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Punt resolutions; use strategy, instead!

It’s January, and we all know what that means: time to set New Years resolutions that we’re going to break! The main things resolutions are good for is causing the gym to get way too crowded for the first six weeks of the year. You have a tool at your finger tips that will do far more for you than simply setting resolutions.

Skip your resolutions and set strategy, instead.

A strategy is a 50,000-foot view of your life or business. A good strategic plan gives you a roadmap for where to put your time and effort this year. It tells you what to say “yes” to and what to say “no” to.

As you know from my article on how vision and mission relate to strategy, your strategy for a year answers the question, “How can we further the company vision, given the realities of the markets, customers, and resources under our control right now?” Strategy is how vision plays out in today’s real world context.

But when you’re setting your strategy, make sure to approach it from both the outside and the inside.

Look Outside to Set Strategy

Your strategy depends on what’s going on outside your company walls. You need to develop a plan that makes you more desirable to customers than any of your competitors. That means knowing:

  • How do your customers think of you? What product category do they put you in? (Don’t assume you know. A yacht isn’t necessarily a vehicle. Rather, it may be a status symbol.)
  • Who else is in that product category? If you’re a yacht, are you competing against Toyota and JetBlue (transportation) or are you competing against Jetstream and Sotheby’s (status symbols)?
  • What advantage do you have over your competitors?
  • How can you best communicate that advantage to the market?
  • Who has the power in your ecosystem, and how can you increase your power?

One of my favorite books on external strategy is Co-opetition by Adam Brandenburger and Barry Nalebuff. If you’ve ever heard of Michael Porter’s “Five Forces,” Co-opetition goes one step further and deepens the model. Just the way Brandenburger and Nalebuff define competitive and complementary relationships is worth the cost of the book.

Strategy Looks Inside

Looking outside is only half of the equation. You also need to look inside when you formulate your strategy. If strategy is vision made real now, part of “now” is the resources you have under your control. You need to take stock of your resources and decide which resources will form the foundation of your strategy.

When you make ultra-yachts, two of your assets are your customer list (oodles and oodles of rich people), and your yacht design capabilities. If you base your strategy off your customer list, you will expand into other products and services that your current customers might want. Like platinum dinner place settings. If, however, you base your strategy off your design capabilities, you might instead expand into other kinds of yachts, or other sea-faring vessels.

My favorite book on internal strategy is Top Management Strategy by Tregoe et al. The book is 30 years old, but is pretty much just as relevant today as when it was written.

Treat yourself to a 3-martini lunch

If you don’t have a formal strategy session planned, then at least take a long lunch. And over lunch, review the vision/mission for your venture. Why are you in the game in the first place? Then ask yourself how that gets expressed in the world of 2017. Review your external factors—competitors, customers, suppliers, and so on. Review your internal resources, and decide which you plan to base your strategy on.

Then go for it. Give shape to your plans for the next year. Make sure to build in time to review and course correct, and get your year off to a good start. A New Years resolution might only last a couple of weeks, but a good strategy will support you for a year.

Linking Vision, Strategy, and Tactics

You’re so proud of your new vision statement. It sounds nice. Inspiring, even. But the vision is useless unless it can direct action.

Your vision lays out a destination; your destination guides your strategy; and strategy chooses action. It’s action that leads to success. In those moments of action, having clear direction is crucial for building momentum. If your organization is like most, you spent weeks debating every word crafting your vision, mission, strategy, and goals. But no matter how lofty, if they aren’t created in a way that provides direction, those statements are little more than high-priced indulgences.

Every company means something different by the words “vision” and “strategy.” One person insists that “Provide our customers the highest possible quality widgets” is a vision. A friend takes one look and assures him, “That’s a strategy.” Here are some useful definitions that will help you decide if you’ve set a direction that can truly get traction.

Envisioning the future

Vision is timeless. It’s based on who/what you want to do. It’s why you’ve got an organization in the first place. It must be specific enough that everyone can use it to decide if their work is moving the company forward. Progress towards the vision must be measurable. A vision is independent of specific competition, and while it may mention the customer, it must guide even someone who doesn’t know the customers’ mind. The best visions imply whom the company serves, what it provides, and what distinguishes it from other companies providing the same products and services. Vision sets the broad direction. It says, “Go west, young man.”

