One of the concepts I really like from the book “Playing to Win” by A.G. Lafley (Procter and Gamble CEO) and Roger Martin is their strategy “sniff test”.
I have found the sniff test to be a useful tool to quickly determine whether an organization understands what a “real strategy” is and whether or not they actually have a strategy that can be successful.
Here is my take on how to apply it to your business.
Step 1: Identify your Long-term (3 to 5 Year) Strategic Moves
As mentioned in the article, “Do you have a real strategy for long-term success?” strategy requires disciplined analysis and a deep understanding of how your industry is likely to play out in the coming years. Then you need to get very clear on the few, key strategic moves your company needs to make in order to position yourself for future success.
Strategy requires tradeoffs. You cannot be everything to everybody; you cannot just blindly copy the moves of your competitors and hope to win. You have to figure out what to say “YES” to, and what to say “NO” to. You make clear cut choices about how you will compete in the future, and then allocate your time and resources accordingly.
“Less is more” when it comes to strategy execution. I recommend that you whittle your wish list down to the 3 strategic moves that will have the greatest impact, and say “No” to everything else.
I’ve always liked this quote from Jeff Immelt, of General Electric:
“Every leader needs to clearly explain the top 3 things the company is working on. If you can’t then you’re not leading well”
Step 2: Apply the Sniff Test
Take a look at each strategic move in isolation, and ask yourself, “Could we do the exact opposite, and would that also be a valid strategy?”
If doing the opposite of your stated strategic move would be stupid or nonsensical, then it is not really a strategic move at all. It is simply a table stakes requirement for doing business in your industry. It is likely to be something that many of your competitors will also be doing.
Your strategic move should be something that will help you to establish a competitive advantage. A strategic move should help you to create a category or a niche in your industry where you can genuinely claim a position of leadership or a meaningful point of difference. A strategic move should make it very clear what are going to say “YES” to, and by association what you are saying “NO” to, and what you are NOT going to do.
This is where I seen many companies fail. Their stated strategies often include generic fluff like, “provide world-class customer service.” Well duh, really? So the opposite of that would be to provide crap customer service, and that would also be a valid strategy? I don’t think so. You haven’t actually made a strategic choice at all.
Take a look at your long-term strategic moves now, and give them the “sniff test”. I’m betting a few of you will realize there’s still quite a lot of work to be done.
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