Five mistakes leaders must avoid when developing strategy
As we approach the last quarter of the year, leaders and organisations are preparing for the annual ritual of hosting strategy retreats to consider their strategies for 2025 and beyond.
Advertisement
Though almost every leader agrees that having a strategy is crucial for an organisation's success, research has shown that many executives need help to articulate their strategy meaningfully.
A survey by Roger Martin of the Rotman School of Management found that 67 per cent of managers believe their organisation is terrible at developing strategy.
In a world where customers have options and rapidly evolving technologies often prompt changes in customer behaviour, running an organisation and achieving success without a strategy is nearly impossible.
Even though business strategy is a recent phenomenon, academics and practitioners have written copiously about it because of its relevance to business successes.
Over a thousand ideas, frameworks, and models have been created to answer the question of strategy and guide organisations on their journeys. However, some of these texts could have been more helpful.
Unfortunately, most texts have made the strategy concept very esoteric, producing complex frameworks that sometimes make the strategy process an exercise in futility.
This article provides valuable insights that can assist you and your organisation develop successful strategies.
Drawing from my experience working with executives and organisations facilitating strategy retreats, I hope to clarify some of the confusion and guide you towards making progress. Today, I outline five mistakes you must avoid as you go through the process of developing your strategy.
1. Strategy is NOT in a document but in the doing
Many organisations have spent countless hours developing a document that often ends up on a shelf rather than being used to guide operations despite the economic resources invested in it.
Several executives say, “We have a strategy, but it’s not being implemented.” No, that's not possible.
You are implementing a strategy because your strategy is the daily actions taken within the business, not the document on the shelf.
Your organisation always works with a strategy whether you have a written document or not. The strategy changes when the actions and choices throughout the organisation change.
Your strategy document can be a page or 100 pages; what matters is the "doing" within the organisation.
Capturing the ideas in a document helps stakeholders appreciate the process and supports effective review and evaluation. Move from documenting to doing.
2. Strategy is NOT to beat the competition but to win with your customers
Organisations have a mission to serve chosen markets and customers in a particular way that enables these selected markets to achieve certain states of being.
The strategy allows the organisation to accomplish its mission meaningfully and elegantly without wasting resources.
In doing this, executives can get side-tracked and focus on the competition. Many organisations have followed competitors to death because they did not understand what they were doing.
While focused on outperforming today's competition, another organisation is creating innovative ways to delight customers, thus disrupting the entire industry. Consider the case of the automotive industry.
The incumbents had more resources and better research capabilities than Tesla. However, you know who took the lead in electric vehicles.
Advertisement
The competition may be fierce, but you must be obsessed with making your stakeholders' lives better rather than beating the competition.
3. Strategy is NOT for the top management alone but also the team at the frontline
Many falsely believe that the management team and the board set the strategy, and those below the hierarchy implement it.
Hence, most strategy discussions involve top management teams who understand the business's issues more deeply.
This idea is partly true. Top management may not be aware of some aspects of the business, especially if they engage the frontline only during Customer Service Week celebrations.
Advertisement
With talented individuals working across the organisation and contributing uniquely to fulfil demands and ensure customer satisfaction, the organisation's brain is no longer the management team that sits at the top.
The strategy development process must incorporate mechanisms for gathering relevant insights and wisdom across the organisation.
4. Strategy is NOT a model but your method for winning
I have asked some executives about their strategy. In response, they referred me to the models and strategy frameworks used to develop their strategy.
Your organisation's strategy is not a Balanced scorecard. Neither can an organisation rely on a SWOT (strengths, weaknesses, opportunities and threats) analysis as a strategy.
Advertisement
I remember how I raised anxiety levels in one of my strategy sessions with a group of executives when we had a full day of strategy conversation without introducing SWOT analysis.
Finally, one executive asked the question, what about SWOT? I need support to appreciate how SWOT helps organisations imagine new possibilities for their customers when the strengths they have today may not be relevant for tomorrow.
What’s the inherent benefit of analysing weaknesses that may not be relevant tomorrow? That is demoralising. How did SWOT help in the invention of the iPhone?
I can imagine how Kodak's fixations on its strengths and weaknesses based on its SWOT analysis led to its undoing.
I would instead focus on a method that helps the team to discuss the issues that matter to the future of the business and its stakeholders. Strategy models can be helpful as a guide but are not your strategy.
5. Strategy is NOT your objectives but the options you pursue
Every organisation has goals, targets, and outcomes. These serve as focal points that rally effort and ensure all the organisation's resources and efforts are channelled in the same direction.
However, the goals are not the strategy of the organisation. Your goal may be to double the size of your business in the next three years.
That's a worthy goal but not a strategy. Your strategy is the set of choices that uniquely positions your organisation to win with customers.
A relevant question is how does doubling your business enable you to serve your customers better? Suppose your offering to the market is compelling.
In that case, your customers will support you to double the size of your business. Hence, the focus must be to win the hearts and minds of the customer as you operate sustainably.
…..be of good cheer!
The writer is a Leadership Development Facilitator, Executive Coach and Strategy Consultant, Founder of the CEO Accelerator Program, and Chief Learning Strategist at TEMPLE Advisory.
The mission of The Leadership Project is to harvest highly effective leadership practices and share them in a manner that other leaders can easily incorporate into their leadership practice.
If you have an idea or leadership practice to share, kindly write to programs@thelearningtemple.com. Until you read from us again, keep leading…..from leader to leader, one practice at a time.