“The essence of strategy is choosing what not to do.” – Michael Porter
In order to grow a company it is vital to have crystal clarity on where you are going, what you are trying to achieve, and why. Only then, can you effectively execute and manage your limited resources to achieve the desired objectives.
To help you navigate is the purpose, and great value, of creating a VUCA Strategic Plan.
A thoughtful strategic plan provides focus for the organization. It defines a framework, and the rationale, for saying “no” to all but the most important and impactful activities…those things that will bring your closer to achieving your long-term objectives.
Everything else can, and should be, ignored.
Beware: In today’s dynamic and uncertain marketplace, there are many tempting distractions. You decide to pursue them at your peril.
This advice is much easier to say, than do.
Here is a recent example from my consulting practice…
Chasing Every Opportunity is Not a Viable Strategy
I had an interesting conversation the other day with a company leader who was frustrated by the lack of progress his organization has made in the marketplace.
Despite a proven solution and a solid team, this CEO felt they not executing on the company’s growth objectives, or living up to their potential.
He was questioning if they had the right strategy in place.
A good question for the CEO to be asking! However, it is hard to tell without asking a lot more questions…
With some more discussion, the real problem began to emerge.
They have grown by being really nimble and opportunistic. Literally saying yes, and devoting resources, to every viable market opportunity that has come their way. There have been many.
Over time, they have deviated from their strategic plan, tweaked their solution, added customizations, chased after deals that didn’t really fit their ideal client profile, entered into hasty partnerships…among other things. Always because there was potential revenue at the end.
The implicit strategy they have been operating under is to treat everything as an opportunity, and to leave no potential opportunity untouched.
This agile approach worked fine, until it didn’t.
They have progressed beyond the scrappy startup phase, and failed to convert on the biggest market opportunity in front of them. Now the market (and more focused competition) are passing them by.
After politely I pointed out to this CEO that their business strategy, essentially, had been to chase every potential opportunity that came their way, he asked a provocative question in frustration:
“Well, then what is strategy?”
Strategy Defined
I began with my standard definition.
In the realm of VUCA Strategic Planning, “strategy” has a central and extremely important role to play. To ensure the highest probability of success, company leaders must develop and articulate a clear strategy to follow. It will define the approach, or the “how”, that individual contributors and teams use to do their work and achieve their short-term objectives.
The VUCA Strategic Plan is built around the execution of the chosen strategy. Ultimately, successful execution of the strategy will propel the organization towards achieving its long-term goals.
This leads to a simple definition of strategy:
The approach that will guide the team on “how” to achieve the short-term objectives that move the organization from its current state towards achieving its long-term goals.
I could tell that my simple definition was not resonating with this CEO. He kept talking about all the potentially viable opportunities he wanted to pursue.
I then stopped him in his tracks with this clarification:
“The most difficult, and critical, part of strategy is not choosing what to do. It is choosing what NOT to do. You can’t do everything.”
The Essence of Strategy
Strategy execution requires that leaders constantly make decisions.
Great leaders are often defined by their ability to make decisions quickly between competing choices with less than perfect information, and then taking action.
Leaders decide where the organization should go and what to do. By default, they must also decide where not to go and what not to do. All the while recognizing that you must make a choice, you cannot do both.
Michael Porter said it best, “Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different. The essence of strategy is choosing what not to do.”
Strategy execution is about making choices, trade-offs and choosing what not to do. There are only so many objectives and results that a person (or an organization!) can focus on at any given time. Focus by definition means deciding not to spend time on some things so that others get the attention they need.
The late Jack Welch, former CEO of General Electric summed this up nicely, “Strategy is simply resource allocation. When you strip away all the noise, that’s what it comes down to. Strategy means making clear cut choices about how to compete. You cannot be everything to everybody, no matter what the size of your business or how deep its pockets.”
Great advice from a business legend.
A Good Strategy Litmus Test
So, how do you know when you have a good strategy?
In some cases, you will not know until after you have made meaning progress towards, or achieved, your long-term objectives.
In the meantime, one useful barometer is that a good business strategy requires you to say “no” more often than you say “yes.”
What do I mean by this?
Over the course of time there will be customers that you are not going to serve, activities that you are not going to do, and services/products that you will not offer. You will say “no” to many things.
In business strategy, choosing what not to do is equally important.
Each business strategy should also have a section where it clearly states the things you are not going to do.
The Key Message
The conversation with this leader ended with me reinforcing the key message:
The essence of strategy is to define an objective and pick a direction, and then take actions that are designed to get you there. This inevitably involves making many decisions along the way and saying “no” to many of the options you are presented with.
Pick a direction, make a plan, and take action. And, most importantly, don’t get distracted along the way by things that might take you off course.
Pretty good advice, right?!
-Onward