Good vs. Bad Strategy

Because “strategy” is such a difficult term to define and explain, even among the experts, I try to post more as opposed to less on the topic.

In addition, very little has been written specifically about event strategy. Most of what’s out there is very generic and of little value.

The three elements to strategy…

The first natural advantage of good strategy arises because other organizations often don’t have one. And because they don’t expect you to have one. Instead, they have multiple goals and initiatives to symbolize progress, but no coherent approach to accomplish that progress other than “spend more and try harder”.

Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests. Strategy is at least as much about what an organization does not do as it is about what it does.

Strategy is designing a way to deal with a challenge. A good strategy, therefore, must identify the challenge to be overcome, and design a way to overcome it. To do that, the kernel of a good strategy contains three elements: a diagnosis, a guiding policy, and coherent action.

A diagnosis defines the challenge. What’s holding you back from reaching your goals? A good diagnosis simplifies the often overwhelming complexity of reality down to a simpler story by identifying certain aspects of the situation as critical. A good diagnosis often uses a metaphor, analogy, or an existing accepted framework to make it simple and understandable, which then suggests a domain of action.

A guiding policy is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. Like the guardrails on a highway, the guiding policy directs and constrains action in certain directions without defining exactly what shall be done.

A set of coherent actions dictate how the guiding policy will be carried out. The actions should be coherent, meaning the use of resources, policies, and maneuvers that are undertaken should be coordinated and support each other (not fight each other, or be independent from one another).

Good Strategy

Good strategy is simple and obvious.

Good strategy identifies the key challenge to overcome. Bad strategy fails to identify the nature of the challenge. If you don’t know what the problem is, you can’t evaluate alternative guiding policies or actions to take, and you can’t adjust your strategy as you learn more over time.

Good strategy includes actions to take to overcome the challenge. Actions are not “implementation” details; they are the punch in the strategy. Strategy is about how an organization will move forward. Bad strategy lacks actions to take. Bad strategy mistakes goals, ambition, vision, values, and effort for strategy (these things are important, but on their own are not strategy).

Good strategy is designed to be coherent – all the actions an organization takes should reinforce and support each other. Leaders must do this deliberately and coordinate action across departments. Bad strategy is just a list of “priorities” that don’t support each other, at best, or actively conflict with each other, undermine each other, and fight for resources, at worst. The rich and powerful can get away with this, but it makes for bad strategy.

Good strategy is about focusing and coordinating efforts to achieve an outcome, which necessarily means saying “No” to some goals, initiatives, and people. Bad strategy is the result of a leader who’s unwilling or unable to say “No.” The reason good strategy looks so simple is because it takes a lot of effort to maintain the coherence of its design by saying “No” to people.

Good strategy leverages sources of power to overcome an obstacle. It brings relative strength to bear against relative weakness (more on that below).

Bad Strategy

Hallmarks of bad strategy…

Fluff: A strategy written in gibberish masking as strategic concepts is classic bad strategy. It uses abstruse and inflated words to create the illusion of high-level thinking.

Failure to face the challenge: A strategy that does not define the challenge to overcome makes it impossible to evaluate, and impossible to improve.

Mistaking goals for strategy: Many bad strategies are just statements of desire rather than plans for overcoming obstacles.

Bad strategic objectives: A strategic objective is a means to overcoming an obstacle. Strategic objectives are “bad” when they fail to address critical issues or when they are impracticable.

Forms of bad strategy…

Dog’s Dinner Objectives: A long list of “things to do,” often mislabeled as “strategies” or “objectives.” These lists usually grow out of planning meetings in which stakeholders state what they would like to accomplish, then they throw these initiatives onto a long list called the “strategic plan” so that no one’s feelings get hurt, and they apply the label “long-term” so that none of them need be done today.

Blue Sky Objectives: A blue-sky objective is a simple restatement of the desired state of affairs or of the challenge. It skips over the annoying fact that no one has a clue as to how to get there.

The Unwillingness or Inability to Choose: Any strategy that has universal buy-in signals the absence of choice. Because strategy focuses resources, energy, and attention on some objectives rather than others, a change in strategy will make some people worse off and there will be powerful forces opposed to almost any change in strategy (e.g. a department head who faces losing people, funding, headcount, support, etc., as a result of a change in strategy will most likely be opposed to the change). Therefore, strategy that has universal buy-in often indicates a leader who was unwilling to make a difficult choice as to the guiding policy and actions to take to overcome the obstacles.

