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You Need A Strategy
Most companies do not have a strategy. Here’s how to build yours.
The more companies I meet, the more I am amazed at how few of them have a real strategy. They have goals, maybe some plans and many tactics but no strategy. Sometimes you don’t need a strategy to succeed, but it certainly helps.
Before we jump into strategies, let’s define all of these terms:
Goals. These are specific metric values you want to achieve.
Tactics. These are tasks and actions you perform to achieve short term goals.
Plan. A timeline of tactics and actions that helps you execute your strategy.
Strategy. The overall vision and framework you are going to use to achieve your long term goals.
To make it more concrete, growing your revenue by 400% over the next two years is a goal. Launching a new email marketing campaign this week is a tactic. Launching a series of email and advertising campaigns to announce your new product is a plan. The combination of a long term goal (like 400% revenue growth) and the plans needed to get there is a strategy.
Note that all strategies have plans, but not all plans are strategies! All strategies have goals, but goals are not strategies! You can understand how easy it can be to confuse all of these. This is why many companies THINK they have a strategy, but what they really have is a plan or a goal, or worse, a set of tactics.
Even if you have a strategy, it doesn't exist in a vacuum. All strategies look to the future, but the future is really a set of possibilities. You need a vision for the future, one that highlights the most likely possibilities and how you expect events to unfold. This vision is the field upon which your strategy will be played.
So, in order to have a strategy we need:
A vision for how the future is going to play out.
One or more long-term goals, typically metrics.
A plan or set of plans to achieve those goals.
How do we put these together? Here’s a five step process for you to follow:
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Step 1. Create a framework for the future.
Start writing down all of your thoughts about the future of your industry. Don’t write down the future of your company, write as if you’re an analyst looking at your industry from the outside. What is going to change in the next five years? What will stay the same? How will world events affect your industry, if at all? Where will the opportunities be?
This will be a long document, but that’s a good thing! The future is complex, so it makes sense that your vision for the future will be many pages. You will constantly revisit and update this document over time, as the future unfolds and you have new information.
Now that you have written down your vision, we have the playing field defined. Time to build a strategy that will win the game.
Step 2. Choose your goal
Put together at least 3 significant goals for the next few years. Small companies might define goals for the next 12 months, while large companies look 2-3 years into the future. Whatever your timeline, your goals should be significant and diverse.
Here are some examples of great strategic goals:
Grow revenue by 500%
Grow our market share from 10% to 40%
Build the most recognized and respected brand in our industry
Next, you need to choose one of the goals! Almost everyone tries to choose multiple goals, which is a fancy way of not making a decision. Unless you’re running a large company, you need to choose just one goal. Focus is critical to success and to focus you need a single goal.
This will seem hard and unfair, but the process of choosing your goal is important! By looking at each goal and forcing yourself to choose, you are developing conviction about your choice. You should use your vision document as a guide, since it should tell you which goals are more important in the future.
The best goals are ambitious and differentiated, so if you describe them to someone else they will stand out from the crowds of other companies.
Step 3. Layout all the possible paths to your goal.
Now that you’ve chosen a goal, you need to lay out all the potential paths to reach that goal. This is where brainstorming is critical, as you want to be as creative as possible in creating different alternative paths. Just like with your goals, you want to create at least 3 but hopefully many more.
Each path is a plan or set of plans. Some might be higher risk than others, but don’t worry about that when you are creating them. The process of brainstorming new paths to your goal is meant to open up your imagination and think outside of the box.
The more ideas you generate here, and the more innovative and ambitious they are, the more successful your strategy will be in the end.
Step 4. Choose a path
It’s not a strategy if we don’t choose a path, so you need to choose one of the many options you created. This might seem unfair, and most people try to choose a few paths with the promise to “decide later” which one is working the best. That’s another fancy way of not making a decision.
The process of choosing a path forces you to make hard decisions, which is exactly what you need to do.
How do you choose? That depends on what kind of strategy you prefer:
Do you want the highest risk option, with the highest possible return? Or a more conservative option that is more likely to achieve your goal (but not exceed it)?
Do you want to choose the option that gives you the most flexibility in the future? Or do you want to double down on a single option and let it ride?
Do you want to try something never done before? Or do you want to choose a path many companies have followed before?
Whatever your criteria, this is where you define your strategy. By creating many options for goals and paths you have given yourself clear choices, but now is the time to make those choices.
You might realize that your goal isn’t specific enough to be able to choose a path, in which case you’ll go back to Step 2 and refine your goals. This is normal, and you might have to do that a few times.
Step 5. Identify all of the risks on that path and plan mitigations
Things will go wrong, they always do. To make your strategy more robust you should list out the biggest risks and how you might handle them if they happen. Your vision document is a great guide here, since any assumptions you make about the future might be wrong and those are definitely risks to your strategy.
You don’t need hundreds of risks, just a dozen or two of the biggest risks. There may be some risks that you can’t do anything about, but for those where you can put together a short summary of how you’d handle them.
And there you go, you have a strategy!
You’ll find you need to iterate multiple times to get to a great strategy. While laying out your goals you might change your vision for the future, or you might realize your goals aren’t specific enough as you create your paths. Building a great strategy will involve going through this process multiple times.
The best part of this process is that, at the end, you have more than just a strategy. You have:
A living document that captures the future of your industry. This is useful in many ways.
A strategy that you’ve considered and analyzed to make it robust.
Alternatives which you considered, but discarded. These might be useful later!
It’s that easy! Well, not really. It’s very hard to build a winning strategy and requires a lot of thought and effort. The future is constantly changing, so your assumptions in your vision might not hold true. The goals you set might turn out to be wrong, or at least not specific enough. The paths you choose might have unforeseen problems, or might not work out as you expect.
This is why any great strategy is constantly in motion, evolving as the future plays out. You don’t want to change your strategy constantly, but updating your strategy as you learn more is critical to winning.
Like I said before, you can win without a strategy! It’s just a lot easier to win if you have one.
For more on strategic planning, see these posts: