Over breakfast this week, a small group of business leaders got together to share their challenges, ideas, and insights about finding growth amid really tough competition. Over the coming weeks I’ll share some of those insights, but for me, one of the most powerful lessons was this: strategy is the opposite of planning, and that distinction is fundamental to breaking out of the competitive spiral.
I’ll give you an example. One of the CEOs at the breakfast discussed her plan to “cut off the tail” of her business. Disposing of the loss-making parts will lose her sales but step-change profitability. We all agreed that it’s a great plan, and it needs to happen, but on its own it’s not a strategy; the market shifts and competitive pressures that made them unprofitable won’t stop just because the worst ones are gone.
In contrast, another of those present described how, four years ago he was in a restaurant with a colleague wrestling over what to do about the crashing margins and the increasingly competitive “slug-fest” that was happening in his market. They talked about what customers really wanted, where the market was letting them down, how their businesses needed to work, and what a completely different approach might look like. At the end of the meal, he drew their idea on a napkin.
Four years, and a whole load of twists and turns and sweat and tears later, they’ve got their idea to market and it looks like their biggest single customer is about to sign up. For them, the strategy was about creating something fundamentally different, which meant reinventing their whole operation. Over time it looks like they will transform their relationships and make a big chunk of their competition obsolete.
Planning is building from where you are today. Strategy starts by imagining where you could be in the future, and what it might take for you to get there. Planning can help you deal with the competition, but only strategy can hope to make them irrelevant.
Bottom Line: If your strategy process revolves around questions like “where should we invest?”, “where can we grow?” and “where should we exit?” it isn’t a strategy process – you’re in planning mode.
If your conversation starts with “what could be transformational for our customers?” and “what would need to be true for us to do it?” then you’re in with a shot at changing the game.