It might come as a surprise that despite all this great thinking in academia and beyond, and despite such a great number of people eager to work in strategy and/or “strategically” (from our perspective nearly everybody with an academic background), only a limited number of companies seem to have a real strategy.
The fact that a lot of C-Level leaders seem to believe that constantly changing and adapting strategy demonstrates a sophisticated level of strategy, – because both the market and “agile times” require doing so – makes it even worse. In fact, lots of company presentations start with sentences like “our strategy to react to the changing market situation is…”.
While we fully acknowledge the need to be agile in these turbulent times and to act entrepreneurially every day in order to adjust operational business to situational needs, we still question whether most companies truly have a (good) strategy.
We are convinced that the reason why executives believe that their “strategies” need to be constantly adapted is founded in the following common misunderstandings:
Executives often complain about insufficient execution and knowing-doing gaps. From our perspective, they are confusing strategic goal setting and strategic initiatives with having a strategy. Yes, you do need (strategic) goals, and they are to be well be adapted every year (or in even shorter time spans). But what a great strategy does is to clearly focus on the company’s activities and coherently explains how the company will succeed in different types of competitive environments, thus anticipating upcoming events, since real disruptive changes simply do not happen every year.
Let us look at the department-store retailindustry for example. With the rise of online shops, such as Zalando, YOOX, Net-a-porter, and Farfetch, the pressure on bricks-and-mortar-business CEOs has increased massively. Nearly every company in the world has formulated an ambitious omni-channel strategy postulating that omni-channel offerings will be superior to pure offline players and thus help them to outperform the competition. And while the digitalization of retailing was a long overdue “must,” this cannot be called a strategy. What most companies actually did was to copy competitive developments (click-and-collect, curated shopping, longtail strategies) and to try to be professional in everything. For most of them, this resulted in
As stated above, we strongly believe that for most companies it was the right move to take their businesses online. However, what most companies missed and are still missing today is a clear plan on how their organization will succeed in relation to the competition, a clear focus on what it is that differentiates them in an omni-channel world, and a clear vision of the coherent key initiatives that will help them achieve a superior profit margin. Simply put, they miss a clear omni-channel strategy and instead wander aimlessly trying to accomplish as much as possible.
When presented with a strategy, middle managers often immediately roll their eyes saying that this cannot work. Top management explains this reaction as typical resistance and as just a matter of right leadership to “align people” in order to make it work. While this might be the case, very often the strategy just “doesn´t make sense” to people and it is worth to examine this issue in more detail (obviously, this should be done before presenting a strategy). If you hold on to a multitude of strategies and believe that you “really need” to live up to all of them, despite the fact that they contradict each other, you will only confuse teams and customers, never have enough budget and brainpower, and as a result barely implement any goal.
It´s like a soccer coach standing in front of the team saying, “we’ re going to rely on an extremely solid defense and prevent conceding a goal at all costs,” while at the same time urging them to attack aggressively in order to win the game with the highest positive goal difference. While this might serve as a good motivational speech shortly before a game, it is not a strategy and both defensive and offensive players would be confused about what to do. Any modern coach’s strategy will include sacrifices (“we risk this and that”), anticipations (“we believe them to play either this or that way”), and precise tactics (“if they do that, this is what we do to win”) – all combined with options on how to react in case the strategy proofs ineffective. However, it does not include contradicting tasks that are impossible to combine.
Any great strategy is based on an excellent understanding of a company’s SWOT status quo and honestly acknowledges the challenges a company is facing, while defining a focused approach on how to overcome these challenges and respond to possible market and competitive developments.
A great strategy includes a clear plan of success to follow and a set of thoughtfully defined matching actions and initiatives. These initiatives do not represent the “operational details” but the most important part of a great strategy.
For us, a great strategy contains three main aspects:
In order to develop a solid strategy, we need to achieve a clear understanding of the company’s strengths and opportunities with regard to competitive actions and initiatives as well as of possible disrupting factors. The key is to stay focused, otherwise we risk paralysis by analysis.
A great strategy is often simple in its final definition, but to get to this simplification requires a lot of hard work. Based on a deep understanding of customer and market insights, identified customer pain points and key opportunities, the strategy definition focuses on how the company will win in view of the anticipated market developments and on key actions when things turn out differently than expected. This is where goal setting sets in. The overall strategy should be solid and must consider most developments, goal setting is flexible and highly adaptive to sudden changes.
This is the hardest part of every strategy. The brilliant strategic people of a company must define and align the key actions and initiatives that are needed to win. Doing so, they have to make sure that budgets, leadership, incentives, culture, product, customer and marketing actions, and all other key aspects of the value chain are aligned, and that potential conflicts are addressed and solved before presenting the strategy.
Taking the key players of a company with you on the strategy-development journey is key to ensure both a common understanding and the necessary motivation to implement the strategic goals decided upon.
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OhrConsulting, a strategy and management consultancy, helps clients focus on customers across the value chain. In our consulting work, we draw on in-depth strategic and operational expertise, and focus squarely on sales and implementation relevance. Our experiences show that strategies conceived from the customer’s perspective yield the maximum success for our clients. Our ecosystem of experts includes start-ups and innovative agencies in order to offer our clients maximum innovation.