Tag Archives: strategic planning

Are You a Strategist for a Different Tomorrow?

Flowchart on a chalk boardThe question that Cynthia Montgomery poses at the beginning of her Harvard University Entrepreneur, Owner, & President Program [“EOP”] for business owners and senior executives is simply “Are you a strategist”? Why? Her mission is to take her class of executives and show them, through the many case studies she has written about in her book “The Strategist – Be the Leader Your Business Needs”, how to create a sustainable strategy for you company.  So what is a strategist and why become one?

A strategist is not a “super manager” as the author calls it.   A super manager is an “action-oriented problem solver for whom difficulties are daunting but solvable challenges”. The biggest risk of believing in the myth of the “super manager” is that super managers “tend to focus on what they can control and ignore what they cannot control”.  Put another way, the Nobel Laureate Daniel Kahneman, in his book “Thinking Fast and Slow” may have called this the “inside view” – the tendency to ignore outside data to engage in independent decision-making.  Super managers choose to ignore fierce competitive outside forces as not as important as their management inside capabilities to overcome them.

So how do you “become” a strategist?  The author believes that you must first begin with creating a company’s “purpose . . . why it exists, the unique value it brings to the world, what sets it apart from other companies, and why and to whom it matters”?  At its core it’s your sustainable competitive advantage.  One way to determine if you have a core purpose is to ask yourself “if your company disappeared today, would the world be different tomorrow”?  Once you ascertain your core purpose you then must plug in each component of your company and ask yourself, in a binary fashion, does the specific business activity advance your purpose or does it detract from your purpose of creating a real system of value creation.  If it detracts from your purpose, stop doing it.

So how do you “own” your strategy? The author calls it the “strategy wheel”. It consists of your Products and Target Markets, Marketing and Service, Sales and Distribution, Manufacturing, Procurement, Human Resources, Information Systems, R&Ds, and Finance.  Each “system” needs to be impacted by the center of the wheel – your core purpose. To digress, your “purpose” answers the question of why you exist.  Your “strategy wheel” is HOW you are unique in each component.  Without a core purpose tied to each component of your strategy wheel activities, you will be ineffective.

To be a strategist you must be a leader.  At least once a year a company’s board of directors or LLC managers/members meet to look back at what happened over the past year, and then look forward to how it wants to operate the company next year.  Too often it is a mechanical exercise that involves reviewing the financial statements and tax considerations but not much else beyond asking how you can save money.  A good way to avoid this mechanical approach is to first ask yourself “are you the company strategist”?  If so, then ask what is your company strategy for a different tomorrow?

Why Green Hair is your Company’s best strategy?

SPRINGGREENThe famous writer, business consultant, and anthropologist Angeles Arrien was quoted by Mark Nepo as saying that her grandparents told her to “never hide your green hair, they can see it anyway”.  So when a company starts a new plan for the year, a new project, or a new product, the question they need to ask is how does this improve the overall unique strategy of the company – the “green hair” so to speak – that makes each company different.

The problem is many companies ask the wrong question, and therein lies the biggest mistake they will ever make every time they do so.  What is it?  In the book “Understanding Michael Porter” by Joan Magretta [2011 – HBR Press]  Magretta interviews the famous Harvard University Professor and who responds that the “granddaddy of all mistakes” is confusing marketing plans or operational effectiveness [“OE”] plans with overall corporate strategy.  Why? Simply because trying to “be the best” by definition presumes you are providing goods or services the same as your competitors which ultimately results in what he considers a “race to the bottom”.  Strategy links your demand side with your supply side to create a sustainable competitive advantage.  “Strategy is about the whole enterprise, not the individual pieces” as Porter explains.  Put another way, “better” in strategy parlance means different or unique – your “green hair” so to speak.  There is no one path to success, just many interrelated activities that make your company unique.  The author cites many examples such as IKEA, Starbucks, Apple, etc.  All these companies practice the concept of overall company strategy, not just marketing strategy, not just OE strategy. Porter calls it a framework, not as linear as an economic model and not as specific as a case study.  Once you decide what your unique value proposition is, then you need to communicate and ultimately achieve alignment with your organization, both your inside team and your outside team.

So how do you do it?  Porter states that every 12 to 24 months all companies need to have a formal strategic planning process, with quarterly reviews. But don’t confuse your business model with your business strategy.  Your business model should ask the question how you will generate income and control your expenses, basically your P & L Statement that you review with your accountant [when you do your tax returns].  Your business model looks back and analyses your financial data.  Conversely, your corporate strategy looks forward.  It asks the question – what is your sustainable competitive advantage?  How do your relative prices and relative costs compare to your competitors? What value proposition and value chain can you tailor to make you different.  In a nutshell, Porter states that your business model is a basic “analyzing” step, but your strategy is the next level “forecasting” step that will make you viable.

So when do you do it? Each year the management of a company gets together to have an annual meeting to decide the strategy for that year. Each year has its own challenges and opportunities.  If all that these meetings produce is budgeting and growth rate projections than Porter says all you have achieved is a business model, but you have done no debate and decision-making on your competitive strategy.  Your competitive advantage  is already known by your customers –  that is why they picked you or not.  Your failure to leverage it will ultimately result in your competitors using it against you.  It’s that simple.  So sit down with your trusted advisors who can facilitate a dialogue to help you create a framework for your company strategy – you know – the one that starts with “Our company’s green hair is  . . . “

If you don’t, it’s the biggest mistake you will ever make, because your competitors are doing it – and they know what your green hair is.