"Only the paranoid survive." Andy Grove
When businesses suffer too many bad surprises, it's probably time for a strategy tune up. In fact, I advise my clients that there are 4 warning signs that a firm's strategy needs work.
What about your Midas operation?
Your company is humming along and rolling up sales, transaction volume and market share like there's no tomorrow. The sun is shining and you are rightly out gathering in the hay. When approached about strategy, you put up the hand.
“Not now! Don’t need it!”
Well, please be careful.
Just when you think you've got it all figured out, the winds of change blow in and make a mess of things.
A small amount of thought about your strategy, and a careful look at the things that could derail progress, are likely to pay off in greater success.
Here are 3 questions you should be asking yourself:
Do we REALLY think the competition bell won't toll?
I am surprised how many entrepreneurs think they can build and sustain a monopoly. They think their product or service is so great that no one will dare to challenge them.
The sad truth is success attracts competition, and the greater the success the greater the attraction.
Just as the visionary sees the promise and works his or her tail off the create the solution, another class of visionaries see the opportunity to capitalize on the first mover's ideas and success. They let the first guy or gal work out the bugs, establish the concepts and market demand, and develop the business model. Then they move in to optimize or innovate on the original.
The net of it is, competition is unavoidable.
No barrier is ever high enough. Competitors come in through the front door, the back door, the windows, or burrow in through the foundation. They confront directly or obliquely. They look like you or they look like something completely new. They come in as better value or better features, or they show up as technology substitutes that obliterate your market.
Strategy is fundamentally about competition. How you will confront it; how you will adapt to it; how you will beat it. The good news is competition will make you stronger and better if you accept it and plan for it.
Does my firm and leadership team anticipate and prepare for the unexpected?
This does NOT mean investing a lot of time and money in futurists, trends work, scenario planning or other projects that promise to lift the veil on the future.
The future is and remains unknowable.
What it does mean is that you accept and even welcome change. Companies that look forward to change will thrive more so than outfits that fear it. Therefore, some amount of study and preparation should always be going on.
Someone should be watching those market segments, customers and product lines that you put to the back burner as you focused on the big fish you're currently swallowing.
Someone should be watching competition for changes in leadership direction and operating behavior or shifts in investment priorities.
And someone should be assessing your execution relative to how competitors are doing and against evolving customer expectations.
A recent study by leadership consultants, Jack Zenger and Joseph Folkman, dug through the performance reviews of 50,000 business leaders to look for common characteristics of bad decision making. Among the most dangerous were: Laziness; Not expecting the unexpected; Indecisiveness; Remaining Locked in the Past; Personal Isolation.
Success often masks these bad habits. Change exposes them. Which bad habit is waiting to trip you up?
Bottom line, it’s easy to ride the wave, but managers and companies that are vigilant for the signs of change will be that much quicker to move to the next wave. Andy Grove famously sums it up:
Are we confusing planning with strategy?
Many successful firms will say they have a plan. They've learned to forecast with some accuracy and have thus enabled key managers and operating organizations to get ahead on hiring, inventory, infrastructure or financing. They know when they need capacity and capability and they've put detailed plans in place to deliver.
Often, these firms will put all their function or department level plans together and call them "strategic".
But "strategic planning" is not the same as strategy.
The "strategic plan" might speak effectively about when the firm needs to secure new financing or when to put sourcing contracts out to bid. But it doesn't typically tell the company what to do if competition lowers price or new technology appears that alters the customer proposition.
Strategy is the process of understanding change and making choices and new bets to address or harness change. It answers these questions.
However great today is, tomorrow will come and it will be different than today.
So even in the throes of strong growth and success, a brief time out to examine direction, to calibrate aims and objectives, to assess strengths and opportunities, is well advised. They are essential steps if you want your firm to live out Peter Drucker's famous dictum:
"The best way to predict the future is to create it."
This is a follow up article following Nat's popular post, 4 warning signs that a firm's strategy needs work.
Nat Brooks is the Principal and founder of Strategy Shapers, a consulting firm specializing in strategy and competitive intelligence. Nat brings 25 years of Fortune 500 experience to help his clients develop winning business strategies.
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Photo/Keith Evans Public domain via Wikimedia Commons