Professor of Strategy
When CEOs are preparing their annual strategy sessions, they sometimes send me their strategy documents which they call ‘strategic plans.’ Unfortunately, many strategic plans are just a set of action plans that contain no strategy at all. This reminds me of one of the best strategy videos I’ve seen in years. In this video, Roger Martin – Professor Emeritus at the University of Toronto’s Rotman School of Management – explains why having a plan does not equal having a strategy.
Strategy is one of the core domains in management. And still, every other year, you find an article addressing the question: ‘What is strategy?’
Although the field of strategy is about 70 years old, many managers are struggling with this obvious question. Even after all the numerous books and articles, we see that many still make the same mistake: they see a strategy as a list of initiatives that you plan to do, hence the link with the word ‘planning.’
In this recommended video by Professor Kurt Verweire, Professor Emeritus Roger Martin explains why having a strategic plan does not equal having a strategy.
Unfortunately, a list of initiatives has nothing to do with your strategy. Because a strategy tells you what not to do. A strategy specifies the boundaries of where you will compete. It specifies who are your core customers and who are not and outlines what is your core product range and what is not. Many companies are wasting time, energy and money by serving the wrong customers with the wrong products.
A second element of a strategy is defining how you will win – it’s about defining a specific value proposition, a compelling reason why customers should buy from you. And with that value proposition comes a particular operating model.
Compiling a list of initiatives that you think are important is relatively easy. Most strategy documents today contain sections with familiar topics, such as digital, sustainability, employees, customer centricity, and then a fifth topic of your choice. But this set of initiatives won’t help you to make a difference.
Hard choices regarding where to play and how to win are needed to become a winner in your market. Defining what you are not going to do is much more difficult and sometimes creates big conflicts in your management team. A strategy session that is not painful is not a good one. So, take your time to have some good discussions and make some tough choices. It’s not unusual for strategy discussions to take a couple of months. Try to back up your choices with some data. For example, do you know your most profitable customers and your most profitable products?
I can witness that your hard work will pay off.