There are two big classes of strategy activities. One is crafting a strategic plan. But as soon as you do, there will be strategic problems. Solving those is a different activity. So, strategy and strategic planning are cousins–but not twins.
Following a somewhat tense conversation with a bunch of other strategy consultants, I had a sudden realization. Some of those in the discussion were clearly talking about how one should solve a strategic problem. But the others were addressing how to construct a strategic plan. Yet both thought they were talking about the same thing—strategy.
Strategic plans and strategic problems are different things. But when they get lumped together as though they were interchangeable, mischief ensues.
For example, the professor and author, Richard Rumelt, will try to convince you that there is no need for strategic plans. Visions are for wimps! All you have to do is identify the biggest obstacle, “the crux“, and solve it. Voila, strategy!
That’s all well and good if you have a specific problem that needs solving.
But, to build a sustainable enterprise, with a workforce that’s fully aligned to it, something more is needed: a clear identity, specific aspirations and a competitive, strategic position.
Those are in the strategic plan.
A good strategic plan will also address existing problems—or moot them. But it isn’t primarily a problem-solving document.
A Strategic Plan is
- Definitional
- Comprehensive
- Future-Focused.
- Non-Reactive (but data-informed)
But it isn’t the last word.
A strategic plan launches a leg of an organizational journey. But it does not ensure a smooth and trouble-free trip.
The Problems
Strategic problems come in all shapes and sizes. They are unlike strategic plans in almost every way. And most don’t challenge the strategic plan. But they do rely on it.
Strategic Problems are:
- Reactive (even if you anticipate them)
- Often localized
- Time sensitive or even urgent
As soon as you finish the strategic planning off-site and share its output—even before you roll out the scorecard—a strategic problem or three will arise.
Some are straightforward challenges to maintaining a competitive advantage—but the worst of them are strategy-killers.
Strategy-Neutral Problems
In 2011, Julie Wainwright founded The RealReal, a luxury online consignment market. She got the idea from both buying and consigning her own clothing at brick-and-mortar consignment shops.
The RealReal solved common consignment problems. It ensured tons of new inventory and gave consignors the ability to get paid on time.
As part of its branding, The RealReal promised scrupulous authentication. There would be no fakes on the site.
That turned out to be untrue. There were definitely fakes and the authentication was not so scrupulous. Soon after their IPO, CNBC did an expose which led to an investor-led class action lawsuit.
This was a strategic problem. The basic concept of on-line, luxury consignment was still a unique and competitive category. But guarding against fakes defeated that strategy, and was a higher-order and more pervasive issue than they had understood.
How could they fix the process without untenable costs?
The RealReal developed a multi-disciplinary approach to authentication. They utilize expert inspectors and have developed their own AI to identify fakes. It’s very much still a work-in-progress.
But one of the impressive things about this approach is that, if it works, it reinforces the existing strategy and strengthens it. While competitors can duplicate the architecture of an online consignment business (Poshmark), they may not be able to duplicate a proprietary, AI-based authentication process.
Strategy-Tweakers
The RealReal’s problem didn’t challenge its basic value proposition. But sometimes, problems require that we revisit our strategic plan, and modify it.
Nukebox Studios is an Indian mobile gaming company. They make mobile phone games for casual gamers—the person who plays for 15 minutes and would never own a console.
They launched with the intention of producing and releasing multiple games out of the gate—figuring some would simply survive, but at least one or two would be hits.
They were wrong. In the first 2 years of operation, they created and trashed 15 games.
The high-volume approach was failing.
While they believed they had the right market and category, they hadn’t been selective enough about their market or game.
In their revised approach they would focus on a single game for a very specific user. Their new target market was still casual mobile phone gamers—but more specifically, females. And they committed themselves to refining just one game until it was right.
That changed everything about how their product and engineering teams worked.
Over the next 18 months they built and iterated a food truck game, betting everything that it was perfect for their future female customers. Ultimately, when it launched, Food Truck Chef grew into a blockbuster.
Unlike other games, there was no shooting, and the competition was more nuanced and indirect.
The game is still successful, and the company has launched more of them—all focused at the same basic target—female casual gamers.
In this case, the problem did require revising the strategic plan. But it didn’t upend it.
Strategy-Killers
We’ve seen some of the problems that may send us back to the strategic plan. Usually, those problems don’t call into question the entire value proposition.
