There is probably no word as misused and misunderstood as strategy. Talking about strategy often leads to eye-rolling or sighs around the room. If you observe carefully, you might even catch sight of people cringing or getting instant heartburn.
Why does this happen? Let us dive into a couple of reasons to pinpoint why strategy often fails. Then we will cover how you can make strategy work.
Reasons for strategy failure
1. It’s full of fluff: no choice, no focus, no action
Fluff is the most common cause for strategy failure. Strategy is about action and fluff does not promote any action. People often think that strategy equals vagueness because being too concrete may a) exclude options or b) be too hierarchical. None of this is true. One cannot expect people to take action if they do not know what they are taking action for.
If you were to look up many different companies’ strategies, you will notice that they are very open. This goes hand in hand with fluffiness because by remaining open to everything, they cannot be concrete. In order for strategy to work, you need to make choices.
Imagine if instead of declaring the goal of landing a man on the moon by the end of the decade, John F. Kennedy said their goal was to put a man on the moon, Mars, explore outer space, put some satellites into orbit and try to communicate with extraterrestrial life. Exactly. By making the deliberate singular choice to go to the moon, they created focus and that led to action. The rest is history.
Another famous example: when Steve Jobs returned to Apple in 1997, he drew a very simple chart. It looked like this:
All other products were cancelled. By deliberately choosing to focus on only four devices, Apple was able to revive. Again, the rest is history.
Conclusion: no choice, no focus, no action and a whole lot of fluff.
2. No focus on the customer
The only way for companies to survive is to generate income (unless you are an endlessly funded start-up). Income is generated by customers that buy your products, services or experiences, whether they pay for it themselves or not.
This applies to any type of organisation. Non-profit organisations have ‘customers’: the cause for which they exist. Public organisations have ‘customers’ too: the people relying on the services rendered by that organisation. All that differs is the way payment is made and what or who is considered the customer.
If an organisation does not focus on their ‘customers’, their ‘income’ will be affected. Even with artificial market tactics in play, they will be presented with the consequences one day.
Conclusion: if your strategy does not focus on your ‘customer’, you cannot have a winning strategy.
3. Everything is set in stone (or the complete opposite)
A third reason strategy often fails is because it is considered to be set in stone. Many act as though once a strategy has been chosen or defined, it cannot be reconsidered, changed or adjusted. But strategy is temporary and needs to be seen in light of an organisation’s context. Things change over time and so does strategy. Strategy is about working towards a specific goal, which means that you will either reach your goal or changing conditions will mean it is no longer possible to meet the goal without adjusting your strategy. A lot of companies fail to act on this second scenario and continue as they are (so they stop growing or being innovative) despite knowing better.
The complete opposite is also a recipe for disaster. Often seen at start-ups (what they call pivoting), you have companies that change their strategy every day or whenever they encounter a setback. This is not how strategy works at all. Strategy should not be too fixed but should remain as a guide for an organisation — and a guide needs to show stability. For start-ups struggling with strategy, it is most likely either too early for you to need a strategy yet or you need to see strategy as separate from your product or service.
4. It’s based on false assumptions (instead of good assumptions)
Strategy does not only set the goal that an organisation wants to achieve, it also provides basic stepping stones on how to achieve that goal — let’s call them guiding principles or the Strategy’s Intent (a term I’ve coined from the military concept Commander’s Intent). These guiding principles are often based on assumptions that a strategy team believes may work to help achieve the goal. Such assumptions are necessary to get started since you may not always have proven or validated data and information to work from. An assumption is a good starting point and design or business fields are not the only ones that work like this; science does as well. However, you want to be on the lookout for false assumptions.
False assumptions are assumptions where logic is either flawed or misses the right mark. An oft seen example in digital strategy is when one tries to become a leader in a specific market by converting clients of incumbents with a non-digital product to their digital product. It is built on the premise that these customers want a digital product instead of a non-digital one. As long as it remains unproven whether customers want a digital version of the product, the assumption will be false. Furthermore, they cannot become a market leader if there is no need or demand for the digitisation of a specific product. We know from experience that there are quite a few industries, products and services where customers do not want a digital experience. Good examples are the financial or healthcare industry, where clients and patients prefer traditional relationships with a person because it provides more trust. It doesn’t matter whether the trust argument is correct or not, as long as customers cannot be convinced of the opposite, they won’t be ready to make the shift towards a digital product.
