Many leaders and business owners struggle with strategy. They know it's essential to have strategies to align decision making in their businesses. They understand that they can't observe and control everything in their organisations. They earnestly want to develop the right strategy, and they get the theory. But when it comes down to the nitty-gritty of crafting strategy, they rapidly get bogged down.
There is also a lot of myth surrounding strategy and, therefore, we need to know what a strategy is not before starting with your organisational strategy on a clean slate.
Let us discuss the 6 Myths about Business Strategy.
Myth 1: Strategy is about the long-term
Leaders often ask the question, Do I have to have a one-year strategy, two year or a three-year strategy or even longer like a five-year strategy?
Instead, the time frame should depend on the strategy. To be clear, “What time frame should we have for our strategy?” is the wrong question. The better question is, “What changes does our strategy need, and how much time do we need to implement them?
Thinking about strategy as some kind of long-term commitment can blind you to that need Strategy is not about the long term or the short term, but about the fundamentals of how the business works: the sources of value creation, the drivers of the cost to deliver it, and the basis of competition.
A strategy is about what we are going to do now to shape the future to our advantage.
Myth 2: You don't need a strategy for smaller firms and start-ups
Small firms are always changing their direction and altering decisions quickly. As they are not bureaucratic and highly agile, they can act at high speed, maintaining a high tempo, Because they are highly responsive they do need a strategy.
Agility alone does not guarantee success, successful small firms and start-ups will fail miserably if they don't have a coherent strategy. It will mean poor resource allocation decisions, and for them, that will not mean just a fall in earnings, but death!
Myth 3: Strategy should be a high level
Strategy is highly mystified. No-one really knows what it is, but we all believe it is crucial. It is generated in impressive and usually closed boardrooms by people wearing expensive suits, supported by expensive consultants. Keeping strategy abstract helps to maintain this mystification.
Keeping strategy high-level is comfortable. If things aren't obvious, no-one can be held accountable if things don't work out as they should, The devil is in the details. As with virtually everything else, also in strategy the devil is in the detail. If Strategy focuses on the wrong level, It does not work
The idea that the rest of the organisation can translate a rather vague strategy to their own specific context is mostly a myth. It sometimes works, but in most organisations, it doesn't. It just leads to confusion, political games and a strategy not being executed.
Formulate it primarily at the level of offerings, rather than at the level of entire businesses and corporations.
Myth 4: Strategy Resides at the Top
The idea is that the people at the top of the organisation are responsible for setting out the strategy, which is then supposed to trickle down and be translated to lower levels in the organisation where it is executed.
This is wrong because strategy generation and execution can't be separated.
This very separation is the most critical cause of the high failure rates in strategy. The two need to be in constant interaction so that a virtuous cycle emerges in which ideas and actions continuously feed each other. This is what Hoshin Kanri is all about, Hoshin Kanri (also called Policy Deployment) is a method for ensuring that the strategic goals of a company drive progress and action at every level within that company. This eliminates the waste that comes from inconsistent direction and poor communication.
Myth 5: Strategy Equals Planning
People assume strategy is formulated by analysis of an organisation and its environment, Based on this analysis you make projections and generate a couple of scenarios, and then choose your course of action, plan it accordingly and write it down in a strategic plan.
But in reality, the strategy is an alternative for planning. Strategy has been proposed as a response where planning has failed to deliver. Strategy is not a planning process, but an evolutionary process of trial-and-error, learning and adaptation.
A strategy is also about making things happen using your own resources, competencies and power. Planning works only in predictable situations. As long as the direction in which an industry develops is predictable and as long as we stick to what we have been doing in the past, planning can work.
The result is an approach to strategy which limits the role of planning to the short term and for the rest relies on a mix of adaptation to changing circumstances and effectuating the things you can influence.
Myth 6: We have an implicit Strategy
Strategy is not implicit and should not be. A clearly communicated strategy helps employees and customers to distinguish offers between different product and services clearly. It provides direction to the various functions within the organisation and helps to promote the company culture.
There are other few more myths on strategy that we will discuss in later articles, watch the space. Share your thoughts and feedback on strategy myths or anything related to strategy.