Stop and Build a Strategy

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Stop and Build a Strategy

March 2, 2020
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It’s not unusual for a company once to have created a business plan, and then to assume that the necessary work of strategic planning has been done. Maybe there is an annual “strategy session” during which annual goals get set. This happens in both start-ups and legacy businesses. The reasoning behind doing this instead of long-range, in-depth strategic planning is usually akin to: “We don’t have time”. But really, a business plan –or even a simple set of projects and goals – is NOT a strategy.

There is a significant cost to choosing not to do the slow, reflective work of creating a long-range strategy. That cost will be levied unexpectedly, sooner or later. Even companies that appear to be moving fast, gaining market share and growing, may be doing undetectable damage to their futures by operating without a long-range strategy.

Business school graduates are familiar with the legendary planning practiced in Asia. During the 1980s, when US car manufacturing was losing market share, people got interested in why Japanese cars were gaining so much ground. That led to lots of scrutiny of the business practices at play in Japan. Companies like Toyota and Honda were planning hundreds of years out in long, ponderous and detailed strategy work.

Beyond Japan, we can look to such extraordinary Asian companies at Alibaba for models. Jack Ma, founder of Alibaba, has reported that in the planning for his company, they look at the 100-year timeframe, and plan from that perspective. Lenova, the ubiquitous computer company, did the same thing –planning 30 years ago to be one of the biggest computer makers in the world.

This approach seems unimaginable to Western CEOs.

Despite the detail and thoughtfulness of their plans, none of these companies operates in a hamstrung fashion. They are very much able to maneuver in their moment-by-moment decision-making and interactions. In fact, their actual operations can seem chaotic by the hyper-measurement standards of US companies. Some don’t even use quarterly deadlines for their projects. But the long-term strategy has given them something clear to direct their actions– a standard by which to measure each opportunity and decision.

Many start-ups have an immense number of metrics. They have OKRs, KPIs, monthly, quarterly and annual goals, and measure so many dimensions that it can be dizzying. But those metrics are not measuring a strategy. They are simply measuring activity, tactics or individual projects.

It would be easy to assume that the day to day decisions of long-range planned companies and those made by current US start-ups are similar.  They may look that way from outside. After all, whether a car is racing 120 miles per hour on a random US straight away or on the Autobahn headed for Heidelberg, they look the same standing on the side of the road.

Watching a start-up grow, scale, hire, build, and launch can seem like that speedster on the road. It is blurry in its speed. We tend to think of fast growth as a positive characteristic of a company. But there is a significant difference between speed and velocity. In physics, the difference is explicit. Speed measure the pace over time. But velocity is the speed toward a goal. The car racing for Heidelberg knows where it’s going. That is velocity.

CEOs who are responding in real-time to market opportunities may seem like they are better informed than they would have been while crafting a long-range strategy –perhaps one being crafted before this new opportunity existed. But, because of the flood of information and the lack of a clear goal and plan, their decisions are not necessarily good. Making decisions on the fly, while interpolating massive amounts of data, breeds sub-optimal decisions.

There’s an old saying from the Navy Seals: Slow is Smooth. Smooth is fast.

When the Seals are in training, they break everything down into small parts, they learn each component of a complex task. They analyze, critique, practice, correct, and repeat –over and over. That sets the direction. Of course, in an actual operation, they move super-fast – but smoothly. Slow is smooth. Smooth is fast.

By taking the time to slow down, reflect, and create a long-term strategy, the path that emerges is clearer. That clarity adds up to better decision making during the chaotic reality of business. During that planning process, lots of questions get asked, and ideas get stress-tested through a variety of cognitive tools. The great new avenue for market penetration gets subjected to pre-mortems, and argumentation. There is time to look at the entire set of first, second and third order effects that will play out for any given scenario. It is that very slow and granular look, projected backward and forward in time, the creates the map.

Yes, it takes time, energy, and requires struggling through the hard decisions between this path and that, this road to that. The upshot of that reflection and work is a clear guide to which opportunities are the ones to embrace and which to ignore. Despite the deluge of new information and opportunities that will ensue when the team leaves the strategy session, there is now a compass to guide decision-making and action. If the giant pivot isn’t on the map, then unless there is a clear re-imagining of the entire strategy, the answer is no.

This is the very hardest part of leading a start-up – knowing when NOT to do something.  Only with a clear strategy should the company feel confident in its choice. Without it, the very speed of the progress leads to over-confidence and likely misperception. So, slow down. Strategize.

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