Strategy is the glamour part of business ownership. Unfortunately it is also probably the least time consuming thing you’ll work on as an owner. Execution is where the bulk of your time should go. There has been more bullshit written about strategy than any other topic in business. It’s got Blue Oceans, 7Ss, 5 Forces, SWOTs, SWATs, and other such things.
In the end all strategy boils down to one question: what is the most important challenge and/or opportunity facing your business? Then you figure out a reasonable way to capture the opportunity or overcome the challenge and align your resources to that program. Sounds simple but in reality it isn’t easy. It isn’t easy because it requires focus, commitment, and clarity.
Where Good Strategy/Bad Strategy Came From
I got clarity on strategy after watching a YouTube lecture by Richard Rumelt a professor at UCLA Anderson School of Management. His message is simple: bad strategy is all fluff and goals. It’s aspirations. Good strategy is about identifying the main issue and doing something about it. When I watched the video and then after reading his book, it became clear to me that I had a bad strategy. Our strategy was to double in size and maintain profitability. Sounds great but it’s essentially meaningless. When people asked me what our goals were I gave them revenue targets based on nothing but instinct.
What we really needed was to focus on getting enough new sales opportunities. I’ve written in a previous post about our struggles with building an effective sales process. We had lumpy sales because a small group of people who had been with the company a long time had relationships. We maximized those relationships but had no idea how to expand beyond that. What we needed was a sales process that no longer relied on the owner so that’s what we focused our strategy. Fix sales. We broke down the key tasks, saw where the bottlenecks were, focused resources on those bottlenecks, and things got better.
Strategy Isn’t the Only Thing, It’s Just the Most Important Thing
Of course there may be more than one important thing your business needs to work on. In fact there almost has to be but there is always one thing that is most important. You need to focus time and resources on that one thing. That said, the rest of the business still needs to carry on. Just because you are focused on improving sales, that doesn’t mean that you can stop invoicing or paying vendors. Focus means that you dedicate resources and management time and attention to the issue but everyone else goes about their regular job. If that means invoicing gets a little worse until sales gets fixed; then so be it. You can clean it up later because it is necessary but less important overall.
The Objections
There are many objections to this definition of strategy. Some people believe strategy should be a comprehensive list of all the initiatives needed to succeed. This is sort of the Scaling Up/Entrepreneurial Operating System view of the world. That’s fine as far as it goes, but the very laundry list nature of these programs leads to a lack of prioritization. I also find some of the parts are irrelevant. Do you really need to know your three uniques? Usually you don’t. What if you just have one? That One Page Strategic Plan from Scaling Up looks suspiciously like a two pager and God help the person that looks at that and says, “Oh, now I get it.”
I’d suggest going through one of those exercises once. They give you some frameworks to think through but at the end, ask yourself, “out of all of this what is actually most important?” Put all the other stuff on autopilot or at least deprioritize it.
The other main objection to my view is from people think that strategy is about big thinking. It’s about vision and finding the blue ocean. If finding a way to pivot into a higher value niche away from the “red ocean” of excessive competition is your biggest opportunity, then yes, that’s the right strategy. I’m guessing 99 times out of 100, that isn’t the biggest issue. Something harder and mundane is but if you really do have that opportunity, go for it. To me big visions are situational. Sometimes they make sense, other times you have to do a bunch of mundane stuff just to stay in business.
Applying This to My Own Company
I’ve found my strategy has focused increasingly on understanding my market better through the data available to us. We want to use these data in a systematic way to compound our knowledge, deliver more targeted services to our customers, and have a better view of the trends in the markets. Out of that data we planned to identify our most important opportunity and use it as a way to constantly refresh that priority. I think that strategy will pay huge dividends but if my sales processes weren’t in place it’d be a pipe dream. If I hadn’t fixed the way we looked at our numbers, I wouldn’t have the financial base on which to build this strategy.
In the end, my recommendation is to skip the laundry lists, skip the big think books, and just think: what is my biggest opportunity or challenge. Then go tackle that. Rinse and repeat. That’s it for this week,
Alan