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Key signs that your Strategy is wrong

by on November 19, 2014

Strategy-and-Tactics-a-500x354Can you state your company’s strategy in a simple sentence?

Kenichi Ohmae, the author of The Mind of the Strategist, the Art of Japanese Business, is quoted as stating, “Inability to articulate a strategy in a single, incisive, natural-sounding sentence is a sure sign that there is something wrong in the strategy itself.”

Another sign that something is wrong with the strategy is the loss of key people or a lot of turnover in the staff.  This is a common issue resulting from lack of confidence in the company and its leaders, which results from poor strategic plans.

Let’s say you’ve had a couple of pivots.  The staff may just not believe in the company or concept anymore. They lose confidence in the leadership’s ability to execute.

As a result you’ve got an organization where it’s not clear to the leadership and to the key people in the company where the company is strong, that it’s headed in the right direction, and that it has its priorities correct.

The effect is that the company has lots of good people that are taking good salaries but they’re not really producing for the company.

As I wrote in the post, How do you get your team on the same page, that confidence in the leadership comes from small successes, tangible evidence that the vision and strategy makes sense.

Every employee wants to be part of a winning team.  They want to contribute to producing visible, tangible results.  They want to feel the excitement of being involved in something that just flat-out works.

Oliver Wendell Holmes said, “I wouldn’t give a fig for simplicity on this side of complexity, but I’d give my right hand for simplicity on the far side of complexity.”

Many companies get so caught up in analyzing more and more information, that they never distill it down to the few things that really matter.

Every industry has a key success factor — what is yours?

Identify your strengths and build on them because the purpose of business strategy is to cause events to favor your strengths.

There are 5 steps to the strategic planning process:

  1. What results should we achieve?  What will be different?
  2. List the action steps – what will be done and by whom?
  3. What can go wrong ? What are the options?  Analyze potential improvements in terms of cost, benefit and strategic advantage.
  4. Protect the plan.  Know the difference between Preventative vs. Contingency planning.
  5. Monitor the plan.

Execution Issues

To properly implement and execute the plan you need resources.  Resources come in two forms—assets and capabilities—and it’s important not to confuse them.

Capabilities are the conduit between strategy and execution, and a failure to assess capabilities objectively is often at the root of execution problems. What is often labeled as poor execution is instead an unexpectedly large gap between a company’s capabilities and the ones needed to deliver the strategy successfully.

Capabilities are relative, so an external lens is critical. Formal benchmarking is one obvious method. Another is to get honest input on strengths and liabilities from people who know both your company and others well. Customers, suppliers, and industry experts are good sources, as are experienced hires who join from the outside and former employees now working in businesses that don’t compete with yours.

Ever heard of the shoemaker’s child who has no shoes?

It’s not surprising…

You’re responsible for creating the vision, the company’s strategy, so why would you need an outside perspective?

Why does a doctor need to go see a doctor – if he or she is already a doctor?!

We all need this…

When we’re busy working on our business we often fail to see the bigger picture.

We tend to run in circles when a straight line would get us to the results we desire faster.

The outside perspective of an expert can be invaluable.

Most companies tend to believe their capabilities are stronger and more distinctive than they really are, but that is not always the case. The inverse may also be true: capabilities where you think you’re superior may turn out just to be table stakes.

Understanding your capabilities and competencies is important, but it’s not enough. You have to match them to market opportunities and close the gaps.

Use strategy to identify and prioritize capability gaps.

The unstated default option to close gaps in large companies is internal development, and that probably is best when long-term proprietary advantage is needed. But it is not the only option—partnerships and acquisitions should be considered as well.

Furthermore, make conscious choices on where to dis-invest.

Reducing investment in capabilities that are no longer critical to the future is a controversial but often necessary call. Resources for new capabilities need to come from somewhere, and hanging on to outdated capabilities can hamper future performance.

Strategy choices and the capability agenda must match. The sooner and more certainly a new capability will be needed and the larger the gap, the more aggressive you have to be in filling it. If the gap is too large, you probably need to alter the strategy to match a more realistic capability-development plan.

Creation of Value

What it comes down to is the creation of value.  Value creation has to be developed on the basis of financial strength and sustainability. You need to be sure you’re address the problem, not the symptoms.

If you want to learn how your company can connect with your employees so your team is aligned so that your revenues can grow rapidly, contact me for a quick chat about the Valuation Amplification Process.

I also invite you to download the white paper and find out How to Quickly Increase Your Valuation – A Proven 5 Step Process.

Learn What a VC is Looking For

Need Help Understanding what a VC looks for when evaluating the companies they might invest in?

Download the VC Due Diligence Checklist and learn what they want from you.

Upcoming Course Launch: “How to Build a Company a VC Will Want to Invest In”

We are about to launch a new online course that will help entrepreneurs learn the best methods for building a fundamentally sound company; a company that a VC would want to invest in.

Help us tailor the course by letting us know what issues or questions you have about securing VC funding.  Please take the survey here:


From → M&A, Strategy, Valuation

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