The Strategy Book: strategy is about shaping the future and other useful tips

Do you have any interest in strategy, strategic thinking, strategy making? Have you wondered what strategy is, what it involves, how to go about it? Do you consider yourself a rational/analytical person? If you have answered yes then you might just want to consider reading The Strategy Book by Max McKeown. In this post I want simply to share some of what I found interesting/useful.

What is strategy about and why is it so important?

“Strategy is about shaping the future…… Your strategy will craft a response to external waves, needs of customers and the actions of competitors.”

That pretty much says it all. The future is not simply a continuation of the past. We, collectively, co-create the future and that means that the future is open to being shaped. Most important those that shape the future are the ones that are most likely to prosper from how the future turns out. Furthermore, the essence of the world is flow/change – that is to say that the world is dynamic and as such the external environment, customers and competitors will present your organisation with opportunities and threats.

If you are not open to detecting and responding to these then you are likely to find yourself in the same space as RIM or Nokia. And RIM and Nokia are the living embodiments of what happens when you focus solely on operational excellence – doing the existing things better/faster/smarter. No execution is not enough for a business to flourish: execution is necessary yet not sufficient, strategy is required.

What does strategy require/involve?

“Strategy is about outthinking your competition. Its about vision first and planing second. That’s why it is so important that you think before you plan. And that the thinking part of what you do is given priority….Thinking like a strategist is demanding intellectual work…”

I qualified as a chartered accountant many years ago and was heavily involved in business planning and analysis. Which is another way of saying that I have hands on experience in strategic planning. What did I experience? Lots of planning and a dearth of the kind of thinking that can be called strategic. It occurs to me that most of the organisations that I have worked in/consulted for do not create a clearing for strategic thinking to show up / take place.

Yet, I am not in complete agreement with Max. Kenichi Ohmae, a strategist, pointed out a long time ago that too many companies focus too much on their competitors and not enough on customers – in particular creating superior value for customers and potential customers. Interestingly, Max is aware of this because he mentions it later in the book.

Central to strategy is thinking like a strategist: what does this involve?

“Becoming a strategic thinker is about opening your mind to possibilities. It’s about seeing the bigger picture. It’s about understanding the various parts of your business, taking them apart, and then putting them back together again in a more powerful way. It’s about insight, invention, emotion and imagination focused on reshaping some part of the world.”

Now you know why great strategy is rare. Great strategy requires strategists with a sound understanding of the business along with a combination of competencies that are rare in one individual: imagination and creative thinking; systems (holistic) thinking; and critical/analytical thinking. Which kind of suggests to me that perhaps it is better to ‘play the strategy game’ as a team, preferably the entire organisation, rather than leave it to one or two individuals.

Thinking like a strategist: 4 tips

In part two (thinking like a strategist) of The Strategy Book, Max gives four tips.

Reacting is as important as planning

“Unplanned opportunities may be your best chance of creating a great strategy, so you need to be constantly looking for them…… the greatest opportunities come from unplanned events.”

Ingvar Kamprad, IKEA founder, lived near furniture makers so he started selling furniture. He reacted to a boycott from local rivals by making his own furniture. He reacted to excessive customer demand by coming up with self-service. Then there is the ‘Honda Effect’ – Honda made a successful entry into the US market despite the original strategy being a failure. This approach to strategy is in line with Mintzberg’s view on how strategy comes about in the real world.

Taking risks

“All decisions are about the future. Since the future is uncertain, all of your decisions will have an uncertain outcome. But because you’re trying to shape the future you still have to make decisions…..”

The point is that risk is inherent in strategy making and the course of action (strategy) that is chosen to be implemented. One source of risk is that we have finite minds seeking to grasp/comprehend an infinite world. Another source of risk is simply the ‘butterfly effect’ a tiny change, changes everything and renders our strategy ineffective. Then there is the risk of choosing a strategy that the organisation is simply not fit to implement….. Then there is the risk of doing nothing.

Risk cannot be avoided the challenge for the strategist is to know what risks are involved and have a correct grasp of these risks: how likely is it that the risk will turn into actuality and what is the most likely impact. With this understanding sensible choices can be made.

Looking over your shoulder

“Strategies compete with strategies…….. You need to be aware of the competition is doing. You need to know what customers are doing. Paranoid adaptation is part of the strategy game. Look up, down, back and ahead.”

I believe that Andy Grove said it best with his book Only The Paranoid Survive. Or as I told one of my clients, the bomb is ticking the only question is when it will explode and your business will be blown out of the water.

Knowing where grass (really) is greener

“It’s a fair bet that at some point what made your company money in the past will stop making money. New products replace old products, Entirely new services replace old services. The best places to sell your products will change. And customers who mattered so much will stop (or start) buying. You need to know when (and how) to switch focus.”

