GOOD STRATEGY vs BAD STRATEGY

A good strategy is not about vision or goals. It is a carefully researched and well-designed action plan designed to meet a challenge. However, leaders often substitute targets, branding and slogans for strategy. Bad strategy, contains fluff, dodges problems, mistakes goals for strategy and sets unrealistic goals. Good strategy focuses on critical issues and decides how to address them. It requires research and analysis, hard choices, decisive planning, and action. Identifying and leveraging your competitive SWOT (strengths, weaknesses, opportunities and threats) are the first steps in strategizing.

Good Strategy
 

Good strategy is simple and straightforward. It involves “strength applied to the most promising opportunity.” Strategizing means identifying critical issues within your market and industry, making a plan to focus results-oriented action on those crucial points. Strategy has little to do with ambitious goals, vision, leadership, innovation or determination. For many business leaders, strategy is nothing more than an exercise that generates impressive (but generally unrealistic) goals and meaningless slogans.

A good business strategy presents a specific action plan to overcome a defined challenge. Good strategy involves multiple analyses and development of thoughtful, expertly implemented policies, designed to overcome obstacles and move the firm profitably ahead. Good strategy is a highly focused, problem-solving activity that addresses fundamental issues. It uses the intelligent application of advantage to reach achieve higher goals.

Importance of Advantage

In business, advantages separate winners from losers, but no company leads in every area. Your job is to pinpoint your company’s specific advantages so you can leverage them in the most effective way. Never engage in any form of competition in which you hold little or no edge. Much like “wrestling the gorilla” – it’s completely counterproductive and gives someone else the upper hand.

Make change an advantage. The quicker you “grab the high ground” – or get out in front of it and turn it to the benefit of your firm – the more strategic success you can achieve. You must be able to deal with small details of your particular situation to get a jump start on your competitors, particularly those that are stuck in inertia.

Bad Strategy

Bad strategy isn’t just the opposite of good strategy; bad strategy materializes from “specific misconceptions and leadership dysfunctions.” Four characteristics identify bad strategies:

1.     Fluff- Empty slogans filled with trendy buzzwords take the place of important insights. Consider this example from a bank’s internal report: “Our fundamental strategy is one of customer-centric intermediation,” or, translated into plain English, “Our bank’s fundamental strategy is being a bank.” Many so-called strategies are equally banal.

2.     Failure to face the challenge- You can’t have a strategy if you don’t isolate and find your firm’s main problem. Heavy-equipment maker International Harvester sought to revamp its organization with charts and analyses but never addressed the main cause of its internal issues: poor employee relations.

3.     Mistaking goals for strategy- Objectives are just a wish list if you don’t pair them with concrete action steps.

4.     Bad strategic goals

5.     Leaders must set overarching, but always realistic.

Executives who develop bad strategies tend to ignore problems or to see them as irritants; some believe that acknowledging difficult issues equates to negative thinking. Bad strategy becomes no more than a rallying cry- it can be motivational, but it is not strategic. Bad strategy is common because it involves fill-in-the-blank, template-style thinking.

Good Strategy

Good strategy always starts with a foundation with three components:

1.     Diagnosis

Don’t just ask, “What’s going on here?” Take the next step to find patterns and facts that might direct your thinking into new and different areas. Strategizing is an exercise in thinking and imagination, but it also involves judgment and evaluation. To improve your judgment, list your strategic ideas. Cataloging your ideas gives you a system for turning concepts into actions, and it also helps you overcome your biases and shortcomings. The more knowledge you gain about your company’s challenges and the ramifications of its strategic options, the better positioned you are to tackle a diagnosis.

2.     A Guiding Policy

Once you’ve diagnosed your firm’s strategic plan, you need a method that will direct your teams’ actions.  Good strategy focuses on the advantages your firm must leverage to overcome its obstacles. This leverage comes from the way you focus your policies and coordinate your actions to meet a desired. A guiding policy provides the reasons for the actions you need to take to meet your goals.

3.     A Set of Coherent Actions

The “consistent and coordinated” activities your company undertakes to carry out its strategy are critical tests. These steps should create the momentum your firm needs to succeed. A Plan of Action gets you where you need to go and calls for allocation of resources. As you plan, be aware of “chain-link logic.” Any system or organization is only as strong as its weakest link. Reinforcing all your stronger units is fruitless unless you also improve your weakest area. In your analysis, find if your potential bottlenecks – or weak links – can harm your strategic plan.

Design Your Strategy

Master strategists don’t choose or decide on a strategy; they design novel responses to challenges. Strategy always involves three points:

1.     Premeditation

Strategy represents planning carried out in advance of action; “winging it is not a strategy.

2.     Anticipation

Figuring out how others (for example, your competitors) will act in the future is an important part of the strategic planning process.

3.     Coordinated Action

Your strategy is far more than your choice among various options – it’s something you construct. You are customizing a performance race car, not choosing a souped-up vehicle from a car lot.

What About Growth?

Few business people would question the concept that growth always equals value. Unfortunately, many CEOs will do almost anything to make growth, including making acquisitions for which they pay way too much. You create value when you buy good businesses for less than they are worth. If you don’t create value, the true worth of your enterprise remains static. Growth depends on such factors as innovation, increased product demand and upgraded offerings. Strategize about those hands-on factors and the steps you can take to shape them.

Conclusion

The proof of your strategy will be if it actually works. Good strategy represents an educated guess about how to increase your business in the most productive way. You will know if you guessed right whether your strategy has succeeded. If and when you meet your strategic success, only then can you refine your operations and make the Strategic Plan even more successful.