No matter the size or sector of your business, you cannot ignore business strategy. While it may seem too “meta” or ambiguous in your day-to-day work, a comprehensive business strategy can accelerate you toward your business goals.
That being said, simply developing a business growth strategy isn’t enough. You must put in the work to develop a good business strategy.
A bad business strategy can take your business off-course and destroy value. On the other hand, a good business strategy is worth its weight in gold. It can do everything from helping you gain market share to increasing your bottom line.
Because of this, it’s critical to understand the main differences between a good business strategy and a bad business strategy. By understanding these differences, you can avoid unforced errors and help you create an extremely effective plan.
Some Key Differences Between Bad and Good Strategy
So what is it that separates a bad growth strategy from a good growth strategy? There are several factors that are especially important.
First, any great business strategy has focus. The strategy does not try to do too many things at once. Rather, it prioritizes an overarching objective that has been carefully considered. While the tactics to accomplish that mission may involve many different things, the entire team is working in concert to accomplish that focused objective.
A great example of this is Facebook. Since its creation in 2003, Mark Zuckerberg’s company has been laser-focused on connecting people and bringing the world closer together. From acquiring companies like Instagram and WhatsApp to creating communications tools like Facebook Messenger, Facebook has achieved massive success by sticking to its mission.
This emphasis on focus is echoed by Richard Rumelt in the seminal book Good Strategy, Bad Strategy. In a world where we have a near-infinite amount of choices, those companies that focus on being great at one or two things will be extremely successful.
But focus isn’t the only part of a good strategy. A good part of it comes down to cutting failing projects and putting aside past costs. The sunk cost fallacy is all too real and affects both individuals and companies. Prior investments aren’t forgotten and bad strategies allocate more capital toward their investments, hoping that they will turn around. On the other hand, good strategies cut failing projects and resist the sunk cost fallacy. They recognize what isn’t working and quickly adjust their tactics to find projects and investments that are working.
Finally, a key differentiating factor between a good and bad growth strategy is obtaining staff buy-in. Even the best-designed strategies will fail if the team isn’t invested in the strategy. By contrast, a great business strategy is designed to enthuse and motivate the entire team. It naturally causes staffers to get excited about the strategy and execute to the best of their abilities. Whether that is through appealing to a higher mission or even appealing to financial incentives, great business strategies naturally motivate the employees who are carrying out these strategies.
For instance, Disney is a great example of a company that achieves employee buy-in within its growth strategy. Disney employees (called “cast members”) are fully invested in Disney’s continuing mission of creating happiness among its customers. Whether it is opening a new amusement park in Shanghai or creating Frozen 2, Disney’s growth strategy inspires positivity, creativity, and drive. By helping bring out these feelings in the hearts and minds of their employees, Disney’s growth strategy has paid off.
Best Practices in Defining a Great Business Strategy
Those are just several of the elements that separate good strategies from bad strategies. Therefore, when designing your company’s growth strategy, you’ll want to keep those elements in mind. By paying close attention to them, you’ll be able to design a growth strategy that is not only tailored to your company, but that can help you accomplish your business goals.
In my next article, we are going to discuss some best practices on creating a great business strategy. These best practices are critical, so stay tuned!