The key to developing an effective strategy lies in your ability to set a goal and then make logical choices which give you the best possibility of reaching your goal. Sounds easy, right?
I’ve long advocated that we make strategy far more complicated than it needs to be. There is a simpler and far more effective path that this article will outline.
Strategy is about making choices. This article discusses two choices that are more critical than all others and that form the foundation of a good strategy. If you haven’t made them, your chances of making the right choices down the line are significantly reduced.
Before moving on, this is the second of four articles I am posting on how to create an effective strategy. The first article focused on how to set your worldview which explains the “Why now?” behind your strategy and builds the context for making the decisions in this post. If you haven’t read it, I’d recommend you start there.
Let’s start with an inconvenient truth: most organizations don’t actually have a strategy. What they often have is a proxy statement they use as strategy. Some examples might sound familiar, such as “Our strategy is to be:
1. the best provider of X products or services.”
2. the leader in X market.”
3. the dominant provider of X.”
These are all aspirations. They may or may not be good, but they’re not strategies.
Unfortunately, companies that develop a strategy may not be much better off than those that don’t. The authors of the book Profit From the Core found that while 90% of large enterprises they studied had comprehensive and detailed strategies, seven out of eight actually failed to achieve profitable growth.
You might be wondering, “If large enterprises can’t create an effective strategy, why should I even attempt it?” I can guarantee you that the right strategy will propel your organization forward.
Let’s start first with a definition of strategy. Borrowing from military historian John Lewis Gaddis, strategy is the way an organization aligns “potentially unlimited aspirations with necessarily limited capabilities” to create the best outcome possible. That is the key to strategy—to make choices that focus your aspirations on something achievable (a goal) and then build and align the resources, capabilities, and actions to reach that goal.
In this article we focus on the two choices that will help you define your aspiration and that will lead you to making the right choices of how to use your resources, a topic for the next post.
Defining Your Strategic Objective
Defining one or more strategic objectives is the very foundation of an effective strategy. As the rabbit said in Alice in Wonderland, “If you don’t know where you’re going, any road will take you there.”
The simplest way to answer define it is to ask, “What does winning look like to us?”
This is the stage where leaders tend to lean into a product category, aspiring to be the dominant provider of one product or another. There are a few issues with that approach. First, it’s not inspiring to most people. Second, it also locks you into a product, not an opportunity. Third, it’s subjective. What does dominant mean?
The right strategic objectives should be:
1. Aspirational. At this stage it should be a stretch and somewhat lofty.
2. Centered on the customer. This is what inspires your team.
3. Objective. Know with certainty that you’ve reached your objective. Revenue is my preferred quantitative objective—it’s simple. You can add others that indicate winning to your organization.
4. Time bound. This defines your sense of urgency and tempo. An annual delimitation has advantages, but you can pick something further out.
These objectives should flow naturally from your worldview (see previous post) which will define the context for your customer and help identify opportunities for your organization.
A strategic objective that defines winning can look as simple as something like this, taken and modified from a company I have worked with.
Our strategic objective:
Our goal is to become a $20M revenue company in 2022 by meaningfully helping customers to identify, manage, and mitigate their digital risk.
You might question why I include revenue as a strategic objective. You are defining what winning looks like; the point is to create objectivity: you should be able to state with certainty if you achieved it or not. I advocate revenue is a powerful and objective, especially for startups.
This strategic objective, your definition of winning, which naturally lead you to the question, “How will we do it?” But first, it’s important to define your unique position in the market—where you will choose to play.
Defining Where You Will Play
Next comes a critical decision: where you will play? It’s one of the most critical decisions to make, and one that few companies are willing to consider.
The considerations for where to play can include focusing on a specific market, customer, geography, channel, product position, product category, and even use case. Your decision of where you will play should come from your understanding of the market the best possible playing fields. The trends, shifts, and opportunities you defined from setting your worldview should guide you to the best plays available.
Where you will play matters because it can create open opportunities that you can consistently win. Redbox created a nearly $2 billion business for video rentals with a unique “where to play” strategy built on convenience of time and location.
Defining where to play doesn’t limit your opportunity, instead it solidifies your opportunity by defining the playing field that you know you can win. Too often startups especially try to be all things to all customers. Their customers are spread across geographies, industries, and use cases, creating steep learning curves and dragging their ability to consistently win.
Recently I met with the senior leadership who resisted this notion of where to play. To illustrate the importance of this concept we spent time talking through each of their competitors, their products, go-to-market, and what customers they were targeting. By the end of the exercise they realized that all their competitors had carved out a “where to play” position for themselves and concluded that they needed to do the same.
Where to play strategies do not lock you into a niche. They give you a playing field where you will build unique capabilities and strengths to win consistently and grow your business, expanding your playing field or moving to others.
Together, your choice of strategic objectives and definition of where you will play will lead you to the core, actionable decisions of your strategy: “How will we win?”
In the next post we will talk about how to lead your team to create actionable strategic plays that will focus your organization on key priorities you need to win. I’ll also introduce one of the best and most insightful exercises that will help your team agree on what to do, and importantly, what to stop doing, to be successful.
William Kilmer is a managing partner at C5 Capital, former CEO and managing director at Intel Capital. He is the author of the upcoming book, Transformative: Build a Game-Changing Strategy, Retool Your Organization, and Innovate to Win. For more information, visit Williamkilmer.com