I was in a meeting recently with a strategy director, when he shared his concern that his strategy team may be missing a trick. He wanted to make sure that the processes and approaches he was using to develop his company’s strategy were going to take the business forward, not backwards.
He was right to be concerned. Too many companies struggle to establish a clear, coherent and compelling growth strategy, and a McKinsey survey of senior executives found that less than a quarter of them believed that their strategic planning processes led to major strategic decisions. Less than a quarter!
So, here are my top 7 strategy pitfalls, with ideas about how to avoid them and create a strategy with cut-through. How many of these pitfalls are evident in your business?
- A failure to make trade-offs. Your strategy is defined as much by what you’re not about as it is about what you are about. A key differentiator of many market-leading companies is that they are willing to make choices about how they wish to compete. Struggling companies, in contrast, are often unwilling to make these trade-offs and end up stuck-in-the-middle, being outflanked by companies with more innovative products, lower prices or stronger customer relationships.
- Confusing strategy with planning. The annual financial and operating planning process drives many corporate strategy exercises. However, they are different activities and should be separated: strategy is about developing a framework that guides future actions and decisions; planning is about resource allocation. Big strategy decisions don’t fit with the annual planning timetable, and neither should your strategy process.
- Too much data, too little insight. Strategy consultants seem addicted to data analysis. I need to ‘fess up’ here. In my past I have been guilty of excessive data-diving (or ‘bog snorkelling’ as one ex-colleague succinctly put it). It’s the key insights, not needless detail that’s required. Understanding the 80:20 of any project is essential to effective strategy work.
- Being excessively tied to one alternative. It is important to have a point of view, but it is also essential to appreciate when a better alternative has appeared. Developing three or four credible alternative strategies is the best way to ensure that there is real discussion on how you will succeed in the future, and to prevent the executive with the loudest voice or the most stripes from automatically winning the argument.
- Insufficient alignment, commitment and communication. Having spent so much time creating strategy with the Executive team it is tempting to believe that the strategic intent is clear to everyone across the organisations. In most companies this is far from the case. Focusing more effort on alignment, commitment and communication is essential.
- Trying to solve everything at once. Creating an implementation agenda that resolves all issues immediately is a huge temptation for managers. They want their new vision to be delivered immediately. But you can’t do everything at once, and need to prioritise and sequence your implementation if you wish to build momentum, growth and profits.
- Too little focus on action. Most strategies fail in delivery, not formulation, and strategies only succeed when they are executed brilliantly. Ensuring resources are allocated, accountabilities are clarified and performance goals and milestones are established is critical, as is a bias for action and learning.