So why is it difficult for a company to decide on its objectives?It is not, I assert, because business leaders are lazy, or stupid. I truly hope this is a true statement.I propose that it is difficult to settle on firm objectives because of the infinite possibilities that present themselves for any given situation.Let’s take our example from my last entry….Hypothetically, we are developing a strategy for a software company that is established in a relatively mature market; i.e the desktop application market. For illustration purposes, they are the number three provider of their class/type of software. They have 20% market-share. The leader in the category has 50% share. The second largest provider commands a 30% share.So, what constitutes victory?
Is it increasing market share above 25%?
Is it attaining the number two position in the market place?
Is it attaining the number one position in the market?
Is it establishing a monopoly in the market?
We could continue listing options, but the fact that four come immediately to mind should suffice.So which should we pick? I’ll give you a hint; what we pick doesn’t matter. Yet.
First, we have to understand what our opponents can do, and what we think the are going to do. In military parlance, we must understand their capabilities and intentions. Once we determine that, we can pick the most appropriate definition of victory.And once we define victory, we can begin building a strategy to achieve it.
Now, from my prior post, it may appear that I don’t find anything useful regarding strategy development on the web.That’s not true. At least not totally true.I think there are some corner’s of the net that have very interesting work and links. Of course, context is required.Before we dive into game theory and its relationship to strategy, let’s make sure we are all operating in the same context.Firstly, strategy assumes you are in conflict with another entity. This could be organized conflict, such as war or a direct competitive endeavor. It could be more general conflict such as fighting market trends. Regardless of the focus of the conflict, it is this opposing entity that you are developing stratagems against.Secondly, strategy implies, that you are concerned about an overall plan, not a single tactic to achieve victory. “Shoot first” is not a strategy for winning a war or battle or even a gun fight. The plans and activities that ensure you will take the first effective shot in the fight would constitute a strategy.Thirdly, you know what victory looks like. It is impossible to plan if you don’t know what the overall aim or objective is. In the military, it might be the defeat of the opponent. But it might also be creating a state in which the opponent can no longer inflict material damage against your forces. Or it might be inflicting sufficient casualties on the enemy that they cannot entertain battle for the next generation. Knowing what the ultimate objective is, in detail, is critical. So let’s apply this thinking to a business.Hypothetically, we are developing a strategy for a software company that is established in a relatively mature market; i.e the desktop application market. For illustration purposes, they are the number three provider of their class/type of software. They have 20% market-share. The leader in the category has 50% share. The second largest provider commands a 30% share.So, what constitutes victory?
- Is it increasing market share above 25%?
- Is it attaining the number two position in the market place?
- Is it attaining the number one position in the market?
- Is it establishing a monopoly in the market?
Deciding what the desired outcome is, is the first step in developing a strategy. Unfortunately, for many companies, it is not so simple.
It’s amazing what a quick Google Search of business strategy turns up. Where are the deep thoughts and exchange of ideas that the internet is supposed to foster? Behind a login prompt and request for payment, mostly.
But developing strategy is not rocket science.Is it difficult? Yes. But only because it requires hard thinking (which we typically don’t want to do).What makes it hard? The fact that the devil is in the details. Creating and executing effective strategies cannot be done with superficial analysis or argument by analogy. It requires real honest-to-god heavy lifting to be effective.And maybe that is why people want to charge for advice and services on strategy development.Maybe it’s just because they don’t want people to truly understand.Over the next few posts, I’d like to collect may thoughts on strategy.Let’s start with the fundamentals. From my trusty Mac’s dictionary:strategy |ˈstratəjē| noun ( pl. -gies)• a plan of action or policy designed to achieve a major or overall aim : time to develop a coherent economic strategy | shifts in marketing strategy.• the art of planning and directing overall military operations and movements in a war or battle. Often contrasted with tactics (see tactic ).• a plan for such military operations and movements : nonprovocative defense strategies.ORIGIN early 19th cent.: from French stratégie, from Greek stratēgia ‘generalship,’ from stratēgos (see stratagem ).“To achieve an major or overall aim”– this is an important concept. If you can’t state what your objective is, you don’t have a strategy to achieve it. How often have you been in a business setting and asked yourself “why are we doing this?” It might just be because you don’t know what your true aim or objective is.