They have revenue targets, budgets, forecasts, project lists, and plans for the year ahead. These things may all be useful, but they do not explain the challenge the business must overcome or the choices it will make to win
Saying “we want to grow revenue by 20 percent” is a goal. Predicting that your market will grow over the next five years is a forecast. Creating a list of 30 improvement projects is a plan. None of those things is a strategy
A strategy explains what is standing between you and success, and the few important choices you will make to overcome it
I saw this frequently during my time in consulting. Leaders would spend days discussing markets, financial targets, and new initiatives, but sometimes avoid the most important question: What is the real challenge this business needs to solve?
Without a clear answer, it is easy to create an impressive plan aimed at the wrong problem
1. Start with the real challenge
Every useful strategy begins with a clear understanding of the obstacle standing in the business’s way. Perhaps the business is losing customers because its service has become difficult to differentiate. Maybe revenue is growing, but inefficient operations are causing margins to fall. The business may have a strong product but lack a reliable way to reach the right customers
Each of those businesses requires a different strategy because each faces a different challenge. If margins are falling because work is consistently underpriced, adding more salespeople will not solve the problem. If customers are leaving because delivery is unreliable, a new marketing campaign may simply attract more customers the business is not ready to serve
The actions may sound sensible on their own, but they are aimed at the wrong obstacle
“A strategy built around the wrong challenge can produce a very organized failure”
Defining the challenge forces you to look beneath the symptoms. Slow growth, falling profit, and customer complaints tell you that something is wrong, but they do not always tell you why
You may need to review the economics of your services, speak with customers, compare yourself with competitors, or examine how work moves through the business. The objective is to identify the critical obstacle that must be overcome for the business to create and capture more value
If you cannot clearly describe the challenge, you cannot judge whether your strategy is capable of solving it
2. Make a few important choices
“An integrated set of choices, made ahead of time and in the face of uncertainty, to create and capture economic surplus”
In simpler terms, strategy is a set of connected choices about how the business will overcome its challenge and create an advantage, even though the future is uncertain
The word choices is important. A strategy may require the business to focus on one customer group instead of another, invest in a specific capability, change how it delivers its service, or stop offering work that generates revenue but very little profit
These decisions can be uncomfortable because choosing one direction usually means giving up something else. This is one reason leaders often produce long lists of priorities. Adding another project feels easier than deciding which work no longer matters
The result is a strategy containing ten, twenty, or even thirty initiatives, all competing for the same people, money, and attention. Most of those initiatives are tactical. They may improve a process or solve an immediate problem, but they do not fundamentally change how the business competes or wins
“If your strategy does not require you to make a difficult choice, it probably is not a strategy yet”
A good strategy focuses attention on the few decisions that matter most. It gives the business a clear direction while leaving teams to make the tactical decisions required to support it
3. Separate strategy from tactics
Businesses need both strategy and tactics, but they serve different purposes. Strategy defines the major choices the business will make to overcome its challenge. Tactics are the specific actions taken to carry out those choices
For example, a professional-services business may discover that its main challenge is being treated like a commodity and competing mainly on price. Its strategy may be to focus on one industry, develop deeper expertise in a valuable problem, and position itself as a specialist rather than a general provider
Its tactics may include rewriting the website, developing industry-specific case studies, training the sales team, attending targeted conferences, and changing how proposals are written
The website, training, and conferences are not the strategy. They are actions that support it
“Strategy decides where you will focus. Tactics determine what you will do next”
This distinction matters because companies often confuse activity with progress. Teams complete projects, attend meetings, and launch initiatives without knowing whether those activities are helping the business overcome its central challenge
When the strategy is clear, tactical decisions become easier. People can judge whether a new project supports the direction or simply creates more work
4. Test whether the strategy helps you win
A strategy should produce an advantage. For a large public company, that may mean outperforming the market and creating stronger economic returns than competitors. For a smaller business, the evidence may be stronger margins, better customers, more repeat business, greater pricing power, or faster growth than comparable competitors
The exact measure will depend on the business, but the question remains the same:
Does this strategy give us a credible way to perform better than we would without it?
A strategy should pass four basic tests:
Does it address the real challenge
Does it make a small number of meaningful choices
Does it explain how the business will create an advantage
Can the business realistically carry it out
Choosing to become the market leader means very little without a clear view of why customers will choose you, what the business will do differently, and which capabilities will make that possible
The future will always contain uncertainty. Strategy does not remove that uncertainty. It allows the business to make thoughtful choices despite it
“Good strategy does not predict the future perfectly. It gives the business a better way to compete in an uncertain future”
Your goals tell you what you want to achieve. Your North Star describes where the business is going. Your strategy explains the challenge standing in the way and the choices you will make to overcome it
Once those choices are clear, the next challenge is turning them into action throughout the business. That is where strategy execution begins
Your Better by Monday action
Take 20 minutes and complete these three statements:
The most important challenge facing our business is [challenge]
To overcome it, we will focus on [two or three major choices]
These choices will help us win by [advantage or result]
Then review your current projects and ask whether they directly support those choices. If an activity does not address the challenge or support the strategy, question why the business is spending time on it
The goal is not to create a perfect strategy by Monday. It is to get clearer about the challenge your business actually needs to solve
What is the most important strategic challenge facing your business right now? Hit reply and let me know, I read every response
~Alex
Until next time …
One practical way to improve your business each week