Keeping Strategy Fresh

The last 100 years of business have brought the world together in new and exciting ways. Trade and market expansion has allowed integrations the world had previously never imagined. Groundbreaking technological innovations have completely transformed industries and our daily lives.

Anyone who has worked in strategy knows it's like living life in an earthquake. You have no idea what portion of the ground will fall out from under you, and you have no idea what part of the roof is going to fall on your head. Refining yesterday's work is like trying to polish a stone during an earthquake. Sure, that one stone might get shiny, but it won't help you dodge the cracks in the pavement. When we zero in on fine-tuning our current game plan, we blindfold ourselves to fresh opportunities brewing in the chaos.

In 2013, Apple could have bought Tesla, Microsoft (and Yahoo!) had an opportunity to buy Google, and Blockbuster could have bought Netflix. These are classic examples of corporate governance boards and strategy executives who were so focused on a stale strategy that they failed to see their own horizons.

If, for one, we remember that strategy is more art than science, we remember that there are no guarantees. Part of the reason we're all a bit nearsighted about new strategies is that we mix them up with plans. A plan is like that optimistic friend who says, "Follow this recipe exactly, and your soufflé will rise." Spoiler alert: it probably won't. But a strategy? That's more like a daring adventure: "Hey, this could be a total flop." It's not just about a destination; it's about crafting the right conditions for the most compelling options.

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It All Starts With Interesting Questions

What turns a project or a new market into a full-blown industry? The right blend of convenience and efficiency. Convenience is like that friend who always brings the right snacks to a party, showing up just in time with exactly what you didn't know you needed. Efficiency is finding a way to get the chips and dip without breaking the bank — or your spirit.

Leaders' design questions set them apart. Questions like "Where are we now?" "What are our core strengths?" and "Where do we want to be?" are great places to start. Deceptively simple but critical to understanding the difference between leading through strategic change and managing.

Roger Martin, one of the most famous authors and leaders of business strategy in the last 50 years, would tell us that strategy, after all, is a series of interrelated design questions organized in such a way that, when answered, compels the desired customer behavior.

Choose Your Customer Wisely

Research shows that firms that align their organizational design with a distinct "affinity" group outperform firms that organize on some other preference. Research conducted by Deloitte and Touche has shown that customer-centric companies are 60% more profitable than those that do not prioritize customer focus.

Customers who feel connected to a brand spend more over their lifetime. Their lifetime value is substantially higher, which contributes to greater profitability. Many customers are willing to pay a premium for a great customer experience. One of my favorite Seth Godin quotes: choose your customer, choose your future.

Craft Your Team — Carefully

The most essential part of any organization is the people. Having the right people in the room is crucial for developing an effective strategy because it ensures that diverse perspectives and expertise are considered. Including individuals who understand the organization's goals and can think holistically about business decisions is essential for creating a robust strategy.

Today, every company will sing you a song about talent management. They often look at it from a hiring perspective because it solves emergent needs. Still, they often fail to realize that talent management is the key to long-term succession planning and innovation.

Baby Steps

Every big company and change management initiative had its wobbly baby steps. During his time on Wall Street doing financial research, Jeff Bezos discovered two fascinating data points. First, internet usage was growing at 2300% each year. Second, he made a list of 20 different products to see what he should sell, and he discovered that at any given time, there were over 200,000 books that could be sold.

Based on this tiny, baby discovery step, Bezos started Cadabra, Inc. (the original name of Amazon.com), based on the simple idea of reselling products. We know how Amazon fared after examining a couple of critical data points and taking some very small steps when trying something new.

Don't Be Afraid to Take a Hit on Efficiency

Doing something new is not efficient. Doing design work, pre- and prototyping, and trying and failing is inefficient. It will cause your superstars to look like duds. Your top managers may appear incompetent, and you may question why you assembled specific teams.

I've worked in aviation for 26 years. It is a compliance-based industry, but innovation is not. Even flexible, ambidextrous strategies — those that allow high degrees of both innovation and efficiency — can allow firms to optimize toward both. However, they will still suffer a performance reduction in efficiency. Innovation always has a cost — and it is never zero.

Doing strategy work is intellectually brutal. It requires navigating complex and often uncertain environments. Leaders must consider numerous variables, including market trends, competitive dynamics, and internal capabilities. Strategy requires making tough choices and trade-offs. As Michael Porter has said, effective strategy involves deciding what not to do.

But what is useful in my very light critique of Seth Godin's work is this: strategy is not for the ill-prepared. It requires a repeatable (and always fresh), defensible position around a multi-disciplined, cross-sectional approach to an organization's values based on its customers' needs. And if you think doing this work is simple, you don't understand it well enough.