“Strategy is not planning – it is the making of an integrated set of choices that collectively position the firm in its industry so as to create sustainable advantage relative to competition and deliver superior financial returns.” Roger Martin, Dean of Rotman School of Management at University of Toronto
Whew – what a mouth full. If you get this, I mean really get it down to your soul, then feel free to move on to another of our blog posts or click on the link and read Roger Martin’s full blog on the Harvard Business Review blogsite. If you have no idea what this means or are not sure, then keep reading because this is an important statement for small business owners to both understand and embody.
Frequently, creating a strategy and planning is used almost interchangeably. In fact, I talk all the time about strategic planning, a process that identifies strategy and creates a plan for executing it at the same time. Because of this linkage, many people believe they are one and the same.
Here is the fact – a strategy is not a plan and plans frequently are not strategic. Sadly, plans rarely support and integrate strategy. Small business owners are especially prone to this problem. They may:
- Believe that only large businesses need strategy
- Find it difficult to see the value in creating a strategy
- Be unsure of what a strategy is and how to create one
- Have a strategy and not understand how to translate it into action.
Do you see yourself in any of these statements?
Strategy comes from the company’s brand. A deep understanding of why you are in business and what is important to accomplish is the basis for your strategy. When you combine this with the knowledge of what is going on in your industry and the world, you are able to make informed choices about courses of action that will change or reinforce how you are viewed in the marketplace. This is what Mr. Martin means by positioning the firm in its industry.
Strategy is the difference between reacting at the spur of the moment to an opportunity or challenge with what seemed right at the time to confidently responding to the same opportunity or challenge with an action that you know is consistent with how you want your company to grow and be perceived by customers, vendors, the community, etc.
Still confused? Let’s look at an example. When I first started Jett Excellence I was not the strategist that I am today. Okay, let’s be honest. I had no idea of how to create a strategy for a company that was just me. I created an annual strategic plan but it was really just an accumulation of activities that I hoped would take me to where I wanted to go. Then I would attend a National Speakers Association (NSA) meeting where I would be bombarded with ideas for making more money in my business. After each meeting I would come back to my office and create a plan to implement something new. One month it would be getting onto Facebook; another month it was adding teleseminars; the following month I would investigate how to create products. There was no strategy to my planning.
Seven years later how I did business had changed because I was able to think strategically.
- I had a deep understanding of why I was in business and what I was there to achieve (my mission and vision).
- I was grounded in my values which explained how I did business.
- I had guidelines about the things that I would and wouldn’t do in my business (belief systems).
- I had a view of the future that included what I wanted my business to look like in 5-10 years.
What had changed? At this point I took the information learned at NSA meetings and ran it through a strategy and brand filter. The filter was all the stuff I talked about in the bullet points above. When the speaker talked about social media and insisted that I needed to get onto Pinterest I asked myself a few questions:
- Is this consistent with how I want to be perceived?
- Are my ideal customers hanging out here?
- How does this tie in with my strategy?
- Will this leverage the things I am working on achieving?
- Is this strategically important at this time?
The last question is one of the most important. In small business there is usually only one person, you, that is responsible for making the strategic vision a reality. There are only 24 hours in a day; and it’s important that you spend some of them eating, sleeping, and enjoying friends and family. In other words, you can only effectively focus on one to three things at a time so you better make sure that you are focusing on the most important.
Getting back to Pinterest, once I answered these questions I would do one of three things with what I learned:
- Implement immediately
- File it away as a future opportunity (it’s in alignment with my strategy but it’s not strategically important at this time.)
- Be grateful for the new knowledge and take no additional action.
My choice for Pinterest? Number 3 – no additional action. I made this choice strategically. I was and continue to be completely comfortable with my decision no matter who tells me that Pinterest is the place to be nor how much money they made by being involved. And I am delighted to report that I rarely encounter any regrets in my choices.
Why is all of this important? What is the point of going through all this work?
Well, first off, you will be more in control of your company. It will become easier to make decisions that used to drive you crazy. And you will spend less time, money and energy chasing after shiny baubles (distractions that look like opportunities) and second guessing your choices.
Second is the ability to “create (a) sustainable advantage relative to competition.” Basically, this just means your ideal customers see you not as the best choice, but as the only logical choice when they are making a purchase. It also means that your best customers are out there marketing your company for you as they share their experience. The clarity of your message and consistent application via strategic decisions over time is how you distinguish yourself in the market and stay ahead of the competition.
The third outcome I probably don’t need to explain any further: “and deliver superior financial returns.” What is not to like about making more money?
Strategy is not planning and planning is not strategy. The magic happens when you develop a strategy and become clear on what it is and why it is important. Then you use the strategy to filter opportunities and make informed choices and create plans around those choices. This is what Roger Martin is talking about…actually, this is what I talk about every day.
What can you do today to be more strategic?