Let’s do strategy better
/If the word “strategy” sends your eyes skyward or activates your gag reflex, don’t blame the word—blame those who’ve turned strategy into “something fuzzy that doesn’t really say anything and is forgotten almost as soon as it’s announced.”
That’s according to one expert on strategy, anyway—Richard Rumelt, a professor at UCLA Anderson School of Management. He believes strategy is misunderstood, poorly crafted at many if not most U.S. firms, and yet, if done correctly, the most important thing a business can do.
I’ll focus on Rumelt’s conception of strategy fully acknowledging that there are lots of other great thinkers on strategy. Rumelt interests me because he’s been fighting a decade-plus-long battle to rescue strategy’s reputation from buzzwordery. And he has some very smart things to say about strategy that can help any marketing practitioner.
Strategy is
“... an approach to overcoming an obstacle [or]… challenge.” It is not “ambition, leadership, vision, or planning… [but] rather, it is coherent action backed by an argument.”
For the strategist—whether it’s the CEO or the head of marketing—developing a strategy “is always the same: discover the crucial factors in a situation and design a way to coordinate and focus actions to deal with them.”
give me liberty. Dietmar Rabich / Wikimedia Commons / “Go -- 2021 -- 6746” / CC BY-SA 4.0
This definition is so important because the idea and the practice of strategy have been twisted into something they’re not. Today, says Rumelt, what passes for strategy is anything but.
Strategy is often broad and unfocused. Sometimes its absence is masked by “the language of broad goals, ambition, vision, and values.” At other times, strategy is simply a stretch goal (“increase net assets by 20%” or “our strategy is to achieve these results”) or fuzzy list of things to do. Some strategies simply restate the challenge—and fail to explain how the challenge will be overcome.
My gag reflex is stimulated by what Rumelt calls the template approach to strategy that’s been around for a couple of decades. It’s the “vision > mission > values > strategy” construct that has turned too many amateurs into would-be strategy experts. This Mad Libs approach requires relatively little thought, introspection, or hard decision-making, and leads to aspirational but meaningless strategy statements such as “to invest in a portfolio of performance businesses that create value for our shareholders and growth for our customers.”
Because it’s difficult and because it’s about making decisions with significant tradeoffs, proper strategy simply cannot “pop out of some strategic-management tool, matrix, triangle, or fill-in-the-blanks scheme.” Instead, it requires “… a talented leader [who] has identified the one or two critical issues in a situation—the pivot points that can multiply the effectiveness of effort—and then focused and concentrated action and resources on them.”
Good strategy distills reality’s mess into one or two business challenges. And not just any challenges, but important problems that the business actually can solve. (Rumelt believes that one reason firms avoid strategy is their aversion to admitting they have problems.) It articulates how that challenge will be overcome. And good strategy describes a set of coordinated actions or steps that bridge the gap “between where you are and what you want to achieve.”
For Rumelt, a good strategist leads the way with honesty, a clear understanding of the marketplace, and the realities and capabilities of the firm. A great strategist goes a bit beyond. True opportunity is in “the structural shifts in the economy” and in “… pinning them down and seeing the second-order effects.” That’s because it’s almost guaranteed that “the initial sense of what’s going to happen is wrong. The money is made in the second-order effect.”
All good. What does this mean for chief marketing officers and their ilk?
Marketing ought to have a strategy—and ideally that strategy will mesh with the firm’s overall strategy. That could be:
Figuring out what marketing actions or approaches will help the firm meet the challenges defined in the firm’s strategy
Identifying one or two marketing problems that, if solved, would help achieve the firm’s overall strategy.
For example, if the firm’s strategy is to increase sticky assets by capturing more market share in the small to midsize institutional 401k market, marketing may identify one key problem as low brand name awareness, or perhaps poor brand perception. Solving either problem becomes the crux of the marketing strategy.
But many investment management firms can go years without developing a proper strategy. Not one company that I have worked with, nor the top-tier broker-dealer or leading commercial bank that I have worked for, had a proper, Rumelt-style business strategy that was well communicated and internalized by upper and middle management. That qualifier is important. It really doesn’t matter if the C-suite has a strategy. If lines of business aren’t aware of it, can’t name it, don’t consider it in their everyday operations, the strategy might as well not exist at all.
If you find yourself in this rudderless position as a marketer, you can certainly advocate for a strategy to senior management. In the meantime, take action. Select a problem or two you believe is critical to growth or getting back to growth. Identify the actions required to solve the problem. And go.
This isn’t pushing on string. Consider the CMO of one firm I’ve encountered with a well-conceived marketing strategy—an institutional manager with a respected brand in the endowments and foundations market. He did some clever work in diagnosing a key challenge: the firm was always asked to finalist presentations but rarely won mandates. His plan of action was to improve the firm’s perception and its sales approach.
That is, he developed a true marketing strategy. And if he has succeeded (we’ve lost touch), he not only has increased sales and revenues—he has made that investment manager relevant again in a way it hasn’t been for years.