journey to the new economy, who do you want to follow — someone with a hunch, or someone with a plan?

The bottom line: Strategic planning will be more important than ever in the new economy. The four components of a proper strategic plan include rigorous evaluation of your current position, developing multiple scenarios to deal with an uncertain future, promoting vision and values, and using business metrics to chart your course. Proper strategic planning complements and enhances dynamic leadership.

This article is reproduced with permission from XIT Strategies Inc at

www.energizeyouchannel.com