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The Fine Line Between Strategy and Fantasy

A favourite topic of many entrepreneurs, product managers, marketers and executives is strategy. You hear it all the time. People talking about company strategy, product strategy, marketing strategy, sales strategy etc.

The interesting thing about strategy is that there are so many definitions of it. If  you look in the dictionary,  you’ll see something like this:

Strategy n. a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result

OK…that’s somewhat obtuse to be honest. In essence, it’s says a strategy is a plan or series of plans to achieve a goal.

From a business perspective, the most common description of strategy seems to be tied to Michael Porter’s 5 forces that shape strategy. You can also see a video here of Michael Porter talking about these forces. Here’s another good video talking about competitive strategy.

And here, embedded for your viewing pleasure, is our own Prabhakar Gopalan, who gave an insightful talk about strategy at the recent ProductCamp Austin. (Make sure you watch Part 2 as well or click here for talk details).

So what exactly is Strategy?

My take is that strategy is more than a plan, and more than a set of guiding principles. A strategy is a framework for decisions and actions, that will help guide a company or organization to success.  It’s as much about understanding what you will NOT do (and knowing why), as what you will do. For a strategy to have a good chance to succeed, it has to have 4 essential components:

  1. A clear set of achievable goals/objectives
  2. An understanding of the major obstacles that could prevent you from achieving those goals
  3. The actions needed to overcome those barriers
  4. A means to measure the success of that strategy as time progresses

Before I explain each of these, let me say that if any one of these are missing from the strategy, it can quickly turn into fantasy.

Strategy is about executing within constraints. Those constraints are both internal and external. Internal constraints basically come down to your organization’s ability to execute the plan on time. Do you have the money, the people, the resources etc? If not, then your plan will fail. Similarly, the external constraints come from competitors, the economy, market trends, channel constraints and other factors that are usually beyond your direct control.

The key to a successful strategy is understanding those constraints, and defining the path that will lead you to your goal. And in business, that goal should be sustainable competitive advantage and clear differentiation in the marketplace. This could be by exploiting market trends, attacking competitor weaknesses (or strengths), or heading into new uncharted territory and defining and claiming new market space.

1. Achievable goals and objectives

Everything starts with having clear, ACHIEVABLE goals. I highlight the word achievable because the first mistake that most companies make is to set unattainable targets. These could be related to sales/revenue, market share, time to success or some other major business objective. If the goals are unachievable then the strategy will fail, without question. This is where the fantasy begins with a lot of companies.

2. Understand the obstacles in your path

Assuming the goals are achievable, the next step is to identify where the bumps in the road lie. i.e. the obstacles to success. Conversely, you can also look at what the conditions are for success. i.e. if an obstacle to success is the lack of a 3rd party developer network for your product or platform (in a certain timeframe etc.) , then a condition for success is the existence of that 3rd party developer network (in a certain timeframe etc). How you build it out is a different matter entirely.

You can look at it either way, but you need to ensure that those factors are clearly identified and their dynamics and importance understood. Another part of the fantasy occurs when companies don’t realize the obstacles in their path, or simply choose to ignore the reality of overcoming those obstacles. Most strategies look great when you ignore the challenges you’ll face.

3.  Actions for overcoming the obstacles

Tied closely with #2 above, it’s important to articulate HOW the barriers will be overcome. Some people would view this as a set of tactics, but understanding HOW to overcome barriers (and the required assumptions) is still about understanding the constraints and the conditions for success.  Using the 3rd party developer network example from #2 above, understanding HOW that network will be created is critical. Some key questions to understand would be:

  • What exactly is that developer network? ‘
  • Why is it needed?
  • What does it look like in 6 months, 12 months, 24 months etc?’
  • How will members be recruited?
  • Why would people join the network? Why wouldn’t they?
  • How will members be retained and grown over time?
  • etc.

These kinds of questions are fundamental to bringing a dose of reality to any key objective tied to a strategy.

4. Measuring success along the way

Let’s say you’ve implemented the strategy. How do you know it’s working? Are you on track for success, ahead of plan, behind plan? How do you  measure it, particularly in the face of a dynamic market? Objectives that looked good 6 months ago may be completely irrelevant today because of external issues beyond your control or required changes in assumptions you made.

When defining your strategy, identify a few simple ways to track it’s progress. What are the best (simple) indicators that can be used to track the success of various aspects of your strategy? These will help you identify and address problems quickly, if they arise.

For example, with the 3rd party developer network, simply tracking the number of developers joining the network (and total overall) will tell you roughly how well you are doing against your goals. But tracking their development plans and target dates for releasing applications or products for your platform will give you a much better indication of how successful the network will be.

A real life case study

Now I’m going to pick on HP for a bit, because the recent EOL of the TouchPad and WebOS is a great example of how even the most sophisticated companies can believe a fantasy. Listen to this interview of HP CEO Leo Apotheker, from June 2011 (less than 3 months ago) as he discusses HPs strategy with WSJ’s Walter Mossberg.

As you listen to Apotheker, (key points about WebOS start at about 9:00 & around 24:00 into the video. Also note the answer to the question around 34:30 about lessons learned from RIM’s Playbook experience!!) and given recent actions by HP, ask yourself how much of what Apotheker said was fantasy, and how much was strategy based on an understanding of reality, constraints and ways to overcome obstacles. He spoke about consumers, enterprise, cloud, developers, security, connectivity, WebOS on every PC, on printers, and end-t0-end ecosystem etc.

And finally, here’s a link to an article (posted Aug 19 on ZDNet), where Apotheker and HP CFO Cathy Lesjak describe why they completely changed their strategy just 7 weeks after the launch of the TouchPad. A little more discussion about focus and constraints than the video above.

Saeed

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