August 9, 2021 - Management

Management

The 5 Myths of Business Strategy

Consider some of the most popular myths in today’s society: Lightning never strikes the same place twice—it does. There is no gravity in space—there is, just less. Humans only use 10% of their brains— actually, they use a lot more—yes, even men. Pigeons blow up if fed uncooked rice—they don’t. Myths are fun to talk about but because they are not rooted in reality and fact, problems can easily arise when people believe a myth to be factual, especially in business.

Which myths or half-truths have permeated your organization and what effect have they had on your business? Running a business on myths, flawed business principles, and baseless assumptions creates needless confusion and a lack of strategic direction. A study of 10,000 senior executives showed that the most important leadership behavior critical to company success is strategic thinking at 97 percent. As good strategy is at the core of any organization’s success, it’s important to understand the strategy myths that may be holding back your team from reaching greater levels of success.

Strategy Myth #1: Strategy Comes from Somebody Else

“We get our strategy from the brand team/ upper management.” This is a common refrain when managers in other functional areas are asked who develops strategy. While there is a grain of truth in this in the sense that an overall organizational strategy is created by a brand team or upper management, it is also wrong because it doesn’t consider the strategies of functional teams and how they contribute to the organizational strategy and direction. When managing a team, the strategy that you execute should be your own strategy. Why? Because each group’s resources are going to be different. For instance, the sales team has different resources—time, talent, and budget—than the marketing team or the IT team or the HR team. How they allocate those resources determines their real-world strategy. It’s important to understand company, product and other functional group strategies to ensure that your strategies are in alignment with each other so it can contribute to the vision and direction of the organization effectively. However, their strategies should not a replacement for your strategies. After all, what may be an effective strategy for one team may not be effective for another. In the worst case scenario, using another functional group’s strategy could prove detrimental to your team and the organization as a whole.

Myth Buster: Identify the corporate strategies, product strategies, functional group strategies and your strategies and seek alignment.

Strategy Myth #2: Strategy is a Once-a-Year Process 

In a recent webinar presented to more than 300 CEOs entitled, “Is Your Organization Strategic?,” the following question was posed: “How often do you and your team meet to update your strategies?” The percentage of CEOs that meet with their teams to assess and calibrate strategies more frequently than four times a year is only 16.9 percent, with nearly 50 percent saying once-a-year or “we don’t meet at all to discuss strategy.”

A study of more than 200 large companies showed that the number one driver of revenue growth is the reallocation of resources throughout the year from underperforming areas to areas with greater potential. Strategy is the primary vehicle for making these vital resource reallocation decisions, but as the survey showed, most leaders aren’t putting themselves or their teams in a position to succeed. If strategy revision in your organization is an annual event, and you take a wait and see approach until the next annual strategy session, there is a possibility that you will see short-term gains, but your organization will not achieve sustained success.

Myth Buster: Conduct a monthly strategy tune-up where groups at all levels meet for 1-2 hours to review and calibrate their strategies. Make sure that everyone involved is made aware of any changes to strategy and is in alignment with these changes.

Strategy Myth #3: Execution of Strategy is More Important than the Strategy Itself. 

A landmark 25-year study of 750 bankruptcies showed that the number one cause of bankruptcy was flawed strategy, not poor execution. You can have the most skilled driver and highest performance Ferrari in the world (great execution) but if you’re driving that Ferrari on a road headed over a cliff (poor strategic direction)—you’re finished.

A sure sign of a needlessly myopic view is that every scenario in a business strategy is an “either/or” situation where the direction can go one way or another and have differing outcomes. In this view, there is no room for scenarios to have an “and” which enables a strategy to evolve over time. Strategy and execution are both important but make no mistake that all great businesses begin with an insightful strategy that is flexible and open to change as needed.

Myth Buster: Take time to create a differentiated strategy built on insights that lead to unique customer value and then shape an execution plan that includes roles, responsibilities, communication vehicles, time frames, metrics, and goals. Use metrics to measure how successful the strategy is at achieving those goals, and if they aren’t measuring up, take time to review the strategy first before looking at the execution of the strategy.

Strategy Myth #4: Strategy is About Being Better than the Competition. 

Your products and services are not better than your competitors. Why? Because “better” is subjective. Is blueberry pie better than banana cream pie? The answer depends on who you ask. “Is our product better than the competitor’s product?” is the wrong question. The real question is, “How is our product different than the competitor’s product in ways that customers value?”

Attempting to be better than the competition leads to a race to see who can implement “best practices” more effectively, which results in competitive convergence. Doing the same things in the same ways as competitors, only trying to do them a little faster or better, blurs the line of value between your company and competitors, and makes your products or services interchangeable with those of your competitors. Remember that competitive advantage is defined as “providing superior value to customers”—it’s not “beating the competition by being better at doing the same thing.”

Myth Buster: Identify your differentiated value to specific customer groups by writing out your value proposition in one sentence. Then, make highlighting this differentiated value a part of your strategy.

Strategy Myth #5: Strategy is the Same as the Company Mission, Vision, or Goals. 

Since strategy is an abstract concept, it is often interchanged with the terms vision, mission and goals. How many times have you seen or heard a strategy that is “to be #1,” “to be the market leader,” or “to become the premier provider of...?” These examples are not strategies. They are examples of a vision. Remember that the mission is your current purpose and vision is your future purpose, or aspirational end game. Goals are what you are trying to achieve that will bring the organization closer to its vision, and strategy is how you will allocate resources to achieve your goals.

Misusing business terms on a regular basis is like a physicist randomly interchanging element’s chemical structures from the Periodic Table. You can say that the chemical structure of hydrogen is the chemical structure for gold, but that doesn’t mean it’s correct. Starting with an inexact statement of strategy will derail all of the other aspects of your planning and turn your business into the equivalent of the grammar school volcano science project with red-dyed vinegar and too much baking soda.

Myth Buster: Clearly distinguish your goals, strategies, mission and vision from one another. Start at the top with your vision, then your mission which will drive the organization towards your vision. Then determine goals that will accomplish the mission, and follow up with strategies that will be executed to achieve those goals.

Beware of Strategy Myths to Succeed in Business

If left unchecked, strategy myths can cause you and your business to fail. A 10-year study of 103 companies showed that the number one cause of business failure is bad strategy. Arm your team with these strategy myth busters and your business will soar higher than a pigeon with a belly full of uncooked rice.

About the author: Rich Horwath is a New York Times bestselling author on strategy, including his most recent book, StrategyMan vs. The Anti-Strategy Squad: Using Strategic Thinking to Defeat Bad Strategy and Save Your Plan. As CEO of the Strategic Thinking Institute, he has helped more than 100,000 managers develop their strategy skills through live workshops and virtual training programs. Rich is a strategy facilitator, keynote speaker, and creator of more than 200 resources on strategic thinking. To sign up for the free monthly newsletter Strategic Thinker, visit: www.StrategySkills.com

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