Archive for July, 2012

h1

My Top Five Strategy Fallacies

July 3, 2012

These five things come to the top of my mind as I reflect on thirty years experiences with corporate strategy. I would love to hear which of these resonate the most with you.

  1. Strategy is not like wine, rather it’s like vine.  Putting it away to age will get you nothing.   Strategy needs to be worked, you need to prune it like a vine in order to reap its fruits.   Don’t put your strategy on the shelf; put a plan behind it. I’ve seen too many cases where great effort was put into creating a strategy, only to be put on the shelf and revisit it a year later, at the time of the next strategy cycle.
  2. If your change your strategies every year, you have mislabeled them.  What you actually create are campaigns, not a strategy. A good strategy lasts at least few years, and is supported with annual plans and campaigns.
  3. If you create your strategy quickly, be sure you’ll change it quickly too. Many managers want templates that they can quickly fill-in and be done with the strategy cycle. These are the same managers who think the strategy is useless and put it away unused.  Consequently, they’ll have to recreate it in the next planning cycle, if not sooner.
  4. It takes some talent to recognize a good corporate strategy- it takes none to recognize a bad one.  Anyone can recognize a bad strategy when they see one, not the least reporters and disgruntled amateur investors.
  5. Company’s business performance could be viewed as a process with a given Process Capability Index (PCI).  Companies who continuously meet or exceed the expected performance goals have a high Cpk. Companies who fail to meet the goals have low Cpk.  One of the most important business processes is the Annual Strategy Process. It sets the performance limits and defines the key process variables that need to be managed to maintain the process under control, i.e., meet the company goals. If you create unrealistic goals, or the goals are not supported with solid initiatives, resources, etc., you have a process that is not in control- it will be incapable to meet the goals. PCI definition: http://en.wikipedia.org/wiki/Process_capability_index