It is difficult to qualify a good strategy. But we can try to glimpse some of its most frequent attributes.
Before that, let’s insist on a point that concerns the Ontology of Strategy (its essence and most intimate nature): we are dealing with a being of relation with an intention of movement.
Relation in time and space: relation between future and present; relation between the various agents competing and cooperating in the market.
In time, a tension between the current situation and the desired future situation.
In the space, we see the interface with customers, competitors, suppliers, partners and other stakeholders.
Intention of movement because it is a latent force that wants to become patent. A potential that intends to manifest itself. A will for realization. The winning aspiration.
Now, trying to identify the characteristics of a well-crafted strategy, we could notice a few things:
Priorities
If there isn’t a clear list of (few) priorities, we are hardly looking at a good strategy. Thirty priorities doesn’t work. Three to five, it works.
Trade-offs are a prerequisite here. We have to choose what to do and what not to do.
I remember a client, a company that provides services at trade shows and events, that had two main revenue streams in its business. The first generated volume and turnover - but was not profitable (standard booths). The second, with significant added value, represented a small percentage of its annual revenue (customized booths). Our recommendation: sell all assets from the first unit, reduce your fixed cost, shrink your physical space, and strengthen your cash flow with that. And focus 100% on the second - be the best in the segment at it.
It was difficult for them to make the decision. It took almost three years to fully detach and make the complete turnaround. Today, they thank me.
Being everything to everyone is the denial of strategy.
Bets
Strategic decisions are always made amidst uncertainty. If there were no uncertainty, strategy would not be necessary - a sequential, Cartesian, linear plan would suffice.
Therefore, if we do not perceive the risk inherent in the choices, it is one of two things: either they are not truly strategic, or, worse still, there is no clarity regarding the risks (a sign of bad strategy, anyway).
Returning to that client’s case, there were clear risks: will we be able to accelerate the sales of the customized solutions? Is it possible to develop a more specialized assembly team? Will we be able to strengthen our brand with this positioning?
Advantage
We must devise one or more advantages. As it is a matter of relationship, the strategist who does not identify or create an advantage over the other players, is not doing their job.
A good way is to think about the differentials: where are we better? what do we know how to do very well? in which market are we strongest?
My client had advantages: a broad portfolio of captive, recurring clients; a know-how powerful and a recognized quality (both in the first and the second business model).
Leverage
Since the book by Gary Hamel this topic has particularly interested me. (In reality, since the already classic Competing for the Future.) And then I encounter the subject again, years later, while reading the wonderful Strategy - a history, by Lawrence Freedman, when he mentions “the art of creating power in circumstances of asymmetry”.
Leverage is asymmetry. When he shouted “Eureka!”, Archimedes was asserting himself as a strategist.
The ability to use leverage. To leverage resources, is entirely strategic. Doing more with less. Generating value from what you have at your disposal - your plant, your team, your technology, your cash, your partners.
My client didn’t need a greater leverage than good cash flow to manage the sector’s seasonality. They did, however, need a new leverage: branding and value perception to achieve a distinctive position. It worked.
Conclusion
It is not a conclusion. It remains open. Strategy is complex, there is no one-size-fits-all formula.
Beyond these characteristics of a good strategy, can you contribute with comments on anything else?