Wrong: We will provide exceptional products and services that our customers value.

This vision requires knowing the customers’ mind in order to understand what the company provides. It doesn’t distinguish what is unique about the company, since presumably everyone in the market produces something customers value.

Right: We will help boat owners everywhere navigate new seas with geographically based directional products and services.

This vision tells us the market, the product (navigation products and services), the distinguisher (geographically based), and the progress measurement (delight).

The strategy thing

Strategy links the destination (vision) with current reality. Strategy applies to the whole company, and answers the question “How will we reach our vision, given current market conditions, competitive scenario, regulatory environment, etc.?” Strategy is narrower than vision, but broad enough to guide companywide organization structure, hiring, capabilities that must be developed, and so on. Strategy says, “We’re going west, but we ran into this grand canyon. We can go around to the north or south. Let’s choose south.”

For example, a company may have a vision to “provide scientifically proven technology to solve the medical needs of consumers and hospitals.” In the 1950s, the strategy may be doing in-house research, hiring and developing scientists, and a compensation program based on discovery. In the 1990s, the same company may have a strategy of acquiring small drug-making companies and buying and protecting patents from other companies. Both strategies will reach the vision, but they are appropriate for different competitive environments, and they have different organization structures, different financing options, and different operational characteristics.

You know you have a strategy if you chose your current path from many alternatives, all of which would have reached your vision, each of which would have required hiring different people and building different systems. If you didn’t consider many alternatives, or you didn’t choose your alternative considering your competition, your vision, and your current market conditions, then you probably have a tactic, not a strategy. If you can execute your strategy with your current people, reward systems, and organization structure, then it’s not a strategy, it’s a tactic.

The tactics

Tactics are limited in scope, typically just to a part of the company. They’re shorter term than a strategy. They involve executing given the existing capabilities and resources of the company. Unlike strategy, tactics generally work within the current organization structure, rather than changing the organization. Tactics say, “We’re on the south path. Let’s travel two miles today.” Your tactics probably won’t work unless they’re generated from a strategy that lays out a consistent philosophy for how your company will compete/win/attract customers in today’s market.

My article on giving your organization serious traction

“Flashpoints” are those moments in time when traction and momentum are built. For example, a flashpoint in creating a quality-driven organization might be when the CEO refuses to ship a poor-quality product, even though it will hurt quarterly numbers. Flashpoints always happen during a tactical action. That’s why you need a vision and strategy—without them, people at the flashpoint won’t have the guidance to ensure they can move the company forward in that moment of traction.

Your strategy also helps you find flashpoints. If your strategy involves locking up important distributor relationships, your flashpoints will involve reputation and relationship building, creating the perception of value to the distributors, and establishing negotiating leverage to capture an exclusive relationship. If your strategy is to be a low-cost provider, your flashpoints might be times when opportunities for efficiencies arise, or incidents where you can encourage a “continuous improvement” mindset in your team.

At the end of the day, your vision and strategy only exist to drive tactics. And often, the most significant tactics are those flashpoints whose effects are far-reaching. When your vision sets direction and your strategy ties it to your current situation, they provide a compass for everyone in your organization to follow for years to come.

© 2004 by Stever Robbins. All rights reserved in all media.

See other stories in this series.

Setting Strategic Direction: Vision, Strategy, and Tactics

Defining and Using The Three Tools of Leadership

You’re so proud of your new vision statement. It sounds nice. Inspiring, even. But the vision is useless unless it can direct action.

Your vision lays out a destination; your destination guides your strategy; and strategy chooses action. It’s action that leads to success. In those moments of action, having clear direction is crucial for building momentum. If your organization is like most, you spent weeks debating every word crafting your vision, mission, strategy, and goals. But no matter how lofty, if they aren’t created in a way that provides direction, those statements are little more than high-priced indulgences.

Every company means something different by the words “vision” and “strategy.” One person insists that “Provide our customers the highest possible quality widgets” is a vision. A friend takes one look and assures him, “That’s a strategy.” Here are some useful definitions that will help you decide if you’ve set a direction that can truly get traction.

