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.

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