Business and Operations
By Rich Horwath
Five myths busted to improve your business decisions
By Rich Horwath
Running a business on myths, flawed business principles, and baseless assumptions creates confusion and a lack of strategic direction. A study of senior executives revealed the most important leadership behaviour critical to company success is strategic thinking. As good strategy is at the core of any organization’s success, it’s important to understand the strategy myths that may be holding your team back from reaching success.
Myth #1: Strategy comes from somebody else.
“We get our strategy from the brand team/upper management;” A common refrain among managers in other areas who are asked who develops strategy. It’s wrong. The strategy that you execute should be your own strategy, as each group’s resources are going to be different. For instance, the sales team has different resources—time, talent, and budget—than the marketing team’s, IT’s or HR’s. How they allocate resources determines strategy. It’s important to understand company, product and other functional group strategies to ensure your strategies are in alignment. However, their strategies are not a replacement for yours.
Myth Buster: Identify the corporate strategies, product strategies, functional group strategies and yours, then align.
Myth #2: Strategy is a once-a-year process.
At a strategy webinar for CEOs, a question was posed: “How often do you and your team meet to update your strategies?” The percentage of CEOs that meet with their teams to assess and calibrate strategies more frequently than four times a year is only 16.9 per cent, with nearly half saying once a year, or “we don’t meet at all.”
A study of large companies showed that the main driver of revenue growth is the reallocation of resources throughout the year from underperforming areas to those with greater potential. Strategy is the primary vehicle for making these vital resource reallocation decisions, but as the survey showed, most leaders aren’t putting themselves or their teams in a position to succeed. If strategy in your organization is an annual event, you will not achieve sustained success.
Myth Buster: Conduct a monthly strategy tune-up where all levels meet to review and calibrate strategies.
Myth #3: Execution is more important than strategy itself.
A study of 750 bankruptcies showed the number-one cause of bankruptcy was flawed strategy, not poor execution. You can have the most skilled driver and highest performance car in the world, but if you’re driving that car on a road headed over a cliff, you’re finished. A sign of a myopic view is that everything is “either/or,” rather than allowing, “and.” Strategy and execution are important, but all great businesses begin with insightful strategy.
Myth Buster: Take time to create differentiated strategy built on insights that lead to unique customer value, then shape an execution plan that includes roles, responsibilities, communication vehicles, time frames and metrics.
Myth #4: Strategy means being better than Competitors.
Your products and services are not better than your competitors. Why? Because “better” is subjective. Is blueberry pie better than banana cream pie? It depends who you ask. “Is our product better than our competitors’?” is the wrong question. The real question is, “how is our product different from our competitors’ in ways customers value?” Doing the same things in the same ways as competitors, only trying to do them a little faster or better, blurs the line of value between your company and competitors. Remember, competitive advantage is defined as “providing superior value to customers,”not “beating the competition by being better.”
Myth Buster: Identify your value to specific customer groups by writing out your value proposition in one sentence.
Myth #5: Strategy is identical to mission, vision, or goals.
Since strategy is an abstract concept, it is often interchanged with the terms vision, mission and goals. Mission is your current purpose and vision is your future purpose, or aspirational end game. Goals are what you’re trying to achieve and strategy is how you’ll allocate resources to achieve goals.
Misusing business terms on a regular basis is like a physicist randomly interchanging element’s chemical structures from the Periodic Table. You can say that the chemical structure of hydrogen is the chemical structure for gold, but that doesn’t mean it’s correct. Starting with an inexact statement of strategy will derail all other aspects of planning and turn your business into the equivalent of a school volcano science project with vinegar and too much baking soda.
Myth Buster: Clearly distinguish goals, strategies, mission and vision each other.
If left unchecked, strategy myths can cause your business to fail. A ten-year study of 103 companies showed that the number-one cause of business failure is bad strategy. Arm your team with these myth busters and your business will soar.
Rich Horwath is a bestselling author; his most recent book is StrategyMan vs. The Anti-Strategy Squad: Using Strategic Thinking to Defeat Bad Strategy and Save Your Plan. Sign up for the free newsletter Strategic Thinker, visit: www.StrategySkills.com.