The initial response to this seemingly simple question, which it is not by the way, is usually in the affirmative. However, deeper reflection on what Strategy building entails shows where the gaps are and what's missing to make it a sound, logical and winning one.
Over time the initial strategy blurs due to changing external context viz changes in business environment, technology, or competition. Leaders are misled into believing that their strategy is working as operational programs produce incremental progress. In addition, pressures to grow lead management to make inferior choices as they keep broadening their scope and attempt to compete in several ways with no real differentiated positioning.
Quite a few organizations mistake goals, objectives, and initiatives with Strategy. Some believe "We are going to grow x% and increase our profitability y%" or some such generic projections defines their overall strategy. What is then visible is a list of performance goals to be achieved during the year, each laudable as a stand-alone initiative. However, without a clear view of the challenges confronting the company these do not represent a coherent approach. In fact, a long list of things to do is not strategy.
So that brings us to the question of what a good strategy would look like. The essence of a good strategy is making an integrated set of choices to create a unique winning position in the market. It starts with an identification of what problems and challenges the organization is faced with causing a gap between the aspirations of the organization and the current outcomes it is achieving.
Making good strategy is a creative process. One needs a sound knowledge of the market and all the players within. In addition, you need to develop an understanding of the future trends that are impacting your business and the changing structure of the industry you are competing in. A winning strategy involves trade-offs to build competitive advantage as you cannot be 'everything to everyone'. You need to explore and define in what all ways you can create unique value that matters for the targeted set of customers. Distinct from competition, your business model must be designed, with mutually reinforcing elements, to deliver strongly on this value. Each of these areas should be studied in-depth, a mere surface level scrutiny will not unearth winning choices.
Moreover, Strategy needs to evolve with time and changing context yet maintain a continuity to establish a sound position in the market & minds of the customer. You need to deepen the strategic position rather than broadening it. Innovative ideas aided by various tools help to clarify and build a winning strategy. Strategy frameworks & tools bring structure to your thinking and help make sense of the complexities around the organization.
The key questions for leader's critical thinking therefore are:
As a prominent strategy guru has said, you are probably 'stuck-in-the-middle' if you don't have a distinctive strategy. The challenge of developing or reestablishing a clear strategy depends largely on leadership. Are you equipped with a clear strategy framework and the right tools?
1. Refer our earlier insight “Recognizing Macro trends” for more details