The Tricks and Traps of Strategy: What Does it Take to Make it Work?

This blogpost was compiled based on an interview with Michael Kouly about Strategy:

What is the main problem with the corporate world’s understanding of strategy?

The word strategy has become highly misunderstood, overused, abused and a generic term. Often it is passed around in board meetings, offices and public circles as an attempt to add value, depth, importance and sophistication.

Strategy is not about being profitable, earning higher market shares, being the best, being the biggest, winning or increasing sales. These at the very best can be considered aspirations, wish lists and hopes.

Then what is Strategy About?

Strategy is all about the choices an entity makes based on the information that it currently has and on its hunch about the trends that would shape the future. It is a macro “Grand Plan” based on a mix of information, analysis and intuition of the current interpretation of the present reality.

Any company starts off with a variety of choices as in which industry will it operate in? What products/services will it provide? What location? What channels of distribution and communication? Strategy is about making sense of all the options and making the needed trade-offs. We do not live in a predictable world hence strategy is merely the “best guess" that a company can make to the greatest of its knowledge.

How do you make these choices? What is the first step? How do you know which option is the best? 

The only way for a company to survive and prosper in a sustainable way in today’s interdependent world is to provide a unique contribution to society. Therefore, the first step to any great strategy is finding the company’s purpose, its core reason for existence. Strategy and purpose go hand-in-hand. Strategy without purpose is like driving without a destination or a reason for the journey. Purpose without strategy is like building castles in the sky, no implementation - just hope, dreams, aspirations and wishful thinking.

The key to any good strategy would be to have a purpose-led “grand plan” for providing unique value. It is about taking a good look at the company’s strengths, what can your company offer customers that nobody else can in the same way? What is a need that can only be fulfilled uniquely by your company? What problems can you solve? What opportunities can you create? These questions can be the starting point and can drive the choices that follow. Planning and research can only get you so far. When it comes to understanding the most viable option, it is crucial to make sure that it is aligned with the purpose. Most companies do not realize the value of purpose and get caught in the trap of constantly planning and trying to predict the future. Unfortunately, this is not possible, and will often fall short.  

What makes a good strategy?

In order to set the stage for the proper implementation of strategy many factors must be considered. The key to any good strategy is being founded on a clear purpose. Also, analytical and rational judgments are essential to filter out options.

The remaining challenges are based on execution: Building on your existing set of skills and capabilities, acquiring new skills, creating an enabling environment and culture, hiring and holding on to the right people, ensuring everyone is aware of and is aligned with the purpose and the strategy and placing the needed monitoring systems to assess and improve execution.

Where do companies fail? What are the traps that they may fall into?

Companies can fail if the quality of any of the above mentioned factors is compromised. Companies’ failures can also sometimes begin with their success. Arrogance is the Achilles’ heel to any company. One must be hypersensitive against arrogance in all its forms.  Arrogance can deter you from your original purpose by shifting your focus towards your own needs and issues as opposed to your clients. This can cause many companies to over reach, and become trapped in a cycle of striving "to be the best", instead of unique. In addition, sometimes companies view their strategy as set in stone, which can prevent them from being adaptable in a changing world. Another trap that many organizations fall into is that of "magic solutions". Instead of facing the root causes of their problems, that often requires them to have the courage to look into a mirror, they opt for quick fixes. It does not end there, even with the best strategy some companies will fail due to lack of proper execution. Lack of morale, inefficiency in deploying or safe guarding their resources, lack of monitoring systems, a blame-filled work culture, lack of communication, can all contribute to this downfall.  

Surviving is not easy and thriving is even harder, but they are possible and definitely worth the effort.