Wrong With Strategy Is Focused

¶ … Wrong with Strategy is focused on teasing out the problems that managers and business leaders appear to have with strategic planning. It is not that this kind of planning is not valuable, but only that it is not going to be valuable unless it is gone about in the correct way. Therein lies the problem, because many managers do not seem to understand the correct way to plan from a strategic standpoint. Without any knowledge of how to plan the right way, managers remain "lost" as to what to do next. They generally hold many strategic planning sessions, but nothing concrete ever comes of them. They may even come up with some plans, but those plans do not come to fruition because the plans are not in line with anything else in the company. In short, strategic planning for most companies is a huge waste of time because they are all doing it incorrectly. They either never get started, or they start down a wrong path too many times and finally stagnate to the point that they decide not to do any more strategic planning. What is the point, if it never seems to take them anywhere?

Overall, the problem with strategy is two-fold: companies do not know what they really need and want in order to move forward, and they are uncertain as to whether they should focus on what they must do in order to move into the future or what they exist to do (their purpose). If they focus only on what they must do in order to remain relevant in the marketplace and keep paying their bills, they will never get around to their true purpose. If they focus on the purpose for which they were created, they will lose out because they may not be addressing some of the things they need to do in order to simply survive. There has to be a balance, but that is where the problem comes in for so many companies. They do not know how to balance what they want to do (their purpose) with what they have to do (their constraints). It would be wonderful not to have any constraints in life, and be able to focus solely on the purpose for which one felt one was created.

That is not something a company can do, and it is also not something most human beings can do. Constraints like family and bills come first. They always have, and they always will - for people and for companies. So how does a company focus on strategic planning and a strategy that will actually work? That company must strike a balance between purpose and constraints, and that means understanding both of those things on a level that is deeper than just being aware they exist. A stable purpose that has been clearly defined is the first thing a company needs. How can a good strategy be created if a company does not know why it exists or what it is for when it comes to caring for customers? Trying to come up with a strategy before having a clear purpose does not even make sense, but companies do it every day - and then they get confused and upset when their strategy fails. And they have to start over. As long as they do not have a clear, stable purpose their strategy will continue to fail no matter how they change it or what else they do with the company.

In addition to a stable purpose a company needs one other thing before it can begin creating a strategy that will actually work. The company needs to show how it can create more value than other companies. People do not have any incentive to buy from a company when they can get something of greater value from a different company. Why should they spend more and/or get less? That would not make sense, and would be an odd thing for most people to do - especially in a time of economic uncertainty, when people are desperate to extract all the value they can get from their business dealings. A company that knows its purpose and knows how it can provide a high level of value to its customers is already ahead of the game. Then, that company needs to take its knowledge and use it in a way that will move it forward as quickly and effortlessly as possible. That is where strategic planning - done the right way - comes into the equation. When companies understand what they have to offer, and when companies understand the purpose for which they were created, the leaders of those companies can come up with strategies that will be effective.

As companies begin their strategic planning they have a great deal to consider. This includes not only what is taking place within the company, but what is happening all around it, as well. Vendors, suppliers, customers, and stakeholders all matter to a company and should all be included in a strategic plan. When a company focuses only on itself during the strategic planning process it can fail later, when something happens outside of its control. Naturally, there is no way to play for every eventuality that could occur. Even though there are plenty of things that can happen to a business and that are unforeseen, there are also many opportunities for a business to be properly prepared. Understanding what the company gets from others around it and what it gives to those others is one of the best ways in which it can move forward and work toward a high level of successful strategic planning. The stakeholders, especially, are an important part of the planning process.

Both purpose and constraint have to be addressed at the level of business and company objectives. Many people within companies complain that the objectives the company has for them are unclear. When they do not know exactly what they are supposed to be doing and what the company wants from them in a given situation, they often do nothing - and that can lead to disaster for a company that is actively trying to move forward. Companies stagnate quite easily if they are not always looking for the next important thing. They can miss out on opportunities, or simply get comfortable where they are and avoid the growth and change that could propel them to the next level. Strategic planning is a way to get past that stagnation, but companies that do it incorrectly are not going to see any fruits for their labor. Instead, they will only believe that strategic planning is a waste of time. That will stop them from learning to plan the correct way, which can hurt their business both in the short-term and also for the long run when it comes to growth.

Many companies run into trouble because they do not know what they should be doing for their stakeholders. They have stakeholder objectives, but they are very vague and uncertain. As a company leader, one must know what should be done for the stakeholders and how to accomplish the objective that has been agreed upon or set out by the company. If the objectives cannot be met it is important to assess whether those objectives are unrealistic or whether the problem is that the company is inefficient. Companies are always trying to get stakeholders away from other companies by making promises to them. If those promises are not met within a reasonable amount of time, though, the stakeholders will pull away from that company and try a different company. Sometimes that can be a wake-up call that helps the first company improve, but sometimes it is just the beginning of the end for a company that is not seeing any kind of success with customers or on a financial level. Companies must not over-promise to their stakeholders, but they must certainly work to keep those stakeholders if they want to remain successful.

Companies that are clear on their purpose, understanding of their constraints, and focused on their stakeholders stand the best chance of creating a strategy that really works. However, there are still issues they must consider. One of the main issues is that strategy is messy. The textbooks and strategy-building courses for managers all make it sound like it is easy and even fun to create a great strategy that will take a business into the stratosphere. That sounds great, but it is not realistic. Coming up with a good strategy for a business takes great effort, trial and error, and some aggravation. It is a difficult process, and made more complex by realism. In other words, the purpose of the business may be sound, but the constraints still have to be considered - and they are often more constraining than what the company actually expected or assumed. Assumption is a dangerous thing for a business, and it is much better to wait for facts and figures instead of just assuming that something specific will take place. Patience is required, and that is also difficult for many people.