Bad Strategy is easy. What kind of strategy do you have?

When we talk about companies we admire, most of them have good strategies. Their strategies have worked for years, as they are focused, clear, and consistent. What changes is how they deliver on them.

Southwest Airlines: The Low Fare–yes, today their ticket prices may be higher in some markets but don’t forget to throw in the cost of baggage ($0), faster redemption for free flights and no change fees. According to Jim Collins, author of Good to Great, no US company has returned more value to stockholders over the last 30 years than Southwest Airlines.

Zappos: Socially Conscious–they do the right thing for the world, and they do pretty well by us too, offering great selection and reasonable prices and terrific customer service.

Chick-fil-A: Christian values–a fast food place closed on Sundays? Yes, and the industry leader in performance. Chick-fil-A received Restaurant & Institutions magazine’s “Choice in Chains” award for the 16th time in 16 years, as well as topping QSR magazine’s 2009 Best Drive Thru in America survey for the sixth time in the 12-year history of the study.

Good strategy is simple, concrete and almost timeless. Many of us don’t really have good strategy. We succumb to uncertainty or conflicting opinions and come up with a complicated compromise, or short term objectives which are little more than annual goals.

How do you know if you have a bad strategy?

  1. Do you have on rose colored glasses? It is human nature to think we are better than we are. We like ourselves–and we should. However, most of the time, when we evaluate our company’s products or our own performance we give higher marks than an objective party would. If the customer isn’t buying we think they don’t understand, not that they are rejecting our very prized new offer. Good strategy doesn’t happen when we are not objective about the current strengths and challenges facing our company.
  2. Are you confusing operational improvement for strategy? I have been asked several times to help companies update their strategies and discovered that meant to help them identify new objectives for the following year. That is an important step to do–to identify the next steps that will get you closer to achieving the strategic vision. However, when it is done in the absense of a guiding strategy, it is “bad strategy”. At that point it is an eclectic collection of activities and it has been documented that only one in four growth initiatives generates a return in the absence of strategy.
  3. Do you have a kitchen sink strategy? A strategy is a choice. If you pick one choice, by default, you eliminate the other. Some companies just can’t pick one. They want or need to be more They call it a hybrid. We call it bad strategy. Doing too much with too few resources for too many people is almost a guarantee of underperformance.
  4. Is your strategy a financial goal? If the strategy is to be the biggest or to grow to a certain size and the rest of the discussion is how to get there with a list of initiatives, we are guilty of problems #2 and 3 above. In other words, any idea will get you there. How do you decide where to invest? It is good business to have a financial goal but it needs to be supported by sound strategy to create a plan to achieve it. 

An example of bad strategy? Most government organizations today are not using basic business principles or innovative approaches to solve the many problems that face us. Our education system is failing us. Our post office has fallen behind.

Good strategy is not easy, but good strategy is worth it. Just ask Southwest Airlines.  For more information on how to create good strategy, check out our CEO interviews on our website  and the CEO videos on our membership site. If you need an objective assessment of your strategy let us know!

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