Envisioning the future

Vision is timeless. It’s based on who/what you want to do. It’s why you’ve got an organization in the first place. It must be specific enough that everyone can use it to decide if their work is moving the company forward. Progress towards the vision must be measurable. A vision is independent of specific competition, and while it may mention the customer, it must guide even someone who doesn’t know the customers’ mind. The best visions imply whom the company serves, what it provides, and what distinguishes it from other companies providing the same products and services. Vision sets the broad direction. It says, “Go west, young man.”

Wrong: We will provide exceptional products and services that our customers value.

This vision requires knowing the customers’ mind in order to understand what the company provides. It doesn’t distinguish what is unique about the company, since presumably everyone in the market produces something customers value.

Right: We will help boat owners everywhere navigate new seas with geographically based directional products and services.

This vision tells us the market, the product (navigation products and services), the distinguisher (geographically based), and the progress measurement (delight).

Some organizations may call this a mission statement, rather than a vision. Or, they may have both a vision and a mission, with the vision expressing the ideal world or company, and the mission expressing the company’s purpose. For our purposes, they’re the same. A mission statement rounds out the vision. Together, they give timeless, overarching principles chosen by the company that express the company’s reason for being.

The strategy thing

Strategy links the destination (vision) with current reality. Strategy applies to the whole company, and answers the question “How will we reach our vision, given current market conditions, competitive scenario, regulatory environment, etc.?” Strategy is narrower than vision, but broad enough to guide companywide organization structure, hiring, capabilities that must be developed, and so on. Strategy says, “We’re going west, but we ran into this grand canyon. We can go around to the north or south. Let’s choose south.”

For example, a company may have a vision to “provide scientifically proven technology to solve the medical needs of consumers and hospitals.” In the 1950s, the strategy may be doing in-house research, hiring and developing scientists, and a compensation program based on discovery. In the 1990s, the same company may have a strategy of acquiring small drug-making companies and buying and protecting patents from other companies. Both strategies will reach the vision, but they are appropriate for different competitive environments, and they have different organization structures, different financing options, and different operational characteristics.

You know you have a strategy if you chose your current path from many alternatives, all of which would have reached your vision, each of which would have required hiring different people and building different systems. If you didn’t consider many alternatives, or you didn’t choose your alternative considering your competition, your vision, and your current market conditions, then you probably have a tactic, not a strategy. If you can execute your strategy with your current people, reward systems, and organization structure, then it’s not a strategy, it’s a tactic.

The tactics

Tactics are limited in scope, typically just to a part of the company. They’re shorter term than a strategy. They involve executing given the existing capabilities and resources of the company. Unlike strategy, tactics generally work within the current organization structure, rather than changing the organization. Tactics say, “We’re on the south path. Let’s travel two miles today.” Your tactics probably won’t work unless they’re generated from a strategy that lays out a consistent philosophy for how your company will compete/win/attract customers in today’s market.

Your “moments of truth” are those moments in time when you build traction and momentum. For example, a moment of truth in creating a quality-driven organization might be when the CEO refuses to ship a poor-quality product, even though it will hurt quarterly numbers. Moments of truth always happen during a tactical action. That’s why you need a vision and strategy—without them, people won’t have the guidance to ensure they can move the company forward in that moment.

Your strategy also helps you find your moments of truth. If your strategy involves locking up important distributor relationships, your moments will involve reputation and relationship building, creating the perception of value to the distributors, and establishing negotiating leverage to capture an exclusive relationship. If your strategy is to be a low-cost provider, moments of truth might be times when opportunities for efficiencies arise, or incidents where you can encourage a “continuous improvement” mindset in your team.

At the end of the day, your vision and strategy only exist to drive tactics. And often, the most significant tactics are those moments of truth whose effects are far-reaching. When your vision sets direction and your strategy ties it to your current situation, they provide a compass for everyone in your organization to follow for years to come.

Summary of Vision, Strategy, and Tactics

Description Determines
Vision Timeless. Internally generated. Specific enough to know what to say “No” to. Major markets.

Major uniqueness/skill/advantage.

Possible strategies.

Strategy Specific to time, competitors, market conditions. Answers the question, “How do we achieve our vision in the current market, regulatory, and competitive environment?” Market segments to pursue.

Which relationships to pursue (distributors, complementors, customers).

Organization structure and priorities.

Tactic Goal, typically < 1 year, to be achieved with existing resources, market structures, etc. Day-to-day actions to take.

