Strategy is widely misunderstood in the corporate world, and therefore also misused. People often confuse strategy with things like (strategic) objectives or plans. They’re not the same thing.
As I outlined in my first article on strategy, strategy is a set of choices that explains how an organization aims to win on its chosen playing field. These how-to-win choices explain how the organization differentiates itself in its market(s); why customers choose it over the competition.
Still, this article raised lots of questions about what a good strategy is, and what criteria it should follow.
Here are the 3 criteria that I deem most important.
A good strategy is:
One that you plan to execute.
This sounds like a joke but it isn’t. Many companies will have a strategy along the lines of ‘Be a great place to work’. I think this can be a good strategy to have — if you’re able to attract and retain better talent than your competitors, your chances of succeeding will be higher. But how many businesses are really making all the required investments to become — and remain — a great place to work? My guess is not many.
When choosing a strategy, make sure you’re seriously planning to execute it. A strategy can only pay off when it’s executed and don’t underestimate the amount of work that will go into that.
The best way to ensure this is to make your strategy measurable. You create Key Results to measure the success of your Objectives, you should create KPIs to measure the success of your strategy (this is why you can align KPIs to strategy in Perdoo). As we say in the Netherlands, “meten is weten” (measuring is knowing).
One that you can execute.
Every organization is dealing with different ambitions, resources, and circumstances. If you don’t take these factors into account, you’re setting yourself up to fail.
For example, how much capital do you have access to? Are you willing to fundraise? At Perdoo, we decided against taking on venture capital. This decision had consequences for our strategy. Instead of spending (wasting?) lots of venture dollars on Google Ads, we focused on creating high-quality resources and offering that for free to the market (offering the best resources and support is still one of our strategic pillars today). While it’s probably easier to raise venture capital and buy your way to the top of Google search results, it just didn’t feel like a useful way to use our talents. More importantly, because we didn’t have huge budgets, growing aggressively through paid advertising wasn’t an option for us.
What also helped is that we were early in the market. Therefore, it was easier then, than it is now, to rank high organically for relevant search terms. Many people also started sharing our content so we knew we were doing something well — we knew we were able to execute our strategy to offer the best resources and support. It was different for our competitors. For some of them, raising venture capital was a better strategy, since their circumstances are/were different.
When setting a strategy, you need to know your organization inside out. You need to know which resources you can — and want to — obtain, and which resources you’ll have to do without. Only then can you be sure that you can actually execute it.
One that exploits your strengths.
A good strategy utilizes the strengths of a business. It’s not for nothing that a SWOT analysis is a popular activity during strategy offsites.
What do you believe you can — or should — be better at than any other player in the market? Do these strengths already exist? Or could you commit to building these up? Do these strengths have the potential to help you realize your ultimate goal?
Going back to the example above, we were getting signals from the market that they appreciated our content. At the same time, we were getting many questions from people trialing our product. They didn’t ask so much about how to use our product, instead, they had many theoretical questions about how to use strategy, KPIs, and OKRs to power their business. So we knew that we would be able to create better resources than the competition, and we also knew this was something the market needed.
That’s it. In summary, make sure that you’re strategy is one that you plan to execute, one that you can execute, and one that exploits your strengths, and your strategy will give you sustainable advantages over your competitors.
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