It’s only a strategy if it helps you make a decision

I attended a strategic review on a particular product today. Unfortunately, it wasn’t very strategic.

Back in the day I was taught that a strategy is only a strategy if it helps you make decisions. The classic business example is the statement that our strategy is “to grow profitably.” Sounds nice but it doesn’t mean anything.

Let’s say you’re the sales guy trying close a deal or the sales manager who has to sign off the proposal. How do you price it? Well, what is more important – to get the customer or to make money? If our strategy is to grow then we need more customers – we price it keenly to make sure we close quickly. If our strategy is to be profitable then we price to make a good margin – but are happy to lose the more price-sensitive customers. If our strategy is to grow profitably, then we’re stuck – we cannot translate the strategy into a short term tactic.

The symptom then is indecision. A classic example is the team that considers three alternatives then decides to do all three. That’s not a decision, it just puts off the decision until later. Or how about the team that endlessly debates a proposal in open meetings as nobody wants to personally risk being wrong. Or in the case of today, a set of short-term tactics without anything to bind them together.

So then, here’s the plan guys:

1. Set an objective. What do you do? What is the vision? (Not mission, that’s usually to increase shareholder value.)
2. Select a strategy. At a high level you can choose price (if you want to be the cheap option); differentiation (to be perceived as better than the competition); or focus (pick segment or niche to dominate). For us in the Internet media business the price is free so you think laterally – the quantity or quality of adverts you stick on the page vs. the value of the content. You can put more ads on the page but that makes you the Walmart not the designer boutique.
3. Define tactics. Now that you have a strategy that allows you to make decisions it should be easy to choose between the different options your product teams present. For example, reject feature A as it does not clearly differentiate your product from the competition.. or accept feature B as it provides a better experience for a small but important market segment.
4. Set goals and plan. The tactics set the short term objectives – set milestones or goals and execute. Repeat.

For example you could decide you’re going to run a mobile news site. You decide to focus and select the segment of iPhone users. Tactically you decide to build an App and away you go. Instead of focus perhaps you decide on price and believe the best value is the quantity of articles. Tactically you aggregate as many free feeds as you can into a basic mobile site which can be accessed by most devices.

So, on a side note, are we Walmart or the designer boutique? We’re probably Target right now. We roll out reasonable products for the mass market and make a basic margin. Some people prefer local suppliers but we have many loyal shoppers who visit regularly. If that’s our strategy then we just need to tidy up our execution – but stop kidding ourselves about being cutting edge..

Honestly though, we could probably pull off Macy’s if we were clearer about what we were trying to achieve in the first place. 😉