Differing from false assumptions are incorrect assumptions. Incorrect assumptions start from good assumptions: the logic behind it is correct, but you do not know if it is true. To know if an assumption is correct, partially correct or incorrect, you need to validate the assumption through experimentation. The way you react to assumptions found to be incorrect is the most important factor. If the assumption is invalidated, you should first recognise this and see it as something positive, then take action to iterate on your strategy by replacing the incorrect assumption with the validated result or by looking for another solution. If you remain blind to this possibility or deny the results, your strategy will fail as well. If you iterate, you will be successful.
Conclusion: if you want your strategy to succeed, avoid making false or incorrect assumptions.
5. It’s a single person’s job
Creating strategy is too often seen as a single person’s job. There is this dark arts legend about CEOs working into the late hours under a desk light in their office to figure out what to do next… Successful strategies are never a single person’s job. The whole organisation needs to be involved. Without information flowing upwards, strategy will be disconnected from the company and based on false assumptions. Without flowing downwards and resonating with the rest of an organisation, nobody will be willing to execute the strategy so it will remain a fluffy dust-gathering PowerPoint presentation. This is why the most successful strategies are the ones that involve the people within an organisation. This does not mean that the whole organisation needs to be involved, that everyone needs to be in agreement, or that everyone should contribute to the creation of a strategy. Rather, it means that everyone in the leadership team of an organisation needs to be involved in it together and that each and every one of them will involve their own people as well. By having an open culture, the right information flows upwards, downwards and sideways. It means that you need to stop working in levels and silos, and start working in a network instead.
6. It’s too complex
There is a guiding principle in design: simplicity. In science, there is a similar guiding principle: Ockham’s razor. In strategy, unfortunately, the guiding principle seems to be complexity. For some reason, everyone seems to believe that it is better to make things complex, or more complex — for a variety of reasons. Complexity in strategy is a dogma. Complexity makes things difficult to understand, to follow, to empathise with, to work with, etc. Simplicity is clear, practical and straightforward. People know what to do. You might ask: but aren’t environments complex? Absolutely, but this doesn’t mean you need to make things more complex than they actually are. By making things simple, you’ll create a mental model that allows you to grasp things easily. Look at NASA’s strategy again: going to the moon. Their strategy was not to create a fuel-based aluminium silo that has XXX of power, etc. etc. (I am not a spacecraft specialist or enthusiast, so I will let you fill in the details yourself.)
How to make strategy work?
1. Use a designer’s approach
Why should you use a designer’s approach? For a number of reasons, but here are a couple of important ones.
Designers are very comfortable with leaving behind their biases and presumptions, which allows them to experiment and think more broadly. There is a huge toolkit available to help designers achieve this. These tools do not only focus on ‘design’ activities, but are there to help designers solve problems and design solutions. When they learn from an experiment that something doesn’t work, a designer will take this information and iterate so they can find another possible solution. They will keep doing this until they’ve nailed it. Doing this allows them to create an unbiased strategy that is flexible enough to iterate, but stable enough to serve the longer term to achieve a goal.
Designers strive for simplicity. Simplicity is about choosing what to do (and thus also what not to do) and leaving behind the things that do not matter (the noise). Simplicity is also about cutting back on complexity without denying the complex nature of something. This helps to create concrete and simple strategies.
Finally, designers are not afraid of doing new things. Remember those old beige computers? That all changed when a designer had the crazy idea to introduce colors. Remember those physical buttons on smartphones? Me neither, thanks to that same designer. In both cases, the industry predicted their failure. Now those who predicted their failure are copying the winners.
