Strategy seems to be a dead concept these days. The changes are too intense for the strategy. Customers (organizations) seem not to want continuity, but rather enthusiasm, excitement. In the midst of this scenario, strategic positioning does not make sense. What matters is agility and continuous innovation.
I partially agree with the statement above. Strategy is much more than positioning. It is about developing resources that will allow the company to create value and differentiation in this changing world.
Unfortunately (or fortunately) it takes commitment (time and money) to develop this capacity for differentiation. It depends on people's talent and organizational culture. It is not overnight and if it were something easy we would not have a success rate of only 10% between startups, for example.
Do not get me wrong. I'm not that old but my modest knowledge of strategy was built on SWOT analysis, BCG matrix, Peter Drucker, Michael Porter and looking at companies like GM, P&G, IBM, Dell, Xerox, etc. The strategy was taught me to operate something internal (controllable) and to foresee and adapt to something external (uncontrollable).
Nowadays we like to give things beautiful names. A startup to be successful needs to have the idea, timing, profiling, etc. I think that for all this we can use Porter's 5 forces model (with the appropriate adaptations, of course).
We have dozens of frameworks and methodologies that promise to solve all the strategic problems of the organization. I want to talk a little bit about strategy in agile methodologies.
Agile strategy and methodologies
Even one of the creators of the agile, Dave Thomas, says:
The word 'agile' has been subverted to the point where it is effectively meaningless.
What I observe: it is a great methodology, many use it, almost nobody uses it properly, nobody makes money from it.
As a good dinosaur who studied project management with PMBOK (fourth edition to be more specific), I question how agile methodologies are used, especially in Brazil. If you are able to translate the entire PMBOK into a 17-page guide… well, who am I to say that you shouldn't do it.
Agile development, scrum, kanban, scruban, kancrum or whatever, moves the focus from results to deliveries. It's a bunch of people looking to turn on the green light on the project based on deliveries, not results. What goes into production is usually garbage and does not provide long-term support.
PMs (project managers or project managers) become more important than AMs (account managers or account / operations managers). There is no openness, transparency and / or alignment with company executives.
Amazing how every project in an agile methodology works ...
Obviously it will work! Most companies use them the wrong way, without quality, without alignment with managers and without offering value for delivery. Where will they go wrong? Just stick a bunch of post-it notes, do zillions of unproductive meetings, play piloting the project and that's it. Wheat delivered!
Do not get me wrong. Agile methodologies have their value, as long as they are used correctly (which happens very little).
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Phases of strategic thinking
I like to talk to executives the old fashioned way. For them strategy is a set of actions and initiatives designed to achieve a long-term goal (Perfect!). In business, long-term goal is profitable growth.
A good action plan involves three phases of strategic thinking:
Diagnosis: Where are we?
A diagnosis of the internal and external situation is necessary.
Internally, we must look for some form of financial analysis that tells us where the company is earning or losing money. In addition, some form of business model analysis to determine strengths and weaknesses of the company and how they correspond to financial performance.
Externally, we need to look at current and emerging competitors. We can even use the Porter's 5 forces model. It may seem old-fashioned today, but we will not use it to prescribe strategies. This model can serve to generate a dynamic perspective on what is happening competitively.
The second essential external diagnosis is a market and customer analysis. Where are the opportunities for growth? How are customers' needs, wants and behaviors evolving? What kind of new market segments are emerging?
Alternatives: What can we do?
Great strategists spend a lot of time analyzing past movements. They do this to present leaders with Possible alternatives for dealing with different situations. In business, strategic alternatives are often scarce, often reduced to cost leadership, differentiation or disruptive innovation. You’ll want to take three different perspectives to develop your list of strategic alternatives:
- What kind of performance moves are needed to increase profit? This involves considering movements in adjacent markets, new products, segments, operational excellence and portfolio restructuring.
- What kind of business models are needed to support changes in performance? They can be grouped into models that involve a personalization of the value proposition (from pioneering to co-creation) or also a scope of efficiency in the value delivery system (starting with volume efficiency and progressing to ecosystem efficiency). At opportunities to beat the competition are strengthened by quickly combining a new value proposition with a new value delivery system.
- What kind of innovative experiments are they needed to give business models a truly competitive advantage? Not all possibilities are equally relevant. The return on innovation is likely to be greater if the performance movements and business models being evaluated are improved / expanded. This is not to say that isolated experiments are not important, but possibly will bring a relatively minor return.
Choice: What should we do?
Strategy is choice. Leaders need to focus the organization's effort, focus. They need to lead the selection of a limited number of strategic initiatives, based on the potential value of creation vs. execution risk. Ideally, there should be three sets of initiatives: the performance changes today (short term), new business models impact tomorrow (medium term) and experiments to provide the competitive advantage guarantee the day after tomorrow (long term).
THE execution risk is fundamental to this choice and it depends on how the necessary market capacities and opportunities will be developed. We generally underestimate the challenges. Acquisitions need to be integrated and the organizational culture must be nurtured.
Consultants and consulting firms
The strategy is not dead. It just isn't being done the way it should. Telling your customers that your work is strategic is no longer a differentiator, since everyone says that today.
Of course, to sell your fish, you need to call it strategic (even if it isn't). You can even add other terms like "insights", "action plan", "diagnosis", "modeling", "prototyping" and a lot of other words "trends".
Well know that it won't get you very far, unless you just want to turn on the green light at the end of the project.
Do you want to do real strategy? Do research (lots of research), create a repeatable method and perform tasks reliably.
At people / companies will not always buy your strategy, patience. It doesn't mean they don't need it, they usually do. Those who do not adopt the strategies proposed by a strategist are more concerned with getting the job done quickly.
The green light at the end of the day can be more interesting than the profit at the end of the year. This can be a bomb for organizations.
Hearing someone talk about strategy is very tiring (if you've read this far you may be thinking that), unless you're really interested in strategy.
You will be doing strategy when:
- requiring your client to engage in your strategy not through a super presentation but from a well-written page, without graphics;
- the price of your consultancy is considerably high to the point that your client feels obliged to have a return for every penny invested;
- you use cutting-edge tools and know how to take advantage of them;
- does research and treatment of information following a methodology;
- extract and interpret data reliably and with quality.
Strategy without data is very risky. I met only one person in my life who could think strategically without being presented with data. Fortunately, I had the opportunity to work with this person for a while and it was revealing.
Now, if you sell strategy but are not too concerned with it, adopt an agile sales methodology (hehehe). In addition, create a legal title for your LinkedIn profile. Something like "Ninja of something" or "Guru of something".
Incredibly, a search for these “gourmet” positions reveals that we have so many smart people out there, able to use strategic thinking to improve the environment around them…
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The strategy is more alive than ever, we just need to know how to use it in our business.
The organizational culture must be tied to the strategic vision of the business. The integration between the teams (internal and external) creates a favorable scenario of strategic alignment in the organization.
The use of new methodologies and tools aims to facilitate the understanding of the strategic planning and tactics addressed.
It is important that all levels of the organization have a holistic view of the strategy so that they can contribute meaningfully and actively.
And in your company? Are they paying due attention to strategy? Tell me, what are the difficulties you encounter to implement strategic thinking in your company?
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