Business strategy is a widely misunderstood concept – which is terrifying given that it is also one of the most important aspects of any successful company. No wonder so many business large and small fail each year. As a decision-making framework, strategy clarifies the key priorities and sets a direction for the organization. Unfortunately, many company leaders have misconceptions about what strategy is and how it works. Here are some common misunderstandings and insights on how to approach strategy more effectively.
Misunderstanding #1: Strategy is a one-time event.
Many leaders believe that strategy is a one-time event that can be completed in a few weeks. Even worse, some ask me to help them create it in a one-day workshop – true story! Designing an effective strategy is a continuous process that requires constant assessment and adaptation. Strategy must be able to evolve as the company grows and changes, and the market shifts.
Misunderstanding #2: Strategy is a quick fix.
Some leaders think of strategy as a magic bullet that can fix all their problems. This is not the case. Strategy is a long-term approach that requires investment and time to implement. It is a journey, not a destination. Having said that, a clear strategy does have immediate positive effects as well, such as better resource allocation based on strategic priorities. It helps the organisation let go of busy work and say no to everything that doesn’t match their priorities.
Misunderstanding #3: Strategy is only for top executives.
While it is an executive job to lead the design of a business strategy, the result needs to be known by everyone in an organization. Strategy should be transparent, clear, and communicated effectively to ensure everyone is aligned on the same goals and objectives. Strategy should be a guiding force that is embraced by top executives and front-line employees. When everyone pulls into the same direction, your strategy creates a flywheel of motivation, productivity, and performance.
Misunderstanding #4: Strategy is a plan.
I often hear leaders use the term strategy interchangeably with strategic planning. But strategy is way more than a plan. Your strategy consists of your priorities that will help you reach a desired future state of your business. The planning part comes only after your priorities are clear. There, you define key work streams, allocate budgets, and decide who does what by when. While this planning part is important, it comes only after the priorities are set – which is the really difficult part and the reason many try to avoid it. Strategy is about clients, it defines how you win in your chosen marketplace. It is often based on uncertainty. Planning is sort of the antidote to strategy: it is internal, to create a sense of control, that helps us navigate in a volatile environment.
Let’s talk business strategy, to bring your organization to where you want it to be.
Main image by Tim Mossholder