2. Make it a team effort
Involve everyone in your organisation. This can be done in multiple ways and does not necessarily mean direct involvement. The first step is to make sure the entire leadership team is involved: this means senior management at corporate structure and can be anyone in a team at a lower level. By focusing broadly, you will break down silos and receive information you did not have before. Everyone is in their role for a reason and they will be able to rely on expertise that may not be within your range. By opening up, you will see different perspectives, different ways of learning and different information. This enriches and deepens your information, making it possible to make better decisions. Even as a CEO: your role is the same as a facilitator, to guide your team and provide clarity when everyone else is stuck. The only difference is that the CEO has the final say in things.
In addition to opening up horizontally, make sure that expertise and information flows vertically as well. There are people on your team who may be speaking with customers directly and can provide you with information you cannot see in the data (or vice versa). By making sure expertise and information flows upwards, you are actually enabling downwards information flow. And having both enables people to feel engaged and involved. It will also increase the chances your strategy has of winning.
3. Create trust and delegate
Strategy needs to consider its level. What do we mean by this? A strategy for an organisation at the highest level needs to contain the organisation’s strategic direction. It provides guidance but doesn’t interfere with other levels and is up to the rest of the organisation to execute. This execution starts with considering a strategy at the right level as well. As an example, a corporate’s strategy needs to be at the corporate level rather than department, team or product level. However, this is all relative since a small company’s corporate strategy may very well encompass department, team and product strategies.
Imagine a company whose strategy is to become a leader in the Canadian perfume sector. The strategy may also include some of the company’s key differentiators: only natural products, no testing on animals and the use of innovative sensory patterns. However, the strategy should not include the look and feel of the boxes, how the advertisements will be made, or how the store’s employees will guide people towards the best perfume. Those details are up to the different product units looking after the entire line-up of perfumes.
Within the organisational strategy, they will create a nested strategy: a strategy that lives within another strategy and provides further guidance downwards without becoming too specific. Getting too specific is no longer strategy but micromanagement.
To do that, you need to create trust and be willing to delegate further. If you are prepared to create such an environment, your strategy will become more successful and have a higher chance of good execution. By creating trust and delegating, you involve people, which makes them feel heard and they will buy-in. Also: at that level, they most likely have better expertise, knowledge and information to decide on a strategic direction. Believe us when we say that your in-store employee knows better sales tactics to convince people to buy that perfume than you do. Take that as an advantage!
The above can be summarised into an example: imagine that you are going on a road trip with friends. You won’t map out every corner you will take, detail every meal you will have, and you certainly will not calculate the watts of energy you will need for every part of the journey (yes, we updated the metaphor to give it a modern spin). Rather than focusing on every single detail, you simply plan to go from point A to point B, which the most likely stops will be, and where you hope to spend the night. Everything else will be decided during the journey because things may change. A diner may be closed, an accident may cause a long traffic jam, weather may impact how fast you can go, etc. Those decisions are ones you make as you go. Some of them are planned (e.g. “we’ll make a stop at 10h and we’ll make a second stop at 13h”) while others are made in the moment (e.g. “I drank too much latte and it is killing my bladder so please take the next exit”). Remember this the next time you lead your team to success!
4. Mind your capabilities
Imagine Napoléon without his army and his administration. He wouldn’t have gotten very far and all he would have are dreams and aspirations. This is the same in strategy. You can do everything and use all our good advice, but you won’t get far without the capabilities to execute your strategy. Therefore, capabilities should be a part of your strategy (although not necessarily in detail). Consider which capabilities you can leverage and turn into a competitive advantage and which capabilities you are missing or weak in to ensure your success.
5. Watch and don’t stare at (or copy) your competition
Finally, knowing your level playing field is important. A saturated market, a product without much differentiation, a target audience that is hard to reach… All these elements make up difficult markets where competition is heavy. If everyone copies each other, the market will be paralysed. In every market, the following applies: in order to win, you will have to steer your own course. But to do this, you will also need to know your market. Not only your customers but also your competitors. Make sure you know what they do, what sets them apart, what makes their customers loyal and what causes your customers to move towards them. That’s it. Everything else is writing your own story. If you stare at your competition too much, or worse, copy them, you will miss out.