So it’s that time of year again. The summer holidays are now a distant memory. The annual business planning and budgeting cycle has kicked off and looks certain to dominate your agenda until Christmas Eve.
Yes, crafting strategy is a critical task, but with crammed schedules it’s all too easy to make mistakes. So, looking back at my experience, here are 10 common mistakes to avoid at all costs (and apologies if some are very basic – the problem is they keep popping up!!!):
- Not clearly defining the marketplace that your business is going to compete in. The team crafting the strategy might have a clear idea of who the target customers are, what their needs are and what the business is going to offer, but unless these dimensions are clearly defined, shared and communicated, then confusion will reign across the business.
- Trying to do it all yourself. Or, the top team trying to do it all. Unless there’s a real crisis, top-down strategy making is to be avoided – it brings a whole legion of problems with it the most obvious being ownership. You don’t really want your first job after the New Year holidays to be trying to sell the plan to the people in the organisation that are going to have to implement it!
- Forgetting hygiene and motivation factors. Are you really sure your business understands its customers’ hygiene and motivation factors? When I talk about ‘hygiene factors‘ I mean the things you really have to do to meet the core, basic needs of customers. If you don’t meet these requirements then a business won’t get new customers and existing customers will start deserting the ship. It’s remarkable how many businesses don’t meet or understand their customers’ most basic of needs. Motivation factors are different. They encompass elements of your products and services that really delight your customers. In a business to business setting it means helping your customers reach their ultimate goals. You can read more about this idea here.
- Seeing only yesterday’s competitors. Quite frequently we only look at competitors that sit within established industry boundaries. This is dangerous. A good exercise is to think about your core strategic assets – the assets that really create competitive advantage. These assets could be material (from the perspective of a traditional bookstore chain it would be a portfolio of retail properties in prime locations) but they could be less tangible such as the ability to price complex products. Now think about how a new entrant could turn these usually costly assets from sources of strategic advantage into strategic liabilities – just like Amazon did when it over-turned traditional booksellers.
- Fudging competitive advantage. In my strategy training workshops I call this the ‘quest for uniqueness’. If you can’t define in some valuable way how your products and services will be unique then you’ve got real problems. Many don’t get this far when thinking about competitive advantage and fall back on generalisms such as ‘our service is going to be better than the competition‘. More precision is required. To help define the source of uniqueness precisely try using the Strategy in Three Circles model.
- Forgetting to define space for learning. The days have long gone when we could create a plan and then sit back and implement it over the following 12 months. Those were the days when successful organisations had life expectancies of up to 50 years. In today’s mercurial world even the most successful organisations seem to hit a crisis of maturity in just a few years. So any great strategy encompasses an experimental or ‘learning by doing’ element. Organisations like Google have over 300 learning projects on the go at any one time – largely to find out how the outside world is changing.
- Forgetting about innovation. Very much linked to the last point, but the message is if you don’t continue to change you will die. So we need a clear explicit picture of where innovation is needed that goes beyond old views of just product and process innovation to encompass other innovation types such as customer experience, market, distribution and even leadership innovation.
- Misalignment – today’s profit and tomorrow’s future. One of the things that I like to look for when I work as part of a client’s team is a balanced forward-looking portfolio of products and services. Try mapping each product/service’s profitability against its future business prospects and do this over a five year period to get a forward-looking view of how the entire portfolio stands up. And when you do this, double-check where the profits come from and how they are calculated. You might have some surprises!
- No ‘what ifs ….?’ Growth was yesterday’s big word for business. We’re now in a world of big shocks so we need an additional keyword – resilience. One great way to start building resilient thinking is to move away from what you think is certain to happen (which is the way most businesses build their plans) to think about what might happen that would really hit your business. Then consider what would you do if it happened. A good place to start might be – ‘what would we do if there was another recession?’ or ‘how could our business survive and flourish in a zero growth world?’
- No story. A strategy is nothing unless it can motivate and inspire the people who have to make it happen – the employees. Yet too frequently we don’t spend enough time thinking about how we’re going to communicate the new strategy. We need to go beyond the PowerPoint presentation and think about how we can tell stories that inspire. You’ll find some interesting guidance here.
If you enjoyed reading this article please try What is strategy and are you sure you have one? – which contains a nine-point strategy test.