I seem to have been talking a lot about strategy recently. It is one of those often-used words that is not often thought about enough, and not understood enough. To me strategy refers to that myriad of choices which defines our business, who we are, what we do and how we go about doing what we do.
Verne Harnish, the author of “Scaling Up” said “There are two things you need to know about Strategy: where you want to be 20 years from now, and what you will be doing about it in the next 90 days” All strategy decisions should be predicated on the understanding of the ultimate destination, of a clear and precise understanding of where we want to arrive.
Probably the best known authority on strategy is professor Michael Porter who said that “Strategy defines the company’s distinctive approach to competing”.
Being crystal clear on our strategy is one of the most important parts of running a successful business. As well as knowing what it is we will do it must also require an equally clear and rigorous understanding of what we wont do.
In a recent blog I spoke about the five big strategy questions. Click here to read.
• Where do we want to end up?
• Why do we exist?
• How should we behave?
• What are we good at?
• Why should customers want to do business with us?
In knowing the answers to these questions we must also know their opposites. Because the surest way to dilute a winning strategy is to adopt behaviours and chase markets that aren’t aligned with our winning strategy. The farrier, who is a world-class farrier and then starts making wrought iron, for example. Can he any longer claim to be a world-class farrier? He is probably not spending the time on it that he was. The decision to work in wrought iron is a strategy decision and the full implications of that decision must be taken into consideration.
Too often organisations can become lured away from their well planned strategic path by the glitter of doing something that looks and feels similar to what we are already good at, but is slightly different and therefore dilutes and perhaps eventually destroys the original strategy.
Jim Collins writes about the hedgehog principle. Based on the fable of the fox and the hedgehog, Collins makes the point that whereas the fox is a wily character and has lots of strategies at his disposal the hedgehog always comes out on top but he only has one strategy available to him. As long as he pursues that strategy of rolling into a ball and playing dead he will come out on top. Any deviation or embellishment of that strategy will cause it to be less effective.
In his exhaustive analysis Jim Collins found a common theme running through high performance businesses. The hedgehog is to be found where the answers to the following three questions intersect.
1. What are we passionate about?
2. What can we be the best in the world at?
3. What drives our economic engine?
Knowing the importance of finding and preserving our hedgehog involves refusal to do anything that does not align with the intersection referred to above. It means saying no to opportunities that might beckon us as powerfully as a siren song tempting us to our doom.
Sometimes, indeed often, the best thing we can say is “No”.