While it is extremely difficult to create a great strategy that generates sustainable competitive advantage, it is not very hard to craft a flawed strategy. It is more difficult now than ever to build a great business. As A.G. Lafley and Roger Martin write in Playing to Win the new normal is volatile, uncertain, complex and ambiguous. Given this environment, having a sound strategy is critical. I plan on writing next month on the key elements of a sound strategy but more pressing is analyzing your existing strategy to see if it is flawed. In Playing to Win, the authors point out the six most common strategy traps.
- The do-it-all strategy. Companies fall into this trap when they fail to make choices, instead they consider all initiatives as priorities. While this is sometimes a problem for struggling companies who feel they do not have the luxury to reject any initiatives, it is actually a greater problem for companies that have multiple great opportunities. It is harder to say no to a great opportunity than focus on the least of all evils. But if you do not focus, you are not likely to make the most of any of your opportunities and build sustainable competitive advantage. Lafley and Martin point out that strategy is always a choice, so you should not abdicate this decision.
- The Don Quixote strategy. With this trap, you attack competitive “walled cities,” taking on your strongest competitors first. Given that your competitors are also smart and trying to build sustainable competitive advantage, your chances for success are minimized if you are focusing on fighting the strongest. Part of strategy is deciding who to compete against.
- The Waterloo strategy. Much like the do-it-all strategy, this trap entails starting wars on multiple fronts with multiple competitors at the same time. No company can do everything well, and trying to compete on so many fronts will leave you weaker everywhere.
- The something for everyone strategy. In this trap, you try to capture all consumer or channel or geographic or category segments simultaneously. The problem is, to create real value for your customers, you need to know them intimately and not worry about the others.
- The dreams-that-never-come-true strategy. With this approach, you create high-level aspirations and mission statements that never get translated into concrete where to compete and how to compete choices, core capabilities or management systems. The authors point out that with this trap aspirations are not strategy.
- The program-of-the-month strategy. This is another trap I have seen all too often. With this trap, a company chooses generic industry strategies, in which all competitors are chasing the same customers, geographies and segments the same way. It is a classic red ocean approach, and you have little chance of doing better than everyone else (despite how smart you think you are). The more your choices look like those of your competitor, the less likely you are to win. Continue reading “Is your strategy unsound?”