All successful companies outperform their rivals with the difference they are able to preserve. A good company strategy enables that. A good strategy is about consciously choosing a particular set of activities to deliver a unique set of value to the customers.
CEOs have invested a ton of time and effort in building strategies that will help companies survive and stay competitive in the market in the long-run. But there are some common pitfalls that they might make, when developing or iterating a strategy for their company.
Though there is no straightforward list of things that the CEOs might miss when developing strategy, here’s a list that we think will get in their way.
Pitfalls when developing great strategies#
1. Not thinking about working towards the future#
Many companies try to extrapolate their strategy to work in the short-term. This calls in for a strategy iteration too often that it could turn toxic for an organization. Allowing the company to think about the longer vision, and how to drive towards that vision is crucial for a successful strategy. Jeff Bezos usually thinks about Amazon in the next 10 years.
2. Not iterating management routines enough#
Everyone feels a sense of comfort when there is no change. Writing the managerial routines based on the right strategy, could mean everything for the company. Managers tend to get back on the cycle and end up with satisfactory underperformance, before they could realize. Over time, this could be a practice and a norm in the company, slowing the company’s growth, thus failing the strategy.
3. Choosing the best owner vs having it with themselves#
Many times, businesses tend to gain so much by outsourcing. Knowing what you are best at owing, and what you are not as a business is one of the crucial leadership qualities. This is one of the reason why we see a lot of new CEOs cutting down a ton of initiatives and projects as soon as they take up the new role. Some CEOs tend to stick to holding on to their business too much. Leaving a huge gap in developing a good strategy. You need someone to pull you out, and help arrive at a clearer vision on what the company is good at.
4. The uncertainty blindspot#
Uncertainties are unavoidable. But accounting for them is important when developing a strategy. Strategies have to be developed to be built around these uncertainties. Running a brainstorming session before developing a strategy, to account as many uncertainties as possible is crucial as a leader.
Harvard’s Professor, Michael Porter has a famous saying about strategy:
Strategy is not Operational Effectiveness.
Good strategy is about focusing on the couple of things:
- Building something new
- Identifying new possibilities
- Doubling down on what you are already good at
Developing a strategy doesn’t have to be a daunting task. It can be an intellectually challenging experience that leaders can enjoy, which could bring out all of their experience in one single place. Want to know what to build next for your company to stay on the competitive edge? Talk to us.