01 January 2019

Creating a Corporate Strategy


"The essence of strategy is choosing what not to do."

--Professor Michael Porter

Here's something to think about as a new year gets underway:

Does your business have a corporate strategy, defined as the desired future and a way to make it happen?  Is it clearly communicated and understood? Do the assumptions on which the strategy is based fit current reality? 

And is there congruency between the corporate and business unit strategies? Units need their own strategy, as do staffs. However, corporate should go first.    

The goal is an alignment of the corporate, unit, and staff without which results are substantially lessened.

Getting started with the process can be challenging but having the right people involved is critical to the outcome.  With no one way to create a strategy (looking ahead and reasoning back), there are options to consider:

Option A (Predictive Strategy)

Premise:

The world is going to look like this--frame the corporate strategy for that future. 2
  • A message, theme or direction (20%)  
  • Implementation (80%)

Option B (Non-predictive strategy)

Premise:

We don't know what the world is going to look like.  Therefore we need a strategy or set of strategies that can be successful almost irrespective of what the world looks like. 3
  • A message, theme or direction (20%)  
  • Implementation (80%)  

Center of the earth

More than a few corporate strategies are rushed into creation, often by-passing the "core."  

If we begin at the center or with the purpose (why?) then there's a better chance the blank spaces get filled in with what makes sense.    

So what's a core idea?

It's a simple articulation of the original purpose or innermost reason for being. It forms the basis of an organization's culture. 

A core idea is central to what you're about.  It's not a mission statement; it's what you want to accomplish; a positive goal that can be realized at any time.

Some illustrations:  

o   Taking Wall Street to Main Street--Merrill Lynch
o   Technology married with liberal arts--Apple
o   Developing leaders of character--West Point

The right way to communicate a core is to embody or personify it.

No organization should assume current employees or management teams know what's in the core.  That means conversations, development programs, and on-boarding should include references to an organization's history and a unique sense of purpose.   

A neglected idea

Borrowing from game theory we consider an overlooked, but valuable concept--having a dominant strategy. 

"In general someone has a dominant strategy when they have one course of action that outperforms all others no matter what competitors do.  If someone has such a strategy, their decisions become very simple; they can choose the dominant strategy without worrying about a rival's moves.  

Therefore, it is the first thing one should seek." 4

We learn that dominance in the term "dominant strategy" is superiority over another of your potential strategies (make a list), not of your business over a competitor.   

Avoiding common errors

After nearly five decades of observation, experience, and study, we note the following recurring problems facing CEOs when it comes to corporate strategy:

-Not being clear.

-Giving up too soon.  

-Building a strategy that's easily reversible.  

-Utterances and actions that don't match.

-Failing to have the right people in the right places at the right times.

(See our blog post, The Struggle with Strategy).

The speed of light

A year goes by quickly.  

What will you pay attention to over the next 12 months to ensure the business, under your watch, is moving in the right direction?  If it is, how to maintain momentum.  If not, how to adapt in order to regain momentum.  

No matter the analytics, the rare corporate strategy that works for any length of time is ultimately a series of judgment calls.  When it comes to thinking strategically, quoting Thoreau, "It's not what you look at that matters, it's what you see."         


1 Benjamin B. Tregoe and John W. Zimmerman

2 Philippe Silberzahn
3 Ibid
4 Avinash K. Dixit and Barry J. Nalebuff


www.strategist.com


(C) Bredholt & Co.