Mark Faust: Three Pillars of Good Strategy
The phrase “strategic planning” is an oxymoron, and people who use the term and claim to be experts are business management morons. Strategy is a cool word. We all love to say it, but it has become trite and cliché, and it’s improperly used. The bottom line is strategy involves decisions that determine an organization’s nature and direction.
Good strategy consists of three pillars: vision, focus and divergence. I define strategy as formulating, communicating and refining a vision and determining what would be the optimal angle, focus and primary source of leverage that will ideally create or lead to divergence and defensible points of advantage for an organization.
Strategy begins with vision, and as the leadership for your organization, you work backward from that vision, not toward it. So your first step toward developing an effective strategy is to aim toward building a powerful, inspiring and dynamic vision. Note the word “aim.” I’ve helped to build hundreds of visions, and more often than not, owners feel their visions are not good enough. Yet in the communication of those not-quite-ready visions, great things occurred. For example, companies tripled in size or became “Best Places to Work.” Re-read my definition of strategy, and you’ll see the word “refining.” Strategy is a process, not an event. It’s a dance, not a sculpture.
The next set of decisions center on how your organization will intensify its focus and, thus, direct the angle from which you aim your limited resources in order to multiply their power. Your people, capital and time will get more leverage when you direct your limited resources in distinctive ways toward well-chosen markets. This becomes much easier when you have determined what I call your organization’s primary source of leverage (PSL). The PSL is that one area where you have the most impact compared with the competitive alternatives. Your decision on that one area is critical to an effective strategy.
What amplifies good strategy into great strategy is innovative divergence. Continuously refining your approach to the market, your offerings and even your culture (internal customers) will differentiate you from alternatives in more and more powerful ways. This process of strategic thinking is where innovation and strategy become two “sides” of the one-sided Mobius loop, and when accentuated with what I call the third high-growth lever—culture—they become three synergized aspects of the one-sided high-growth levers Mobius loop.
Few companies continuously refine their strategy, so it actually becomes quite powerful for any organization, of any size, to systematically revisit and refine its strategy with the process of innovation infused into the approach.
If the same expectations and objectives put toward R&D in innovating product are put toward strategy, then transformative breakthroughs and turnarounds should be expected. That is the power of a turnaround mindset, the three pillars of strategy and strategy as a process.