I recently read an article by strategy consultant and writer Ken Favaro which nicely explained how to best think about strategy in today’s business environment. “Many business leaders subscribe to the classic definition of strategy as a set of actions designed to achieve an overall aim,” wrote Favaro in The Trouble with Putting Goals Ahead of Strategy, published in strategy+business in 2015. “In other words, they believe strategy starts with a goal. But for companies that have implemented winning strategies, that’s not how it typically happens.”
Goals and strategies serve very different purposes. Goals, visions and missions are important to paint an exciting picture of the future around which everyone can rally, as well as to help set the general direction of a company. But being too high level, goals by themselves don’t give you much guidance on how to get things done and what key decisions must be made and prioritized. “[G]oals tell you very little about the fundamental choices you should make around creating customer and company value. Such choices are the very essence of your strategy.”
Most winning strategies start with an idea for an innovative new product, service or business model, followed by a plan to bring the idea to market. Only then should come a big, bold goal, as a way “to crystalize an ambition, motivate the troops, and excite investors. Unfortunately, strategic planning in most companies gets this sequence exactly reversed - and when that happens, bad strategies result.”
I totally agree with Favaro, based on my personal experiences leading emerging technology initiatives at IBM, including parallel supercomputing, the Internet, and Linux. Let me share some of what I learned when working on IBM’s Internet strategy.