Strategy, in my experience, is vastly misunderstood. I often see strategy thought of as “marketing strategy,” and it is applied to business development efforts only, or it is considered to be “not-applicable” as conditions on the ground are changing too quickly to “make a long-term plan” and then not change from it. But both of these are incorrect.
Cohesiveness and consistency
Strategy, in the words of Richard Rumelt, author of “Good Strategy Bad Strategy” and UCLA business school professor, is “the set of actions an organization or team should implement and, just as importantly, the actions an organization should avoid as they drive forward in their market.” Another way to consider strategy, is the cohesive actions a business takes in pursuit of success. If the actions are cohesive, there is a strategy. If they are not cohesive, there isn’t a strategy.
Thus, businesses don’t really have a choice to “not do strategy” — those businesses that aren’t intentional about the activities they choose to do or not do will face much frustration. If a business is taking actions but isn’t considering how those actions relate to each other, it is likely that they will have a number of high-performing employees become frustrated. Human beings crave consistency — when rules aren’t applied consistently, the first thing we say is: “That’s not fair!”
Consistency is ingrained into our DNA, and it grates on us when it doesn’t happen. (I imagine that the people who tend not to care about consistency generally don’t care about the organization in general).
The other problem is the term “strategy” is often used to describe things that aren’t really “strategy” in the classical sense. Think “marketing strategy,” “project strategy” or “recruiting strategy” — we use the word strategy to describe the plan we are formulating. What I am arguing is that strategy would encompass the marketing plan, the project plan and the recruiting plan. It would also make sure the marketing plan worked with the project plan which worked with the recruiting plan which worked with the marketing plan (full circle). In essence, if one were to breakdown into a visual format it would look like this:
I. Company overall strategy
a. Marketing plan
i. Marketing initiative 1
ii. Marketing initiative 2
b. Project plan
i. Project 1
ii. Project 2
iii. Project 3
c. Recruiting plan
i. Recruiting initiative 1
ii. Recruiting initiative 2
iii. Recruiting initiative 3
Each plan has to fit into the overall strategy; if not, it needs to be discarded. In our above example, if there is a “marketing initiative 3,” which was perhaps cohesive with the other marketing initiatives, but wasn’t cohesive with the other recruiting or project plans, then it should be discarded. It can be painful to say “no,” but if an organization wants to succeed, it needs to learn to do this.
Netflix did this the hard way when they transitioned from DVD-mail subscriptions to becoming an online streaming service. To make this transition, they made wholescale change in their hiring, firing, project planning, marketing, etc. The process wasn’t painless. Netflix is estimated to have lost 80% of their revenue during those years. But with patience and perseverance, they came roaring back.
There are numerous strategies technical organizations can take. Generally, per Michael Porter, author of “Competitive Strategy,” the options can be summarized in one of two ways: (1) Strategy of low cost or (2) Strategy of Differentiation. Differentiation strategy has more “branches” (as there are a number of ways to differentiate), but the result is the same. If a business is trying to apply low cost strategy, then they will have great difficulty in also providing a differentiation strategy that focuses on “high quality” and “speed of delivery” at the same time.
What employees would enjoy working in that type of an environment? What would keep them around long enough to become star performers? Or, what keeps customers continually coming back, especially if promises are continually broken? This is a recipe for disaster. Businesses need to be intentional on their strategy, or risk going out of business.