But every now and then, a problem does just that. And it may suggest that your very raison d’etre is invalid.
In 2015, Alex Garden launched Zume Pizza. The basic concept was for a pizza delivery service that used robotics and algorithms to cook the orders en route. Pizzas would be delivered piping hot, fresh from the automated oven.
They raised over $400b from serious investors, including Softbank.
At last, they had an MVP (Minimal Viable Product) and began deliveries.
Within their factory, robot arms spread sauce on raw dough pies. A human worker sprinkled the shredded cheese and toppings and then the prepped pies went into the specially equipped truck ovens. The ovens in the truck were GPS enabled, and ostensibly turned on and off based on proximity to the delivery location.
But, as it turns out, trucks do not make for a smooth and even ride. Despite the superb timing involved in the baking process, the melting cheese repeatedly slid off the pizza while cooking. I’ve never seen a photo, but I imagine the pizzas arrived looking something like this: (Not quite like this. AI image generation is also almost as imperfect as cheeseless pizza…)
This was a strategic problem. But it wasn’t the only one. To solve the a la carte cheese problem, they began to park the trucks at select locations and then deliver from those central hubs. But the cheese issues persisted.
This problem called the entire strategy into question. If they couldn’t deliver hotter, fresher pizzas—what was their competitive advantage?
I won’t belabor the whole sad tale. You can read it here. But fundamentally, this problem was a strategy-killer. It contradicted their entire theory—or at least, they behaved as though it did. [I still don’t understand why they didn’t work on a technical fix…but they didn’t.]
Strategy-killer problems are unusual if you have a thoughtful and tested strategic plan. I think it’s fair to say that Zume’s strategic plan was not thoughtful or tested.
Problem Posterity
Business books are largely written about how companies solve strategic problems. And that’s apt. The strategic plan provides the blueprint and cornerstone for an enterprise.
It’s necessary but not sufficient.
Solving the problems that arise as you execute the plan is the real work of running an enterprise. [Click to tweet this]
What matters though is the distinction between strategic plans and strategic problems. They are the Yin and Yang of sustainable enterprise-building.
Plus, knowing those two universes coexist can provide better context as we create strategic plans. The thought and creativity that one uses to craft a truly logical and innovative hypothesis can pave the way for fewer strategy-killer problems.
When you do confront the problems, how do you distinguish between those that demand tweaks or a firing squad?
Start Here
Does it Threaten Your Competitive Advantage?
The stronger your strategic differentiator, the harder it is to compete with you.
But, even with a singularly attractive position, you can lose advantage.
Your strategic plan defines your category, position or distinction; the winning formula to beat competitors. When something threatens that advantage, you have a problem.
It can be as public and mortifying as The RealReal’s authenticity scandal—or as much an own goal as Lume’s cheeseless pizzas.
But in both cases, without solving the problem, competitive advantage will be lost (or never gained).
Solving these problems rarely requires a new strategy. But it does require a mind open enough to interrogate that possibility.
If you try to solve strategic challenges without that assessment, you may find yourself in a perpetual series of ineffectual fixes. You haven’t found the root cause.
Is Your Advantage Still Viable?
It takes courage to confront the possibility that your strategy is invalid. But you must do it.
I can name a dozen start-ups that change their target market as often as they take out the trash.
One B to B, SaaS client changed their target vertical market 6 times in less than 3 years. They even took a stab at trying to be a fully integrated portion of an adjacent product instead of a standalone. That was just one of many tweaks.
To this day, they are still at it, having not found a “product-market fit”. The CEO is an expert fundraiser and so they have the cash to be wrong.…repeatedly.
But they haven’t done the one thing that might work.
Revisit Your Value Proposition
Ultimately, every strategic problem is a suggestion to honestly look at your competitive advantage.
After all, if you can’t clearly and confidently state why customers will choose you over every other option –then customers certainly won’t make that distinction for you.
The direst strategic problems are signals that you do not have a competitive advantage. If you find yourself receiving that indication, you have a choice:
- You can tinker around the edges and prolong the inevitable.
- Or you can confront it and reinvent your strategic plan—including the decision about who your market is and what problem you solve for them.
But if you are losing the advantage through a technical glitch, delivery mechanism or something else, it likely isn’t a strategy-killer problem. Yet, it still sends you back to the strategic plan to assess that. Everything does.
