Before we delve into how to tell if your strategy needs to change, first let’s clarify what we mean by strategy.
Strategy is what determines the framework of a firm’s business activities and provides guidelines for coordinating activities so that the firm can cope and influence the changing environment. Strategy articulates the firm’s preferred relationships with its environment and the type of organisation it is striving to become.
It typically, therefore, spans much longer than 12-36 months. In fact, many successful strategies have been executed for decades. For example, when Ford Motor Company decided that it would control its value chain from raw materials production to final sale to customers in order to guarantee a certain quality of car to its end customers, that was an example of a strategy that was successful for them since the 1920s. And, Walmart’s Everyday Low Prices strategy to help their customers live better lives has been the underpinning of the company since the first Walmart store was opened in 1962.
The main challenge when determining if you need a new strategy tends to be encountered when people try to figure if they have a strategy at all. And this problem tends to boil down to the question of strategic planning versus tactical planning. The best way to explain the difference is with an illustration. Let’s say that your goal is to have the most satisfied customers in your industry. One strategy could be to improve the experience at each customer touchpoint. If your organisation chose this strategy, relevant tactics might be to improve internal processes, invest in the ambiance within your stores or conduct customer service training. But another strategy to have the most satisfied customers could be to aggressively target those that would be happy with your offer exactly as it is. Tactics to support this strategy could involve guerrilla marketing techniques, adapting your brand messaging or incentivising customers within your chosen segment to keep them happy.
Now, you may argue, why can’t we do both sets of tactics? Of course, you can, which is the problem. In fact, often that is what many companies do. They execute tactics that all individually seem logical to achieving their goal. But it is a bit like deciding you will become wealthy by going to medical school, investing in real estate and trying to land roles in movies all simultaneously. On their own, you can see how each course of action could lead to you becoming a millionaire. But together, they spread your resources too thin, do not create momentum towards any of their intended outcomes and confuse everyone trying to help you reach your ultimate goal. And that’s why you need a strategy first.
If the work of your organisation feels like everyone is pulling in different directions, but each department’s plans make sense, odds are you don’t have a strategy at all. You have a hodgepodge of tactics.
A good strategy tends to be characterised by the following:
- It spells out both what you are going to do as well as what you are not going to do
One of the most uncomfortable experiences you’re likely to have when developing your strategy is saying no to good ideas. There are usually multiple ways to win in any given market and there will always be advocates for each approach. A good strategy will require you to become comfortable with this discomfort. By saying we will do things this way and not that way, you must acknowledge that certain options will therefore no longer be available to you. Trying to do both will dilute their efficacy and likely result in failure. Which brings me to point number 2.
- Another company could make money doing what you are not doing
When you make your strategic choice, odds are another company could make money doing the very thing you chose not to do. If, for example, you choose to locate your stores close to your customers, another company could choose to have no stores at all and be just as successful. When you choose your path, there will inevitably be naysayers who have strong, solid arguments for why you are wrong. Time may prove that both strategies can be successful given the right set of circumstances, but odds are, only one approach will be the right approach for your company given its purpose, constraints and invisible assets.
- It leads to a change in the basis upon which people make decisions
You will know when your strategy is at least clear when people start making decisions based on whether the expected outcome is aligned with the strategy. If your team is constantly bickering over which course of action makes sense to take the company into the future, either you do not have a good strategy, your strategy is not sufficiently clear or you don’t have a strategy at all.
- It leads to a set of mutually reinforcing choices
The final acid test to whether you have a good strategy is to check alignment between departments. Often, departments make decisions independently from each other. If, even in those separate rooms, each department’s decision reinforces the decision of another department, you’re on the right track.
If you have ticked all of the above boxes and are still not seeing success, odds are your strategy is not working and you need to develop a new one.