Strategy is one of those words that many of us throw around, often without really knowing what we mean by it.
Sometimes we mistake a strategy for an ambition, or a goal: “Our strategy is to grow by 25% every year for the next five years.”
Other times, a strategy is no more than a set of words that sounds good and might make sense, but lacks any real substance or meaning: “Our strategy is to create and monetise engaging content for today’s digital native consumer.”
There is nothing inherently wrong with goals, visions, mission statements and the like (they are all useful tools for setting the direction of a business) but they are not a strategy.
To get a better handle on strategic thinking (in its broad business sense and not just confined to the world of marketing) I just finished reading Richard Rumelt’s book, ‘Good Strategy/Bad Strategy’.
Rumelt has been a leading thinker on business strategy and management for several decades. He’s a professor at UCLA and consults on strategy with big and small firms all over the world. His book has become a bit of a classic since it was first published in 2011 (the version I read was updated in 2017).
It’s a fairly accessible book, although it isn’t the most lightweight read, which I guess is to be expected given the subject matter. He explains, in lots of detail, the difference between “good” and “bad” strategy, and why it’s important to recognise the difference:
“Bad strategy is more than just the absence of good strategy. Bad strategy has a life and logic all of its own, a false edifice built on mistaken foundations. Bad strategy may actively avoid analyzing obstacles because a leader believes that negative thoughts get in the way. Leaders may create bad strategy my mistakenly treating strategy work as an exercise in goal setting rather than problem solving. Or they may avoid hard choices because they do not wish to offend anyone…”
As I say, this isn’t your average pop-culture, business book for your holiday reading list. It’s pretty heavy on examples drawn from the US technology and telecoms industries (where Rumelt has clearly done a lot of his consulting work) but there are enough other reference points to lighten things up occasionally.
So what is good strategy? I won’t try to summarise the whole book here, but essentially, Rumelt brings it down to three key elements:
- A diagnosis that defines or explains the nature of the challenge and identifying certain aspects of the situation as critical
- A guiding policy for dealing with the challenge (an overall approach for overcoming the obstacles identified in the diagnosis)
- A set of coherent actions that are designed to carry out the guiding policy.
There are obvious parallels here with creating a good marketing strategy, i.e. using data to understand what is really going on, making decisions about targeting, positioning, pricing etc…and then developing a set of tactics (ideally an integrated communications plan) to bring things to life.
All too often, we skip over part one and only briefly think about part two, before diving head first into the easier work of tactics and just “doing stuff”. That might make us feel like we’re getting on with the job, but without a good strategy behind it, it’ll get us nowhere fast…or worse.