Are you sure you know what strategy is?
We all hear and use the word strategy almost every day in our professional life. However, I found that not everyone truly understands what strategy is or whether what they are talking about is actually a strategy.
I got a severe interest in strategy when I was studying my first Master Degree. I came across an idea of “managing your desired outcomes”, which I think it’s a fundamental principle of any strategy — personal or professional. If you apply this principle — plan your desired outcome — you will always do two things:
- think a few steps ahead
- respond, not react.
In doing so, your life is going to be much simpler because you always know why you do what you do. As my interest in this area grew, I then chose to do a PhD in business strategy. I learnt that there are many tools that help businesses do strategic planning, such as SWOT Analysis, TOWS, The Balance Score Card, etc. The problem is there are so many of them. I doubt that anyone, apart from those high-fee consulting companies, would know or get benefits using those tools. They are very, very theoretical.
A few years later, I came across two great books that entirely changed my perspective about business strategy — one is Good Strategy Bad Strategy: The Difference and Why It Matters by Richard Rumelt. The other one is Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Renée Mauborgne.
Why do I like these two books very much?
The first book by Richard taught me about the core principle of a (good) strategy. He suggested that a good strategy needs to have the following three components:
- A diagnosis — what is going on? What is(are) the challenge(s) that you or a company encounter? I find that this is the most important step in any strategy works. If you don’t understand a problem, how could you come up with a solution?
- A guiding policy — once you understand the challenges, you need to come up with guidance or a direction on how you think you can overcome those challenges. It could mean that you need to add more product features, or you may need to add another product line, or you need to improve your service offering.
- Coherent actions — There is no distinction between a strategy and an execution. You may have heard people saying — the reason this plan does not work because even though a strategy is good, the execution is bad. The execution is a crucial part of your strategy. To execute the guiding policy above, you need to design all related/relevant actions.
What’s about the Blue Ocean book?
The concept of the blue ocean strategy is to encourage us to think beyond the traditional competition and industry boundary. The authors call this traditional concept “red ocean” — the trade-off between differentiation and low-cost. The blue ocean strategy simply asks why we have to choose between these two if we could do both. The real question is how and if you could find a way to do it, you wouldn’t have to worry about competitions anymore.
The idea is basically to look for gaps or unfulfilled pain points or demands and offer something to close those gaps. In short, blue ocean strategists focus on creating and capturing new demand, not fighting over existing customers.
A true insight about strategy is valuable to everyone. It helps you to understand the situation, apply the right solutions, execute at the right time, and ultimately deliver the outcome that you want. You have to believe in this one.