The key point is that one has to be constantly open to and looking for new markets. Are there customers who are not buying your products yet would love to buy your products? What can you do about that? Are there segments of the market that are growing faster than others? Are there new entrants to the market? Clayton Christensen says be wary of the new entrants that you are most likely to ignore – those that make inferior versions of your products and who sell them cheaper to a segment you are happy to walk away from. Remember Toyota and the crappy cars it made/sold and eventually it went on to compete with Mercedes in the luxury market!

And finally

If you would like a free copy of The Strategy Book then drop me an email. The first person to email me will receive the book.

LingsCars.com: doing great by daring to be different / breaking the rules

The heart of strategic thinking is difference, few choose to be different

The heart of strategic thinking is difference.  In order for you to act strategically you have to have a particular foundation in place.  What is this foundation?  It is an existential quality you cannot buy it, yet you can choose to be it.  Be what? Be courageous: the willingness to leave the herd, create/follow your own path, be ok with the fear/uncertainty/doubt and criticism.

Few, in big business, choose courage over security.  Which is why for all the talk of innovation, innovation is rare, an exception, in big business.  Having given into and being gripped by the need for security, the Tops and Middles, in big business, love ‘proven’ formulas pushed by brand name gurus and consultancies.  The interesting thing about formulas is that they are available to everyone and if they catch fire they make you/your business the same as every other business.  That is the very opposite of what strategic thinking and innovation is about.

Meet Ling Valentine who is different and built a successful business on this difference

Ling Valentine has built a successful online business (LingsCars.com) by daring to be different, breaking the rules.  You are confronted with that difference as soon as you hit her website.  In a world of blandness the LingsCars.com website oozes personality – Ling’s personality.  And as a visitor you either love this website or hate it.  Before you read further go and check out the LingsCars.com website.

You either liked it or hated it?   If you liked it then great because Ling’s focus is on ‘selling you a car’.  If you hated it then that is also great by Ling.  Ling doesn’t want you – you are boring – she wants people with a personality who are going to be a good fit with Ling and the way that she does business.  How is this working out?  As she says on her website “You can trust me! ….. in 2010 I rented out over £35milion of cars (RRP)”.  It occurs to me that it is working out great.

What can we learn from Ling and LingCars.com?

Use the principle of ‘impute’ to attract the right people to you and drive the others away

One of the key lessons that Steve Jobs learned from Mike Markkula was that of ‘impute’.  It is clear that Ling is practicising ‘impute’ powerfully through the design of here homepage.  And thus narrowing down visitors to those that are a good fit for her business.  Put differently the design of the website is so bad that it is great at selecting the visitors who find this bad to be great!  Notice how the design conveys both Ling’s fun personality and comes across as ‘cheap’ thus living the promise of ‘cheap cars’.

Here is the bit that is really hard for big business: you have to turn away , filter out, the ‘wrong’ customers so that you can design and deliver the value proposition and customer experience that shows up as great, the best, for the ‘right’ customers – the ones that you are targeting. 

Focus on the one or two domains that matter – the difference that makes a difference

Did you notice Ling’s focus on LingsCars.com? Did it scream out at you?  Yes, it’s selling.  Ling is focussed on selling you a car. There are plenty of offers and sales messages on the home page.  Did you notice the livechat?  What you may not know is that Ling and her small team don’t necessarily wait for visitors to reach out to them, they reach out to customers and lead them through the buying process helping them to buy.

Now compare that with other websites.  The key question that most websites fail to answer well is this one: what is the fundamental purpose of this website?  As a result most websites end up being a ‘dog’s dinner’ of objectives and functionality – every powerful group in the business wants a say and real-estate on the website particularly the home page.

Educate customers and openly/effectively address the barriers (skepticism) to buying

As I spelled out in this post if people are hanging out at your website they clearly have a need and think you can help them with that need.  So you do not have to sell to them.  You have to help them to buy.  That means getting that people have to overcome concerns-worries-fear before they will purchase from you.

Leasing a car is a big deal and Ling understands this.  Importantly, she acts on this understanding – you’d be amazed at how many Tops/Middles fail to act as if insight is enough in itself.  LingsCars.comaddresses the worries-concerns about leasing a car head on.  How?  By being upfront about all the charges thus spelling out the total cost.  By explaining the charges – why they are there, what they cover.   In short, she addresses the skepticism through education and transparency.  Which builds trust – it occurs to me that she is practicing ‘Extreme Trust‘.  This is the opposite of what her competitors do.  Notice the difference:  Ling is not claiming to be different (marketing/PR) she is being different!

Want to learn more about Ling and LingCars?

Ling giving the keynote presentation at the Future of Digital Marketing 2012: