7 Common Strategy Mistakes

Very few peo­ple real­ly under­stand and are good at strategy.

They con­fuse it with things like exe­cu­tion or mar­ket­ing or set­ting goals.

That’s why we rec­om­mend the Illus­trat­ed Guide to Michael Porter writ­ten by Joan Magret­ta (con­ceived by Hen­rik Zim­mer­mann and illus­trat­ed by Emile Holme­wood). This is a pow­er­ful tool any­one can use as a fil­ter to eval­u­ate their own strat­e­gy and to help avoid crit­i­cal strat­e­gy mistakes.

Porter, a pro­fes­sor at Har­vard Busi­ness School and author of 19 books, is one of the world’s most influ­en­tial thinkers on man­age­ment and competitiveness.

Accord­ing to Porter, these are the sev­en most com­mon strat­e­gy mis­takes peo­ple make:

1. Com­pet­ing to be the best

You don’t want to be just a bet­ter ver­sion of what some­one else is doing. Your job is to build a unique and valu­able posi­tion in the mar­ket in a way your cus­tomer cares about. Think Tesla.

2. Sub­sti­tut­ing exe­cu­tion for strategy

Of course, you need great exe­cu­tion to make a prof­it, but if you only look through an exe­cu­tion lens, you’ll lose your strate­gic advantage.

“Exe­cu­tion is doing what we already do better.

Strat­e­gy is doing bet­ter or dif­fer­ent things in the eyes of the customer.”

3. Con­fus­ing mar­ket­ing with strategy

Mar­ket­ing is crit­i­cal, to find a way to bet­ter tell a sto­ry and match it with the needs of your cus­tomers. But it doesn’t con­sid­er the tai­lored val­ue chain, or the inputs, or how to alter the inputs to pro­vide dif­fer­ence with­in the mar­ket. And while brand is impor­tant, it’s not every­thing. Strat­e­gy always comes first.

4. Chas­ing the wrong goals

The right strat­e­gy isn’t chas­ing the lat­est fad or your com­peti­tors. The job of a busi­ness and the num­ber one mea­sure of a CEO is return on cap­i­tal. Being crys­tal clear on the stuff that mat­ters most requires a lot of debate and analy­sis – and it can take time.

5. Over­es­ti­mat­ing your strengths

What are your core com­pe­ten­cies? Hint: It’s not your name, how long you’ve been in the mar­ket or your CRM. A real strength is some­thing your com­pa­ny can do bet­ter than any of your rivals.

You must have dif­fer­en­ti­a­tion to be sus­tain­able, to be more appeal­ing to cus­tomers and make it eas­i­er for sales­peo­ple to sell.

6. Get­ting the def­i­n­i­tion of the busi­ness wrong

Have you been look­ing at your busi­ness gener­i­cal­ly, or have you real­ly zoomed in? Some­times, you’re not doing what you think you are doing, and you miss the busi­ness you are real­ly in.

Porter’s Five Forces is a great tool to real­ly under­stand and break­down the dif­fer­ent indus­try forces act­ing on your busi­ness. Your strengths, activ­i­ties, core cus­tomers and prof­it can change remark­ably when you get this right.

7. Get­ting the geo­graph­ic scope wrong

Exact­ly where are the edges of your sand­box in which you’re going to play?

Whether glob­al, nation­al or local, every mar­ket has a dif­fer­ent scope, cus­tomer and val­ue chain. And peo­ple can get into trou­ble when they think that expand­ing into anoth­er mar­ket is an exten­sion of what they are already doing. As well as mar­ket dif­fer­ences, you’ll cross the bound­ary of where your com­pet­i­tive advan­tage stops and you have to be pre­pared to build it differently.

Often, start­ing a sim­ple expan­sion is like start­ing a brand new business.

The Chal­lenge

Of the strate­gic areas high­light­ed above:

• Which are you excel­lent at?
• Which would help you improve strat­e­gy and com­pet­i­tive­ness the most if you mas­tered them?

For more about com­mon strat­e­gy mis­takes, lis­ten to Episode 84 of The Growth Whisperers.

Lawrence & Co’s work focus­es on sus­tain­able and enhanced growth for you and your busi­ness. Our diverse and expe­ri­enced group of advi­sors can help your lead­ers and exec­u­tive teams stay com­pet­i­tive through the use of var­i­ous learn­ing tools includ­ing work­shops, webi­na­rs, exec­u­tive retreats, or one-to-one coaching.

We help high-achiev­ing lead­ers to have it all – a great busi­ness and a reward­ing life. Con­tact us for sim­ple and impact­ful advice. No BS. No fluff.