Myths about strategy
Myths were created by early civilisations to help make sense of things that happened in the natural world around them. Myths consist of a plausible narrative and potentially a small element of truth. It’s only with the passage of time that fact becomes distinguishable from fiction.
Here are five myths about strategy that I’ve encountered in my career as a strategist:
- Strategy is exclusively about the long-term / strategy is focused on tomorrow at the expense of today
You’ve probably heard the story of the boiling frog, who didn’t jump out of the saucepan as the water temperature increased gradually. For many established businesses, strategic challenges creep up on them. When they’re forced to act, they need to make informed decisions very quickly.
Strategy is not about timelines (long-term or short-term), but about the fundamentals of how the business works - sources of revenue, the most effective & efficient way to deliver it in the context of competing providers. For strategy to be robust, the time horizon for our thinking is much less important than the depth of our thinking. Strategy is worthless if it’s not executable. It’s about what we are going to do today in order to shape tomorrow to our advantage.
- You don’t need a strategy, you need to be more agile
Firstly, agility is not a strategy. It’s an operational capability. While it drives efficiencies, agility cannot permanently affect a firm’s competitive position unless there is a strategist involved ensuring the right decisions are taken about where to direct that capability. A strategy is a framework for decision-making, rather than a plan. It’s a set of guiding principles, which can be applied as the situation evolves.
While start-ups are agile and test & learn quickly, it doesn’t mean they are guaranteed to make robust decisions and always choose the right direction. Successful start-ups do a lot of upfront thinking because their budgets are limited and they need to minimize their exposure to risk if they want to survive. If they don’t have a coherent strategy, they’ll make poor decisions and won’t attract investment.
- Because they’re so agile, Disruptors change strategy all the time
It can appear as though the Tech Giants continually change strategy as they’re continually innovating - regularly bringing out new products and services. Innovation can be easily confused with a change in strategic direction and sometimes it can trigger a change. However, innovation is all about feasibility, desirability and viability. A robust innovation agenda needs its own over-arching strategy, as it requires vision & leadership and is likely to impact on people & processes.
- Thanks to agile disruptors, competitive advantage is dead
There is evidence to suggest that the time period over which competitive advantage can be sustained is shortening. Since the ‘60s, the average tenure in the S&P 500 has fallen from 33 years to 24. As a result, businesses increasingly need to rely on multiple sources of competitive advantage rather than just the one. Tech Giants like Amazon have achieved trillion-dollar valuations, as they are clearly wise to this. They’re not betting on a single farm, so to speak, but building up a portfolio of farms - arable ones, dairy ones, orchards, vineyards, poultry and beef, to complete the analogy.
- You need to be digital first / you just need a digital strategy
Firstly, "digital" is relates technology not a set of marcomms channels - TV, radio and outdoor are all digital these days. Digital technology has enabled us to do what we did already rather better and do things we’d never done before. The possibilities are endless so also confusing. When people feel confused, they look for ways to make sense of them, reduce their exposure to risk and make an informed decision. So its unsurprising stakeholders call for a “digital strategy”.
However, we’re at the point now where even the likes of Google have recently spoken about "the end of digital marketing ". Bethany Poole (Think With Google’s editor-in-chief) pointed out that “You research online. You buy offline. You have your mobile with you. The consumption of videos, the search behaviour – all of this is present throughout the journey. Separating traditional and digital marketing creates silos within companies.”
Silos within organisations are clearly unhealthy. The same is true of strategy. It needs to be holistic to give businesses the confidence to take action against a backdrop of potentially challenging conditions.
Colin Gray | Planning and Behavioural Economics
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