Instead, it’s the result of a simple and quite rough-and-ready process of thinking through what it would take to achieve what you want and then assessing whether it’s realistic to try. In this worldview, managers accept that good strategy is not the product of hours of careful research and modeling that lead to an inevitable and almost perfect conclusion. The objective is not to eliminate risk but to increase the odds of success. You need to be uncomfortable and apprehensive: True strategy is about placing bets and making hard choices.
You’re probably stuck in one or more of the traps I’ll discuss in this article. In fact, if you are entirely comfortable with your strategy, there’s a strong chance it isn’t very good. It may be an excellent way to cope with fear of the unknown, but fear and discomfort are an essential part of strategy making. This is a truly terrible way to make strategy. By the end of the process, everyone feels a lot less scared. The plan is typically supported with detailed spreadsheets that project costs and revenue quite far into the future.
That nearly always means spending weeks or even months preparing a comprehensive plan for how the company will invest in existing and new assets and capabilities in order to achieve a target-an increased share of the market, say, or a share in some new one. The natural reaction is to make the challenge less daunting by turning it into a problem that can be solved with tried and tested tools. An executive may well fear that getting those decisions wrong will wreck his or her career. Worse, actually choosing a strategy entails making decisions that explicitly cut off possibilities and options. But almost all also find it scary, because it forces them to confront a future they can only guess at. Self-referential strategy frameworks.Įven managers who avoid the first two traps may end up using a framework that leads them to design a strategy entirely around what the company controls.Ī company can avoid those traps by focusing on customers, recognizing that strategy is about making bets, and articulating the logic behind strategic choices.Īll executives know that strategy is important. Planning can’t make revenue magically appear. But for revenue, customers are in charge. Cost-based thinking.Ĭosts lend themselves wonderfully to planning, because the company controls them. Planning arguably makes for more thorough budgets, but it must not be confused with strategy. If you are entirely comfortable, you’re probably stuck in one or more of the following traps.
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But good strategy is not the product of endless research and modeling it’s the result of a simple process of thinking through how to hit a target and whether it’s realistic to try. It’s not surprising, then, that they try to make the task less daunting by preparing a comprehensive plan for how the company will achieve its goal. Strategy making forces executives to confront a future they can only guess at.
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