Strategy presentation. Slides, charts, and slogans - all the components are in place - and the audience, of course! You are sitting in the audience too, but why are you not interested? Why are you yawning and barely paying attention?
The Emperor’s new strategy slides could not be more true. Creating better products, improving quality, supporting customers, and simultaneously reducing costs all seem like good ideas. And just listen to the feedback that the loyal subjects deliver!
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“Absolutely groundbreaking, Your Majesty! Who would have thought that making good products is the key to success? Revolutionary!”
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“Your strategic depth is unparalleled, Your Highness! ‘Increase revenue and reduce costs’ — why hasn’t anyone else thought of this before?”
But you are still not impressed.
Why do you even need a strategy?
A strategy is only as good as it’s able to practically guide people to make decisions.
Good strategy = people are able to use it to make choices without running to mommy top management every time.
Bad strategy = does not enable and empower people to make decisions.
That’s it, you are now the master strategist, here’s your diploma.
What strategy is not
A strategy is not a set of goals.
If your strategy is the same as your vision, then you don’t have any idea of how to get to your envisioned future. It does not help people to make decisions and is therefore useless.
A strategy is not a roadmap. And certainly not a schedule.
If your strategy is a roadmap or a schedule, then you are micro-managing. Instead of giving people guidance on how to plan, you literally plan for them.
This results in a brittle guidance that requires frequent changes.
A strategy is not a continuous improvement or optimization plan.
If your strategy is a continuous improvement plan, then you don’t innovate and move forward.
Strategy is a choice
Or rather - strategy is a set of “big” choices that drive the “smaller” choices to help you win. To be effective, the strategic choices have to be clear-cut and meaningful.
(hereinafter, all slides are from strategy presentations I found on the Internet)
Clear-cut choices draw a clear line between the option that is chosen and the options that are not chosen, and do not leave room for [mis]interpretation.
| Clear-cut choice | Quagmire, fog, and smoke screen |
|---|---|
| This year, we will invest in our AI product X and discontinue our legacy product Y. We’ll develop a migration program to transfer all customers from Y to X. | We really want to be there on the market with our new AI product X, but obviously not at all costs. We cannot let our customers who use Y down, so we will invest in X as long as things are going well with Y, although X is our priority #1. |
Clear-cut choices require courage and strong will, the qualities that a leader must possess to create a motivating strategy.
Making unambiguous decisions does not mean making stupid decisions. In the example above, if discontinuing the product Y is not feasible, do not take that choice. However, strategy requires making choices - even if the choice is to maintain the status quo.
Meaningful choices select between viable alternatives. A simple test for a meaningful choice is trying to reverse it. Does the reverse not make any sense? Then you are not making a meaningful choice.
For example, if the strategy says “we have to increase our sales!” - a reverse choice could sound like “we have to reduce our sales” (okay, technically there’s also maintaining our sales, let’s leave this boring option aside). Reducing sales is not a viable choice and definitely not something that is worth including in the strategy - therefore we are not dealing with a meaningful choice here.
If your strategy cannot be reversed such that it could still make sense in some world or realistic situation, you don’t have a strategy.
| Choice | Reverse choice | Verdict |
|---|---|---|
| This year, we will open new offices in LATAM, and not in APAC. | This year, we will open new offices in APAC, and not in LATAM. | Meaningful |
| This year, let’s open new offices where it makes the most sense to open them based on business cases prepared by VPs. | You don’t say, I thought we’re going to open them where it makes the least sense! | Meaningless |
Practical guidance is the most important aspect of the strategy. It only makes sense if it can influence the choices that people at the company make.
To be effective at that, the strategy should not only communicate the clear-cut meaningful choices, but also explain the reason and intent behind these choices.
| Good | Better |
|---|---|
| This year, we will open new offices in LATAM, and not in APAC. | This year, we will open new offices in LATAM, and not in APAC, because we have identified a number of partnership opportunities in LATAM that would help us to get more value out of the opened sales offices. This is why in the next slide we are going to talk more about our partnership strategy. If we play our cards well, we will see major growth of the business in LATAM region. |
Strategy Paradox and strategic flexibility
Okay, we get it - the strategic guidance is a set of meaningful and unambiguous choices, but don’t they also have to be the right choices? I mean - could a clear-cut choice to do a wrong thing send a company down the failure path just as well as the right choice would set it up for success?
This is called The Strategy Paradox. There’s no way to tell upfront whether a choice is a right or a wrong one, so the same [inflexible] commitment to an assumption about an uncertain outcome may result in either great success or miserable failure.
A strategy that in principle cannot fail (or if the only possible reason for it to fail is bad execution) is not a real strategy. It’s cowardice, but written on a presentation slide.
So we established that a good strategy may always fail. We can talk only about inreasing the chances to succeed and decreasing the chances to fail. And the way to do it is building in what they call “strategic flexibility” - such as condition checking or choosing for more adaptable options.
For example,
- Condition check: open the first office in LATAM, roll out the rest of the plan as soon as the sales results archieve a certain threshold.
- Adaptable option: use a gaming engine that can build for multiple hardware platforms, even if our first target is PC.
Strategic flexibility is not the same as unclarity and indecisiveness. There still has to be a clear conclusive plan that is able to practically guide decision-making. However adding room for maneuver will increase the chances of success in the situation of uncertainty.
It also does not come for free, strategic flexibility usually costs $$$. One particular consequence is that there is no way to build in infinite flexibility - so there is also risk analysis to do and a choice to make.
Conclusion
I am terrible at writing conclusion sections, but all smart articles on the Internet tell me I need to write a conclusion because there are people who don’t read the blog and scroll straight to the end.
Okay, so tl;dr is: choices in your strategy have to be helpful. To be that, they have to be clear-cut (= no fluff, no smokescreen) and meaningful (= pick between viable alternatives and not fake choices where you present only one realistic option and a bunch of fake options). Strategic flexibility helps increase the chances of success.
That’s it, thanks for reading!