What Is Strategy and What are The 6 Critical Elements to Creating a Great Strategy?

Your company’s future is determined by the strategies it pursues. Strategy is about making choices. It’s about deciding what to focus on AND just as importantly, what to ignore.

Can you explain your current company’s strategy? Can your employees explain your current strategy?

Too many people in companies are “strategy tourists.” Meaning that they only visit the idea of a strategy once, or maybe twice a year.

Most company owners or executives focus on strategy at the beginning of the year. They will hold some meetings, have endless discussions, perhaps put the agreed upon strategy into a binder and not look at it again until the end of the year.

They lack the focus, discipline, knowledge, and motivation to learn how to create a powerful strategy and how to execute it.

Strategy&, the strategy consulting business unit of PricewaterhouseCoopers conducted a survey of more than 6,000 executives from companies of various sizes, geographies, and industries.

They discovered that:

· 70% are concerned that their strategy is not clear enough about how they create value for their customers.

· 73% are concerned that their strategy is not meaningfully differentiated from their competitors’.

· 79% are concerned that their company does not allocate sufficient resources to implement the strategy.

· 74% are concerned that they have not translated the strategy into tangible actions.

· 74% are concerned that the strategy asks them to work on too many priorities.

Overall, only 35% of executives believe their strategy is going to lead their company to success.

Think about that for a moment, only 1/3 of executives think their strategy is good enough to be successful.

So the question to ask yourself is, Are you in the 1/3 that KNOWS their strategy is good, or are you part of the 2/3rds that have serious doubts?

No business is unaffected by change. Name any industry or vertical and I will guarantee that its lifetime is decreasing. Remember what digital cameras did to Kodak? Or how about what Netflix did to Blockbuster Video? Can we ignore what AirBnb did to hotels and what Uber did to the taxi industries? These companies and many more have all disrupted the competitive landscape.

WHAT IS STRATEGY?

So what is strategy?

The word strategy comes from the Greek word strategia which means “office or command of a general,” which is from strategos “general, or commander of an army.”

Your goal in creating a strategy is first to understand the ecosystem in which you compete in. You need to have clear insight into your competition, your vertical or verticals, any legislation that might impact your company, and the prevailing economic forces working for or against you. From there you can decide the six key factors in creating your strategy:

The Six Key Questions All Great Strategies Are Built On

1. Where will you compete?

2. What do you want to accomplish?

3. How will you win?

4. What will be your priorities?

5. How will you generate exceptional profits?

6. How will you execute our strategy?

Now let’s drill down further on these six very important questions.

1)Where will you compete? You need to be clear on what market segments you’re going to compete. Which ones offer you the best change of sustainable profitability? What geography? Local, national or global? Which clients or customers do you want to win? Which are you going to walk away from and ignore?

2)What do you want to accomplish? What is our primary goal? To grow market share? Increase margins in specific products or services? What products/services will you offer to the clients you’ve decided to focus on? And which will you not offer?

3)How will you win? What will be your Unique Sales Proposition?

4)What will be your priorities? You have a finite number of employees, money and time. How will you allocate it?

5)How will we generate exceptional profits? Which part of your current business model generates the most profits? Can you expand it? Add another, or narrow your focus and jettison the under-performing products and or services?

6)How will we execute our strategy? What resources, talent and support will you need to make sure you can successfully execute your strategy once it has been created? Does every person on your team know what part they play in your strategy? Does everyone on your team believe in the strategy?

One last but especially important point, strategy IS NOT planning. Strategy is about doing right things. It’s about focusing on the precious few versus the trivial many. The brilliant management consultant Peter Drucker once said, “There is nothing worse than doing the wrong things right”

Planning is about doing THINGS right. Once you KNOW what needs to be done, then you can focus on putting your strategy in action. You can create forecasts, determine budgets, and get your logistics squared away.

One easy way to remember the difference between strategy and planning is to imagine you owned a railroad company. Your strategy determines where you lay your railroad tracks, while planning assures your trains run on time. If you laid your tracks in the wrong places, it won’t matter if your trains are on time. Likewise, if you laid your tracks in the right places, but your trains are always late, you’re going to fail.

Planning isn’t strategy. Strategy isn’t planning. Figure out your strategy first, then create your plan.