Ballmer announces Microsoft’s “Multicore strategy” … which sounds sadly like pathetic flailing…

Steve Ballmer has announced that Microsoft will be following a multicore business strategy going forward. His horribly strained anology, likening Microsoft to a parallel computer processor, suggests that Microsoft will be tops in lots of businesses at the same time. Me thinks Mr. Ballmer is just a little bit looney.

In fact, he says “There really is a Sony that lives inside of us…an aspiring Yahoo! or Google… s an IBM mainframe-software business… a desktop-software business… … I want Microsoft to be in all of the good, important big-growth businesses in the world.”

What a recipe for utter disaster! It’s hard to be tops in multiple markets. And to be in all the good, important, big-growth businesses in the world? Hogwash.

This so-called strategy won’t work for the most basic of business reasons. When you make an extra dollar, you have to decide where to put it. If you have two businesses, one producing a 10% return and another producing a 15% return, you’d be insane to put it in the 10% business. You’ll make the most by investing in the 15% business. If you’re public, your shareholders can even blast you for wasting money in sub-par businesses.

Now imagine Ballmer is in “every good, important, big-growth business” in the world. Some of those businesses will do better than others. As Microsoft makes money, they should put it into the best businesses. Gradually, resources and people will move into the high-margin business, starving the low-margin business. And why not? Any other way you split your money, you’ll be making less.

Microsoft started in desktop software, the highest-margin business in the world. Once the software is developed (a largely fixed cost), each incremental copy costs virtually nothing, while Microsoft sells it for hundreds of dollars. Average business consumers don’t know enough about computers to make good purchase decisions, so Microsoft has invested much more in marketing to drive sales than in creating high-quality, user-friendly software(1).

Microsoft wants to be a Google? Give me a break. Google thrives on technological innovation. Microsoft has always been a me-too technological player, with their innovation being in strategy, channel development, marketing, and anti-competitive fraud. Even their recent “Cleartype” technology is just a slight modification of technology from the circa-1978 Apple ][, where Steve Wozniak used the same technique to produce more colors on a TV screen than the system could directly create.

Microsoft wants to be an IBM Mainframe software developer? Maybe they can do it through market power, but through software? Not likely. For all their faults, IBM has become a superb service company, and their software is pretty darned solid. Horrible to use, but solid. Microsoft has neither the service orientation nor the technical skills(2) to compete on those fronts.

Microsoft wants to be Sony? Should I even dignify that with a response? Microsoft’s grand contribution to the world of electronics is a Microsoft-branded mouse and an ergonomic keyboard. Where do they have the capability to compete in a world of Sony?

And oddly, Ballmer didn’t even mention game consoles, where the XBOX—a very late entrant into the world of console games—is successful, but pushes the edge incrementally rather than inventing any fundamental new product category.

In short, this Multicore strategy seems like a rotten idea. Maybe they’ll prove me wrong, but I think Microsoft’s decades-long devotion to winning by FUD (Fear Uncertainty and Doubt), channel manipulation, and technological copy-catting has to shift fundamentally for them to win in any markets in the future.

My advice to Ballmer? Find a strategy and stick to it. Don’t try to be all things to all people. The desktop-dominating strategy worked because the operating system and applications markets drove each other. That game is over. Now you have to produce products people want at a price they’re willing to pay. And how about products that are technically solid, reliable, and secure? Master that game in one market, then worry about being in every good, important, high-growth business in the world. Because until you can do that, the idea of you sticking your hand into other important businesses leaves one shuddering with fear. I do not want my airplane’s navigation system running on Windows, and neither should you.

 

(1) [Flame on] This is a religious issue with me, so I’m not open to reason or discussion. And even if you catch me in an open-minded mood on the topic (unlikely), if you got into computers post-1990, your arguments will fall on deaf ears. You’ve only worked in the post-Microsoft computer world, so you have no standard for comparison. The Pre-Microsoft world was a happy one. Operating systems were rock solid and never crashed. Installing a new application didn’t overwrite half your operating system. And if things got trashed (unlikely, because systems back then had real protection), you just reinstalled the OS and didn’t need to reinstall every application in existence. Viruses were unheard of … I could go on. Back then, UNIX was laughed at as a silly, toy, sad little operating system. It’s a grand joke of the marketplace that we’ve come to a place where UNIX is considered the technically sophisticated alternative. [Flame off] back

