designing gears to work properly

“Strategy is a deliberate search for a plan of action that will develop a business’s competitive advantage and compound it.”

— Bruce Henderson, founder of Boston Consulting Group

I was at a networking event yesterday, when someone asked me what I do. I told him: I help organizations develop their strategy. He said, “terrific,” but I could see the confusion in his eyes.
Strategy, I find, is one of the most abused and least understood words in business. The misperception is further compounded by the word’s trendiness, which means it gets applied to things that don’t really fit its meaning. 
Often, it’s used to describe tasks, goals, or some combination of both: “We will double revenue in five years.” “We are working to increase diversity within our organization.” “We want to be the world’s leading provider of X.”
These aspirations may be laudable, maybe even realistic, but they are not strategies. 

For that, what is needed — in addition to an assessment of the organization and its goals, an evaluation of the trade-offs involved, and the development of a plan — is a clear appraisal of the context in which the organization is operating, i.e., what is happening in the environment. This may include pending changes in regulations, implications of emerging technologies, actions (or expected actions) of new and existing competitors, and more.
Not only do these external forces and trends have an impact on the effectiveness of the organization going forward, but they can also impact market needs. That is, whether the problems your products or services are designed to solve will remain the issues about which your stakeholders are most concerned.

Context Can Change Quickly

A ruling last August stipulated that in the near future, any federally funded research must be made available to the public for free. For those scientific publishers that up until now had been able to charge thousands of dollars for that same research, this so called “open access” model will represent a significant, if not existential, shift in their business.

Not only does the change upend the current revenue model, but it may also invite new competitors. Some currently marginal organization — if it develops the right approach to providing both serious quality control and an affordable approach to providing open access — might emerge “from nowhere” as a new leader. Giving serious thought to what might have to be true for that to happen can provide an organization with ideas for developing a proactive strategy for remaining competitive.

Or, consider the example of organizations I have worked with that provide group housing and other services for people with I/DD (Intellectual and Developmental Disabilities). They receive much of their revenue from Medicaid. However, over the past decade or so, Medicaid has been moving away from its previous and long-established fee-for-services model and instead working to focus its payment model on “value-based pricing” and “outcomes-based payments.”

There are pros and cons to this modification, but regardless of the merits, it represents a wholesale change in the compensation model. As a result, these organizations have had to work to understand what might be considered “relevant outcomes,” which of these can be measured, and whether their existing systems can even accommodate such an approach.

While building the ability to measure and track these important factors — one of the important strategic priorities we determined — might not create a positive differentiation, there is a significant risk that NOT having those capabilities could cause a critical disadvantage.  Important referral sources may choose to only send prospective residents to facilities that do have those capabilities. 

Recommended Actions

Of course, there is no predicting the future with certainty. However, as part of developing an effective strategy, here are three things to consider…

#1. Watch for “faint signals.”

Right now, there may be issues or trends in your environment that are tiny, inconsequential, or appear to be far off in the future. The thing to consider is which of these could become significant at a later date.

So think carefully about what you are seeing and try to envision what might be on the horizon. Remember that exponential growth begins very slowly… but then accelerates… at which point, your time to respond will be drastically shortened (if not eliminated entirely).

#2. Employ an outside perspective.

Several years ago, in what has now become a classic example of a missed opportunity, the executives at Blockbuster were so convinced of the value of picking up a movie on impulse at a local store (“Movie Night!”), that they dismissed out of hand the threat from Netflix’s mail-delivered service. So much so that they passed on the chance to acquire it early on when it was just a blip on the radar.

Organizations tend to “breathe their own fumes,” being unknowingly biased towards their own approach of doing things. By engaging a critical and objective outside perspective in the strategy development process, this type of “confirmation bias” can be mitigated.   

#3. Listen and involve others across your organization. 

As you seek to understand current and future threats and opportunities, it is critical that you reach broadly and in all directions (not just within your senior team). 

Often, it is the people at the lower levels of your organization — especially those who have “front-line” positions — who are most aware of any “faint signal” changes. Plus, if they understand the thinking — and their contributions are considered during strategy development — they are much more likely to be engaged and supportive, which is essential to successful implementation.

And don’t forget to seek input from other significant stakeholders, including clients and funders, who may also have points of view and insights that you are overlooking.


As the quote from BCG’s Bruce Henderson pointed out at the start of this post, strategy is fundamentally about developing a competitive advantage — the key word being “competitive.” 

It necessarily requires paying close attention to not just what you are working on or towards, but also to what is happening or may happen in the broader context within which you operate.