Template-style “strategic planning:” Many strategies are developed by following a template of what a “strategy” should look like. Since strategy is somewhat nebulous, leaders are quick to adopt a template they can fill in since they have no other frame of reference for what goes into a strategy.

These templates usually take this form:

• Vision: Your unique vision of what the org will be like in the future. Often starts with “the best” or “the leading.”
• Mission: High-sounding politically correct statement of the purpose of the org.
• Values: The company’s values. Make sure they are non-controversial.
• Strategies: Fill in some aspirations/goals but call them strategies.

This template-style strategy skips over the hard work of identifying the key challenge to overcome, and setting out a guiding policy and actions to overcome the obstacle. It mistakes pious statements of the obvious as if they were decisive insights. The vision, mission, and goals are usually statements that no one would argue against, but that no one is inspired by, either.

New Thought: This is the belief that you only need to envision success to achieve it, and that thinking about failure will lead to failure. The problem with this belief is that strategy requires you to analyze the situation to understand the problem to be solved, as well as anticipating the actions/reactions of customers and competitors, which requires considering both positive and negative outcomes. Ignoring negative outcomes does not set you up for success or prepare you for the unthinkable to happen. It crowds out critical thinking.

Sources of power…

Good strategy will leverage one or more sources of power to overcome the key obstacles. Rumelt describes seven sources of power:

Leverage: Leverage is finding an imbalance in a situation, and exploiting it to produce a disproportionately large payoff.

Proximate Objectives: Choose an objective that is close enough at hand to be feasible, i.e. proximate. This doesn’t mean your goal needs to lack ambition, or be easy to reach, or that you’re sandbagging. Rather, you should know enough about the nature of the challenge that the sub-problems to work through are solvable, and it’s a matter of focusing individual minds and energy on the right areas to reach an otherwise unreachable goal.

Chain-link Systems: A system has chain-link logic when its performance is limited by its weakest link. In a business context, this typically means each department is dependent on the other such that if one department underperforms, the performance of the entire system will decline. In a strategic setting, this can cause organizations to become stuck, meaning the chain is not made stronger by strengthening one link – you must strengthen the whole chain (and thus becoming un-stuck is its own strategic challenge to overcome).

Design: Good strategy is design – fitting various pieces together so they work as a coherent whole. Creating a guiding policy and actions that are coherent is a source of power since so few companies do this well. As stated above, a lot of strategies aren’t “designed” and instead are just a list of independent or conflicting objectives.

Focus: Focus refers to attacking a segment of the market with a product or service that delivers more value to that segment than other players do for the entire market. Doing this requires coordinating policies and objectives across an organization to produce extra power through their interacting and overlapping effects (see design, above), and then applying that power to the right market segment (see leverage, above).

Growth: Growing the size of the business is not a strategy – it is the result of increased demand for your products and services. It is the reward for successful innovation, cleverness, efficiency, and creativity. In business, there is blind faith that growth is good, but that is not the case. Growth itself does not automatically create value.

Using Advantage: An advantage is the result of differences – an asymmetry between rivals. Knowing your relative strengths and weaknesses, as well as the relative strengths and weaknesses of your competitors, can help you find an advantage. Strengths and weaknesses are “relative” because a strength you have in one context, or against one competitor, may be a weakness in another context. You must exploit your rivals’ weaknesses and avoid leading with your own.

Dynamics: Dynamics are waves of change that roll through an industry. They are the net result of a myriad of shifts and advances in technology, cost, competition, politics, and buyer perceptions. Such waves of change are largely exogenous – that is, beyond the control of any one organization. If you can see them coming, they are like an earthquake that creates new high ground and levels what had previously been high ground, leaving behind new sources of advantage for you to exploit.

Inertia: Inertia is an organization’s unwillingness or inability to adapt to changing circumstances. As a strategist, you can exploit this by anticipating that it will take many years for large and well-established competitors to alter their basic functioning.

Entropy: Entropy causes organizations to become less organized and less focused over time. As a strategist, you need to watch out for this in your organization to actively maintain your purpose, form, and methods, even if there are no changes in strategy or competition.

Source: Good Strategy Bad Strategy: The Difference and Why It Matters, (2011) Richard Rumelt