(2) No, Veronica, Microsoft doesn’t produce technically solid products. Mostly, they buy and repackage products (I used to use Powerpoint before Microsoft bought it… in the 15 years since, they’ve done almost no innovation to the basic feature set except to add productivity-wasting “builds”). The next Windows release is years late because Microsoft for decades shoved poorly-written, unmaintainable software out the door. It was the right strategy for dominating the market. And now it’s time to pay the piper. Their systems are so needlessly bloated and complicated that they can barely work on the next version. They conscious traded off quality for market timing and money, and now they’re suffering the consequences. The founders, however, still managed to pocket billions. back

How Junior Programmers May be Setting Your Strategy

Companies spend megabucks on beautiful, well-designed web sites that end up losing customers, thanks to technical decisions made by the designers and programmers. Is some consulting firm’s junior programmer really the one you want making your strategic customer acquisition and retention decisions? With a little understanding of the interplay between technology and customer experience, you can start engaging your web developers in supporting your business with smart technical decisions.

The problem is that the world is diverse.

The web has developed dozens of technologies to help build bigger, more beautiful web sites. You will recognize some of the terms: "layers," "cookies," "javascript," "java," "style sheets," "flash," "shockwave."

Unfortunately, these technologies just don’t work on all versions of all browsers. I use Netscape for Windows and IE on the Mac. Two or three times a day, one of them reports a Javascript error and asks "Do you want to keep running scripts on this page?" C’mon, get real. How in the world does any user know whether to answer YES or NO to that, or what the implications are for my purchase?

Furthermore, some users disable cookies, Javascript or Java. I’ve heard companies pooh-pooh those users and say, "Well, I’ll just require you to enable cookies/Javascript to view my site." Uh, huh. When was the last time you were willing to reconfigure your browser on demand? Hard-core customers will do it. But those sites will lose customers who don’t know how, don’t want to be bothered, or aren’t allowed to change their system. Befuddled users don’t hang around to complete their purchase, they just leave. At best, the site loses one sale but the customer returns. At worst, the customer leaves forever.

So why do these technologies end up in web pages?

Flash sells. Look at any television commercial. When a designer is pitching a site laden with cool stuff, the management reviewers like it. It’s jazzy. It’s cool. It’s like a high-end ad. And that’s the wrong criteria to be using to design your web site.

Customers don’t care much about cool looking sites. They care about sites that get them the information or products they want. Yahoo is the most popular site on the web. It uses no fancy features, and it’s downright ugly. But it gets people what they came for. And that’s a much harder outcome for a graphic designer to pitch.

The programmers push the leading-edge technology, too. Take it from an ex-programmer: web site—even large database driven sites—require very, very basic programming, if any at all. The latest version of Quicken is about 10,000 times more sophisticated than 99% of the commerce sites in existence.

So most competent programmers find web sites kinda, well, mind-numbingly boring. But add in layers and flash, javascript and Java and Lingo, and suddenly the complexity is back to the point where it makes the job fun. Besides, all the advanced technology really *does* make certain things easier to program, and trying to use basic HTML to accomplish those same things just isn’t nearly as engaging.

Specific Problems

Here are some places in your site to dig to find out if you’re using these technologies:

1. Disable Javascript in your browser. This is the biggie. If your site isn’t usable with Javascript turned off, that could be a problem. Especially click on [SUBMIT] and [OK] buttons. Many sites have buttons that, for incomprehensible reasons, only work if Javascript is enabled.

2. Do you have Javascript running that makes sure the user types the right things into fields? If so, you just paid your programmers to do the same thing twice, because the data is almost certainly validated once it gets to your server, as well. You now have the maintenance expense of maintaining both the Javascript checks and the server-side checks. Yowza!

3. If you use Java, you’ll lose everyone who keeps Java disabled for security reasons.

4. Do you use layers or style sheets? Many sites do. They make some aspects of site creation much easier. They also tend to break in various browsers and look awful. Modern tools like Dreamweaver give a designer everything they need to create a consistent look and feel in basic HTML that works in all browsers. If your designers simply must use style sheets or layers, test the site in a wide range of browsers to make sure it looks decent across the board.

(And note that your designers will point out how convenient style sheets are, since you can revamp the whole look of the site by changing just the style sheet. But balance that against the increased testing and QA costs of making sure the style sheet solution works everywhere your customers are.)

