Good Strategy vs. Bad Strategy: Spotting the Imposters in Your Business Plan

Introduction

Ah, strategy—the magical buzzword that fills boardrooms with hope and PowerPoint slides with bullet points. But here's a plot twist worthy of a Netflix thriller: Not all strategies are created equal. In fact, some so-called "strategies" are as effective as using a chocolate teapot. 🫖🍫 So how do you differentiate a good strategy from a bad one? Buckle up, because we're about to embark on a journey to spot the imposters lurking in your business plan.

The Essence of Good Strategy

First things first: what exactly is a "good" strategy? According to Richard Rumelt, a leading academic and author of "Good Strategy Bad Strategy," a good strategy is not a vague aspiration or a collection of fluff-filled statements. Instead, it's a coherent set of analyses, policies, and actions designed to overcome a significant challenge.

Key Components of a Good Strategy:

1. Diagnosis of the Challenge

   • What it means: Clearly identifying the critical issues facing your organization.

   • Why it matters: Without knowing what the problem is, how can you solve it? It's like trying to fix a leaky faucet without realizing the water is actually coming from a burst pipe.

2. Guiding Policy

   • What it means: Developing an overall approach to tackle the challenges identified.

   • Why it matters: This is your compass, pointing you in the right direction. Without it, you're just wandering aimlessly in the business wilderness.

3. Coherent Actions

   • What it means: Implementing coordinated steps that support the guiding policy.

   • Why it matters: Actions speak louder than words—or in this case, louder than overly optimistic mission statements.

Spotting Bad Strategy: The Usual Suspects

Bad strategy, on the other hand, is like a wolf in sheep's clothing. It often masquerades as grandiose visions or ambitious goals but lacks the substance to back them up.

Common Traits of Bad Strategy:

1. Fluff and Buzzwords

   • Example: "We aim to leverage our synergistic capabilities to revolutionize the market."

   • Why it's bad: This says absolutely nothing. It's corporate Mad Libs without the fun.

2. Failure to Face the Problem

   • Example: Ignoring declining sales by focusing solely on expanding product lines.

   • Why it's bad: It's like rearranging deck chairs on the Titanic. You're ignoring the iceberg.

3. Mistaking Goals for Strategy

   • Example: "Our strategy is to achieve a 50% market share."

   • Why it's bad: That's a goal, not a strategy. It's the destination without any directions.

4. Bad Strategic Objectives

   • Example: Setting unrealistic or irrelevant targets, like "Increase Twitter followers by 10,000%."

   • Why it's bad: Objectives should be actionable and tied to your overarching strategy, not vanity metrics.

Real-World Examples

Bad Strategy in Action:

• Kodak's Downfall

  • What happened: Despite inventing the digital camera, Kodak failed to adapt its strategy to the digital revolution.

  • The mistake: Clinging to old business models and ignoring the need for a new guiding policy.

  • The lesson: Nostalgia doesn't pay the bills. Adapt or become a business school cautionary tale.

Good Strategy in Action:

• Apple's Resurgence

  • What happened: In the late '90s, Apple was on the brink of bankruptcy. Enter Steve Jobs with a laser-focused strategy.

  • The approach: Simplify the product line, focus on design and user experience, and innovate with products like the iPod.

  • The result: A transformation into one of the world's most valuable companies.

  • The lesson: A clear diagnosis, guiding policy, and coherent actions can turn the tide.

How to Craft a Good Strategy

1. Start with a Clear Diagnosis

   • Action Step: Conduct a thorough analysis of your company's internal and external environment. Use tools like SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to get a full picture.

2. Develop a Guiding Policy

   • Action Step: Based on your diagnosis, decide on an overall approach. This isn't about detailing every action but setting a direction.

3. Align Coherent Actions

   • Action Step: Plan and implement actions that align with your guiding policy. Ensure all departments are on the same page—silos are for grain, not companies.

4. Communicate Clearly

   • Action Step: Ditch the jargon. Make sure your strategy is understood by everyone in the organization, from the interns to the CEO.

5. Monitor and Adapt

   • Action Step: Regularly review your strategy's effectiveness and be prepared to make adjustments. Flexibility is not a weakness; it's a competitive advantage.

Conclusion

Distinguishing between good and bad strategy is more than an academic exercise—it's vital for your organisation's success. A good strategy doesn't guarantee victory, but a bad strategy almost certainly ensures failure. So take a hard look at your business plan. Is it a roadmap to success or a collection of wishful thinking and buzzwords? Remember, hope is not a strategy, and neither is fluff.

Final Cheeky Thought

Think of a good strategy like a well-baked cake: it requires the right ingredients in the right proportions. Skip a step or use salt instead of sugar, and you end up with a disaster that even your dog wouldn't eat.

So, let's get baking!