The 5 Most Common Mistakes Leaders Make When Crafting a Business Strategy
Creating a simple yet effective business strategy is hard. Here are the pitfalls to avoid.
As a strategic coach, I've run many dozens of strategy sessions with businesses of all types and sizes. From early-stage startups who just closed their first round of financing to growth companies with hundreds of millions in financing and poised to go public. And while you would think that raising millions of dollars means you have your act together, most often, these companies don't.
The fact is that creating a solid and effective strategic planning process is exceptionally difficult, and few companies really get it right. Here are the top five mistakes I see companies regularly make when developing and implementing strategy.
If you find yourself making one or more of these, you're probably struggling to get clear consistent results in your business. Look to see which ones you might be making and learn how to fix them so you can drive better results faster.
1. Lack of a clear framework
A good strategic planning system includes a base framework that captures and connects strategy data and insights to key decisions and action plans. A strategy without a clear implementation plan is a dream, and an implementation plan without a clear strategy is a task list. Each component of your strategy planning system should feed the next component to allow you to trace key actions and decisions to insights around market opportunities.
I like to start with the big picture of why the business even exists and its core values, then drive towards a clear definition of your target market and analysis of your competitive landscape. From here, we can find areas for strategic differentiation and then create an operational model and roadmap for implementation. All of these will drive quarterly planning and accountability for the senior leadership team.
2. No meeting rhythms
Too many times, I've seen senior teams spend several days discussing and developing a strategy for the coming quarters and years, only to leave the meetings and get overwhelmed and wrapped up in the day-to-day running of the business. The best strategic ideas are worthless if they never get implemented.
The best companies have a clear set of meetings and dedicated time to work on and implement a strategy. Annually, they think big picture and plan out the next three to five years of key milestones. Quarterly, they update and evolve their plan and define their key objectives and drive accountability for completion. Monthly, they review and update their plans and respond to any new shifts in the market. And finally, weekly, they review progress, catch obstacles, and keep each other on track for the quarter.
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3. Involving the wrong people
Teams get this wrong on both ends. Some teams involve too many people and gum up the process with too much discussion and too many points of view. Other teams don't involve enough people and miss key insights, failing to get proper buy-in from key business leaders.
Generally, I suggest thinking about two types of people to include. First are people who have unique insights, data, and understanding of the business and the market and who are needed to properly assess the opportunities and make key decisions. Second, are people with power and influence who need to truly buy into the outcomes and decisions developed in the process.
4. Too many priorities
A good strategy is basically a series of complex but important decisions which define the handful of things a company is going to focus on in order to be unique in its market. A good strategy also includes a bunch of decisions about what a company is NOT going to do.
Often I see teams trying to be everything to everyone. They prioritize everything and thereby prioritize nothing, watering down their position in the market and making it impossible for buyers to see any uniqueness in their products or services. This puts the company in a position to be a commodity and forces it to compete on prices, which is a painful place to be, especially for growth companies.
5. Missing action plan
Finally, a plan is worthless if you're not going to implement it in the business. So many strategic planning sessions result in a binder of documents that just sits on the shelf for the rest of the year. In order to avoid this fate, make sure your strategic plan gets translated into a set of operational priorities and a roadmap of key milestones that set clear objectives on a quarterly basis. Then use these when doing your quarterly planning and priorities.
Strategy is tough. But there are ways of making it easier and more effective. A good strategy guides priorities and decision-making at all levels of the organization. If yours isn't doing that, take a step back and make some changes before investing any more time or money in your planning.
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