The business question to be asking

The decision to include these technologies in a site is simple, when approached in business terms:

Is the expected increase in business from the Javascript/Flash/etc. more than the cost of losing even 1% of your visitors due to incompatibility or security concerns?

For most sites I’ve visited that use these technologies, the site would be equally useful without the technologies. So there’s no incremental gain from using them, while there is a risk of losing a customer. In a dramatic example of this, a site (let’s call them "GenericSTORE.COM") recently lost my $400 purchase when their Javascript consistently crashed in both Netscape and IE browsers. Their order desk was closed, and my special coupon expired the next day. I’ll now buy from a competitor, and if that competitor does a good job, they will probably have a new customer for years.

How much did that flashy bit of Javascript cost GenericSTORE.COM? Quite a lot.

There are certainly times when the extra technology helps. A highly-technical web-delivered product probably requires advanced technology by virtue of the kind of product it is. But most sites simply don’t.

As a businessperson, make sure your programmers understand the business case behind the technology. They’ll fight tooth and nail. They’ll say things like, "But Javascript is so basic, 99% of the browsers are compatible…" Yet if it’s that basic, why did GenericSTORE.COM’s scripts fail? And why do people continue to experience incompatibilities? And can we really expect customers to turn Javascript on, if their system manager requires that they keep it disabled? And more to the point: what is the lifetime value of the customers who have the 1% incompatible browsers, and is the extra Javascript functionality really worth losing that much money?

What’s the solution?

One solution is to test your site in as many browsers and environments as possible. Test in Netscape, all versions 4 and above. Test in AOL. Test in Internet Explorer (4,0, 5, 5,5, 6). Test in Opera. Test in Omniweb. Test test test. Test with Javascript turned on. Test with it off. Ditto for Java. Test.

Another solution is to have a site that uses very minimal technology. The HTML on my site works on every browser in use today. Only Netscape 1 and 2 would have trouble with the pages. The site uses Javascript to highlight menu items, but it still works fine with Javascript disabled. Yes, achieving this degree of accessibility has meant sacrificing some of the neato-cool features I could have added to the site. But look at it this way: no matter what browser you’re reading this on, you made it. It works. And you’re here.

So make your site simple and accessible. If you’re tempted to use technology that might lose even a single customer, ask yourself how much you’re losing with that customer, and whether it’s worth the extra bell and whistle. Amazon.com manages to do a hundred million dollars’ worth of business with a site that uses no Javascript and can almost survive with cookies disabled. When your site is rock-solid, your customers will love it, and at the end of the day, they’re the ones who keep you in business.

A Surprising Solution to Networking Nerves

Sometimes difficulty getting noticed comes down to something about your style that’s hard to change. So don’t change, reframe instead.

I’ve recently been working with a client on what it takes to become a major player in his company.

Past a certain point, a lot of success is managing how you’re perceived. Especially with first impressions, the first impression becomes the backdrop, and all subsequent interactions are viewed against that frame.

This has been a huge problem in my career. I’ve always looked younger than my age, and during my 20s and early 30s, I could pass for a teenager. I would walk into a conference and people would shake my hand while looking over my shoulder to find someone “important” to meet.

(Side note: women and ethnic minorities are often familiar with this dynamic.)

I tried to make up for it by wearing a suit. I looked like a teenager trying to look older by wearing a suit. It wasn’t an improvement. (Besides, I was raised in a traveling New Age polyamorous hippie commune. That shaped how I show up non-verbally. Despite having the degree, giving off “Harvard MBA” vibes, is exhausting.)

Ultimately, my breakthrough was being the speaker, rather than an attendee. People’s first impression was that I was a featured speaker, so must have something to offer. Then they would come to my session, and give that 18-year-old-looking person on stage a chance. I could establish credibility based on my topic and ideas. Being the speaker became my #1 strategy for networking at conferences.

Pay attention to your first impression. Change it, if it isn’t sending the message you want.

If you can’t change it for some reason (e.g., you were raised in a hippie commune and feel out-of-place acting like a Fortune 500 executive), abandon conventional wisdom and search for different ways to put yourself into the world.

The advanced course: take that differentiator and lean into it. It could be a powerful branding statement that could open the door to unexpected new opportunities.