The Key Elements of Strategy | Business LockerRoom

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By John Spence | Guest Posts

Jan 27

The Key Elements of Strategy

by John Spence

As we head into 2016 many businesses are thinking about how to be more successful, generate more revenue, and increase their profitability. The are considering any number of new “strategies.”

To help, I’d like to share with you a few of the fundamental ideas I have learned through teaching strategy and strategic thinking for the last 20 years.

The first, and most important idea about strategy sounds very simple but it is exceedingly hard to implement.

All effective strategy is just valued differentiation
multiplied by disciplined execution.

In other words, to build an effective strategy you have to bring something that’s unique, exciting and compelling to the marketplace – something that your customers highly value, and difficult, if not impossible, to copy – and you can execute on it flawlessly.

Go back and read that a few times. Then, I challenge you to sit down and figure out exactly how your business meets the criteria. I have worked with dozens of businesses around the world that have not been able to reach the criteria.

For most businesses today, one of the few competitive differentiators left is the quality of people that you can get and keep on your team, and the relationships they create with your customers. If you truly have top talent that are highly engaged and motivated and extremely customer focused, then you do have a winning combination.

This next important idea about strategy is an idea which took me a few years to solve. Because all strategy is basically an exercise in how to allocate limited resources (even Google does not have unlimited resources), it is critical that you figure out what to focus on and how to deploy these resources. And it is just as important to figure out what not to do.

Here are some important questions:

What customers do not want?

What markets do not want to compete in?

What products are no longer viable?

What do you have the courage to stop doing in order to reallocate your time and resources on the things that will allow you to be successful?

Although I conduct a large number of strategic planning sessions, I always have to remember this important fact: we’re just guessing. Even with the best data, tons of market research, and a robust planning methodology – at the end of the day it is still just a very educated guess. Which means you need to follow the plan carefully and resist changing it, until it becomes obvious your guesses were not on target and you do need to change the strategy. There is a fine line to walk between being too rigid and myopic versus changing so much that you never get any traction.

Lastly, and perhaps most importantly, the best plan in the world is completely useless if you don’t execute on it.

I have taught an executive-level seminar on strategic thinking and strategic planning at the Wharton School of Business for the last 16 years. Every year I ask the executives that attend:

“What percentage of companies that have a good strategic plan,
have a great product or service and know how to differentiate themselves in
the marketplace, are able to effectively execute their plan?”

The answer every year has been 10 to 15%. There is no lack of incredibly smart people who can develop uber-impressive strategies, but there is a huge lack of people who can take those strategies and turn them into reality in the marketplace. So to me, spending time on planning the execution of the plan is just as important as the time spent to create a plan.

Unfortunately far too many businesses don’t even bother with doing strategic planning, they just hope next year will be better than the last year, they will somehow make more money and at least a little profit.

I can tell you this with great confidence: Hope is not an effective strategy.

Bet you’ve heard that before!

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About the Author

John Spence is recognized as one of the top 100 business thought leaders and as one of the top 500 leadership development experts in the world. He is an international keynote speaker and management consultant and has written five books on business and life success. For more information, visit www.johnspence.com.