What organizations and startups get wrong about strategy

At the turn of the New Year, companies usually look at strategy. For multinational players, calls are set up looping in all key stakeholders. This is an exercise that sees people present what went well, what could have been better, and what the plan for the following year would be.

Here is what a vague outline looks like:

1. What went well in the previous year — For instance, the sales team would talk about how they fared with the targets in place. Talent and human resources could shed light on the added teammates and the current SG & A spending. And so forth.
2. What could have been better — Pretty much reasons as to why certain targets weren’t met.
3. What the future holds — This is usually picked out from Forester or some famed industry reports and what the industry says.
4. How to leverage these reports — This is typically derived from the industry reports. For instance, a company might look at capturing a certain amount of the industry TAM.
5. Help/Support required — If someone needs to be hired, it will be communicated. If more budget is required, it will be communicated. And so forth.

What people think strategy is

There is something fundamentally wrong with the process mentioned above. This post isn’t a rant about individuals getting their Michael Porter wrong. Instead, it is a rant (if you’d like to call it that) on how industry leaders across organizations and startups should be thinking about what needs to be.

Org leaders seem to think that strategy is measuring what happened the previous year and trying to better that. Some of the more enthusiastic would go so far as to put down certain ‘ideas’ on how things need to be done. For instance, some enthusiastic marketing leads would talk about untapped segments that appear ‘greenfield’ enough to be moved into. This would invariably end in a projection of the future as if the proclamation would hold. One of the most banal ones I’ve heard is when a content marketer talks about starting a podcast. While I admire this gentleman’s zeal, upon pressing him on why he wanted to look at audio content, it eventually came down to him looking at peer group companies who had started podcasting.

Some founders who have been at the receiving end of my strategy rants have usually been ones influenced by Gary Vaynerchuk. Don’t get me wrong, Garyvee is one of those super-successful individuals who seems to have cracked the content and influence. However, his doing vs trying content has seen several entrepreneurs do before they talk, something that eventually leads to terrible execution and in extreme cases, startup closure. Having experienced the latter, it has become a policy of sorts for me to convince myself that a certain strategy whether it's Go-to-market or supply chain; can work.

How strategy actually works

1. Measuring what happened previously — Having a way to measure what has happened in the past year irrespective of whether it went well or not is the way to start. In the case of an early/idea stage startup, formulating a hypothesis on what the industry would look like helps. This helps the founders also understand what the future of the org and the industry looks like.
2. First principles thinking — For those who don’t understand what this means, thinking in first principles requires asking the right questions to arrive at a series of immutable truths. The way to go about doing this is to look at everything that was measured in the previous year and ask ‘why’ or ‘why not’ something happened. This helps to understand why things panned out the way they did.
3. Strategy Formulation — Consider the following — ‘Forrester reports that the market is valued at 200 million USD. We hope to use our expertise in cybersecurity to ensure that we tap into this market and gain a 20% market share.’ This is the furthest one can go from strategy formulation. It is a simple pie-in-the-sky statement based on a prediction made by someone (taking nothing away from Forrester or anyone who makes these assumptions.) Strategy formulation is a lot deeper than this and requires one to understand what exactly needs to be done. It requires lots of clarity on what exactly needs to be done. A good strategy formulation might look something like this — ‘Since Forrester has valued the market at 200 million, we went ahead and validated the same by reaching out to companies in the banking space. We found that certain services are specific to what they’re looking for and we would like to tap into that market. For this, we would need a sales representative to build the pipeline following which we can hire for field sales in a few months to close these new logos. We foresee a revenue of 1.2 million USD for this and will expect to hit anywhere between 70 to 80% of this target.’
4. Strategy Implementation — This usually deals with the nuts and bolts of how things will be done. For instance, hiring someone in marketing with expertise in Google Ads to boost website traffic (along with specific numbers of how it was and how it is expected to pick up going forward.)

The Analysis-Paralysis Argument

This used to be an argument I used to have with a former co-founder. He was in favor of a no-talking execution approach. This used to happen to a point where each time we got into a meeting room to discuss anything, he’d cut me off saying ‘Execution Execution Execution.’ In all honesty, I am all for this approach. I believe that a large part of leadership teams spend a significant amount of time talking. And that does lead to paralysis. But consider what Jeff Bezos says for a moment.

In an organization, what is the role of a leader? A leader is someone who is paid to make high-quality decisions. Without those high-quality decisions, performance and org culture are affected. And badly so. More than the leaders in an organization, I’d like to focus on high-quality decisions. And according to me, that can only happen with strong strategy foundations.

Disclaimer — This rant is one perspective. It is from real-life experience that I have experienced across organizations I have worked with in the past. If you have a different perspective, I’d love to debate. These views are my own and aren’t a reflection of the organization I work with or the portfolio of startups I am invested in.