deco-dots

Strategy

October 12, 2022

Image

Excuse me, but "proactive" and "paradigm"? Aren't these just buzzwords that dumb people use to sound important? Not that I'm accusing you of anything like that... I'm fired, aren't I?

Definition

The word gets thrown around a lot. In fact, "strategic" is one of the most popular buzzwords on LinkedIn. But what does it mean? Here are my favorite definitions:

[Strategy] is the making of an integrated set of choices that collectively position the firm in its industry so as to create sustainable advantage relative to competition and deliver superior financial returns

— Roger L. Martin, strategy adviser

Strategy is a concise, high-level approach to achieving an objective by playing strengths against weaknesses in an unexpected way.

— Richard Rumelt, Good Strategy Bad Strategy. Credit to Jonathan Stark.

In other words, it is a general plan on how to win. Let's take chess, for example. Strategy means deciding whether we will play a more offensive or defensive game and if we want the game to be more open or closed (open games are the ones with fewer pawns, where bishops have an advantage over knights).

There is a lot confusion on strategy versus tactics. Tactics are specific. Back to chess, a tactic is a series of moves that is guaranteed to provide the player with an advantage (in material or position). And tactics have to play inside the strategy. A company acquiring a smaller competitor could be a good or bad tactic depending on its overall strategy.

Example Strategies

How do some big companies run their business? Here are some examples:

  • Apple focuses on the real and perceived user experience. They invest in design and marketing and make the users buy everyting from them ("closed system"), including hardware, software, cables, and adapters.
  • Google provides digital services for free, and then uses the user's data to sell ads. They kill unprofitable products fast and buy the competition before it grows.
  • Meta aims to be the user's online identity for the whole world. Again, they provide free services for sharing text and media with friends, then sell behavioral ads using the user's data.

On Richard Rumelt's strategy definition, it says that strengths have to be played "in an unexpected way". I don't think that's always the case, but it helps to change things up if your current strategy is not working. Notice how, amidst slow growth and mental health scandals, Facebook changed its name to Meta and started to focus more on the metaverse. That was unexpected.

The right amount of planning

Some strategies are way too specific. We cannot know the future, so a business plan for a startup with cashflows 5 years in advance is as valuable as a used napkin.

They’re wrong a lot, those experts. History is littered with their failed predictions. Whole books can be filled with them. Many have been.

— Dan Gardner, Future Babble

Everybody does have a plan until they get punched in the mouth

— Mike Tyson

The other side of the coin, strategy becoming too broad, is just as bad. When it is so generic that it leaves no decision out of the table, it serves no purpose. For example, it is not helpful if a company's strategy is "be innovative" because that's too broad.

Effects of having a strategy

A good strategy will survive getting punched in the mouth at least a couple of times. In fact, it is the approach that helps you avoid getting punched in the mouth and then helps you know what do if you do get punched.

We don't need no stinking strategy, we've got this.

— Ben Chestnut, Mailchip Founder, "How I Built This" Podcast

After Ben said that, half the audience cheered and the other half went "Yeah, we do". A strategy, even if not perfect, can help us make better decisions, assign resources where needed, and align people towards a common goal. After all, nobody panics when things go "according to the plan".

Let's strip strategy of its buzzwordness so we can all enjoy its benefits.

Here are some good tips on how to create one: Don't Let Strategy Become Planning


LinkedIn Buzzwords

Simpsons Wiki - George Meyer

Don't Let Strategy Become Planning

Future Babble