When it comes to strategy, the biggest mistake organizations make isn’t choosing the wrong path— it’s failing to choose at all.
Playing it safe by keeping all options open and not taking a bold stance is a surefire way to lose in today’s hyper competitive marketplace. Playing it safe is The Riskiest Strategy of All! By contrast, a good strategy is about making deliberate choices that define where you’ll compete, how you’ll win, and what you need to do, to execute effectively.
The Key Elements of a Good Strategy
We illustrate the key elements of a good strategy using Acme Inc., a fictitious provider of packaging solutions based in the USA.
Vision
Every great strategy starts with a clear and compelling vision —a “big, hairy audacious goal” in the flowery terms of a client – that defines success in measurable terms. It’s your North Star that guides you to where you aspire to be in 3-5 years.
For example: “Acme will become the national leader in sustainable packaging solutions by 2027, with $500M annual revenue and 15% EBITDA margin.” This vision is specific and quantified, leaving no room for ambiguity.
The vision anchors your internal communication. When your leaders, employees, and partners understand and endorse the vision, every decision becomes a step toward achieving it.
Where to Play
This is about deciding which markets, customer segments, and geographies you will target. For instance: “Acme will focus on enterprise customers in the healthcare and manufacturing sectors with over $1Bn revenue, in North America and Western Europe.”
Just as importantly, determine what you will not do. Draw a line in the sand and decide where you won’t play, so you can focus your scarce resources on the biggest bang for buck. For instance: “Acme will not go after enterprise customers in Industrials sectors, even if they come to us.”
How to Win
Deciding how you will win has four components: your value proposition, your go-to-market, the capabilities you need to build, and finally the partnerships you will forge and the companies you will acquire.
Value proposition: what makes you special
First, you need to articulate your unique value proposition. Whether it’s cutting-edge innovation, cost leadership, or unparalleled customer service, your value proposition must be razor-sharp. For example: Acme might prioritize creating solutions tailored to the needs of their healthcare and manufacturing enterprise customers over competing on price.
Go-to-market: How you take your value proposition to market
Next, you need to lay out how you will take your value proposition to market. This involves determining the geographies you will be active in, and the channels you will use to operate in the market.
When it comes to setting geographies, be specific, as this will aid in determining where you will invest resources. The US is a huge market to cover. However, focusing on the top 40 US cities is a much more manageable effort for Acme, yet constitutes the bulk of the addressable market.
Capabilities: The muscle that powers your strategy
Success doesn’t happen by accident; it’s built on robust capabilities that enable your strategy. Capabilities are a combination of people, processes, and technology to achieve an outcome. If Acme’s competitive edge is customer service excellence, Acme might invest heavily in staff training and implement world-class CRM systems. Equally important are management systems—processes, structures, and metrics that ensure accountability and alignment at every level of the organization.
Don’t view capabilities in isolation. A capability system is self-reinforcing and is hard to replicate. Think of Ikea’s application of Scandinavian design, low cost and self-assembling furniture to set itself apart in their industry.
Partnerships and M&A: How you source capabilities in the market
You can build or buy capabilities. It’s all about making deliberate strategic choices about which capabilities you’ll develop in-house versus which ones you’ll acquire from outside.
For capabilities you have chosen to source from outside your organization, decide where you will partner, and where you will buy them through M&A. In your strategy, you don’t need to figure out who you will partner with or who you will buy, just what your intentions are.
How to execute
Execution bridges ambition and reality. Laying out how you will execute includes building clarity on strategic initiatives you will undertake, how you will organize yourself, how you will measure success, and the risks you will manage.
Strategic initiatives: The priority projects that drive your strategy forward
A good strategy isn’t just a lofty vision; it’s a practical plan for getting there. An actionable roadmap breaks down strategic objectives into clear initiatives with assigned accountability, timelines, milestones, and resource requirements.
Every layer of the organization should understand its role in executing the strategy. When everyone knows not only what they’re working toward but also how they’ll get there, alignment becomes second nature.
Operating model: how you will organize yourself
A common saying is that “Structure follows Strategy”. In other words, your operating model needs to enable your strategy. You will likely need to make changes to your internal organization to enable your strategy e.g., restructure to become more customer centric, or build new functions. This is where you figure out how you need to change your organizational setup.
Key performance indicators: how you measure success
A strong strategy incorporates measurable outcomes—KPIs or OKRs – that track progress along the way. Examples include market share growth, customer satisfaction metrics, or return on invested capital (ROIC). Tracking these metrics act as guideposts, ensuring every effort remains focused on delivering results.
Risks: what will derail your strategy
Every plan entails risks of getting it wrong. You need to identify what those risks are, how likely they are to materialize and how severe they are if they eventuate. You also need to determine how you will mitigate what’s in your sphere of control. Finally, you also need to track identified risks, the likelihood that they will materialize and the severity of the outcome, and course correct your mitigation plan as market dynamics play out.
In summary, strategy is about trade-offs. You can’t be everything to everyone—and trying to do so leads to being average at best, mediocre at worst. A good strategy requires courage: the courage to say no to distractions and yes to focused priorities; the courage to commit resources where they matter most; and the courage to take calculated risks in pursuit of success. Playing it safe isn’t safe at all—it’s just a slower path to irrelevance.
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