Strategy is about positioning

Many people have some misconceptions about strategy. They either define it too broadly, “We just do what’s right.” Or they give you a sequence of tactics, “We’ll hire these people, then grow this part of our business, then we’ll launch a new product.”

Strategy is about positioning. Strategic moves put a company or person into a better position to handle future events- manage a risk, seize and opportunity, fend off a competitor etc. Strategy is a way to create good luck. Here are some ideas:

  • We are building multiple sales channels to diversify our revenue streams.
  • We built a strong leadership pipeline to reduce recruiting and transition costs and make more successful business leaders.
  • We’re a technology-first company; staying on the cutting edge reduces competition and keeps margins high.
  • We focus on growing wallet share with existing customers to reduce our cost of sales.
  • We recruit out of college then train, so we can keep costs low, while controlling customer experience.

The Pillars of Strategy

Michael Porter calls trade-offs the “pillars of strategy”. For Porter, a strategy is defined by what you choose not to do. A company that says yes to everything doesn’t have a strategy. Which customers / sales / suppliers did you turn down last year because they don’t fit your strategy and pull you out of position?

  • The wrong customer can be tactically profitable, but be a strategic failure if they dilute your industry focus or pull you into the wrong market.
  • The wrong hire can meet a tactical objective of serving a critical client, while unbalancing a team
  • The wrong product can be immediately successful with a few clients, but can broaden a product line to the point that it’s too expensive to support.

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