What is suitable for Company A is not necessarily suitable for Company B. The right strategy now may become wrong next year. Even in the same country and in the same industry, the strategic direction derived from different management capabilities will be There are differences. What is a good strategy and what is a bad strategy? This question has been debated for a long time. In the future, we will have a day to discuss good strategies and bad strategies with you, but today I want to first Tell everyone what is “strategy”?
What is a strategy?
In the present year, more than 600 students in the college have submitted their annual goal-setting homework. Most of the students have done a good job in goal setting. Many students even listed specific plans. After reading such complete content, I felt relieved because everyone really understood the concept of OKR, but I also asked some questions for these students who submitted the complete content:
“Why did you set these as your annual goals?”
“There are many things you want to do, but with limited time and resources, which one will you do first in the first season?”
“These goals seem to be independent events. Is there a way to find out the synergy of each other so that you can do one of the first, and the other goals will benefit at the same time?”
The first question I want to ask is actually the “why” behind the goal. Why is it always worthy of being discussed first than the goal itself? For example, some students’ goal is to “find themselves”, and why is the reason behind it? The two supervisors denied his own value and made him very confused. He didn’t know what his value in the workplace was. In order to solve this problem, he set the goal of finding himself.
However, when I asked him if he had discussed the details with the two supervisors, he told me not. I said to him, as you do not know the problem you have to adopt the first thing to resolve the issues, in contrast, your action will be baseless.
The second and third questions I want to ask are the order of priority and resource allocation, how to allocate resources to the most important tasks, what to do first, and what to do later, and this order arrangement can make the most effective use of resources of.
In fact, what I want to discuss about the above issues is actually a strategy.
According to the definition of Wikipedia, I extracted three more specific paragraphs
- Strategy is a high-level plan to achieve one or more goals under conditions of uncertainty.
- Strategys are important because the resources available to achieve these goals are usually limited.
- Strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes.
From the definition of Wikipedia, we can summarize three points:
First, a high-level plan to achieve goals in an uncertain environment ;
Second, the choice and configuration under limited resources, the strategy must decide what to do or not to do ;
Third, the strategy is to organize a series of activities to adapt to the external environment and competition.
The various disciplines of strategy
In fact, there are many theories on strategy. There are countless masters who have talked about strategy from the beginning of the 20th century to today. These people all put forward insightful business strategy theories in their time. The most famous ones are exploring the essence of operation and management. The business missionary Peter Ferdinand Drucker, Harry Igor Ansoff, who proposed the Ansoff matrix, Alfred D. Chandler, who proposed the organization follow strategy, and the Five Forces Analysis and Value Michael Eugene Porter of the chain, etc…
If you are interested in the evolutionary history of business strategy, I recommend you to read “The Complete History of Business Strategy”. This series of books organizes the history of business quite well and is worth reading.
The strategy originated from the military, that is, the strategies and actions taken by both sides when the two armies confronted each other during the battle.
It is also because of this that there is a school of strategy-related theories that takes “competition” as the core and emphasizes how to lock in the company’s own competitive advantages to beat other competitors. As the representative scholar of this is Mike Porter, and is another school. The argument is that “adaptation” is very important, and different strategic priorities should be set in accordance with the current conditions. There should not be only one set of methods to try to use in various situations. Representative figures such as Ansoff and Mintzberger; there are also Emphasizing “positioning”, thinking that companies should focus on playing their own roles, focusing on solving specific problems of specific customers, Kotler, who put forward the market positioning theory STP, and Jack Trout, who is known as the father of positioning.
As mentioned earlier, Bezos puts the strategic focus on creating the largest free cash flow and also proposes a flywheel strategy. So which category does Amazon’s strategy belong to? TSMC, which emphasizes process improvement and financial health, is again a proponent of Mike Porter’s cost leadership concept?
In fact, the above theories are all reasonable, but each has its own historical background and development scenarios. Sometimes you have to compete, sometimes you have to focus, sometimes you have to change, sometimes you have to take risks, and sometimes you have to be conservative. Or retreat from strategy, know how to weigh the situation and adopt corresponding strategies, I think that is the way to sustainable business.
I think that “adaptation” is closer to my understanding of strategy, but I don’t think that “competition” or “positioning” is wrong. Instead, it suits time to local conditions. Sometimes “competition” is required, and sometimes “cooperation” is better. Sometimes it is necessary to step on the “positioning”, but sometimes “diversification” is more appropriate.
However, if my conclusion is to say that “the strategy is good or bad depends on what situation you encounter”, I think everyone will not accept it, so below I have compiled my six important understandings of strategy.
First, the strategy is formulated to achieve the goal
When you don’t know where to go, basically you don’t know what to do, so there is no need to talk about how to set a strategy at this time. An effective goal basically includes a definition that conforms to the SMART principle. In this part, we mentioned that when talking about OKRs, the goal must have KR to describe the way the goal will look like when it is achieved, and in order to achieve these KRs, you have to think about what to take Kind of action plans. KR plus action plans, I think it is the so-called strategy.
For example, survival is not a strategy, but a goal, but how to live, how to live well (KR), and how to do it (action plan) are strategies.
Some companies can set long-term strategies and policies, in large part because they have long-term missions and visions. I will explain this part later.
Second, the strategy must consider the internal and external environment
You may have been great 10 years ago, but the times are changing. International political and economic trends, national policies, competitors, and even corporate leaders are different. Strategies formulated after considering these factors are more feasible. From this point, you may feel that I personally are very buy-in adaptations.
Recall that the impact of the Sino-US trade war a few years ago has not yet heated up, and the global economic situation is not what it is now. American companies have withdrawn factories from the mainland under active and passive pressure. This political and economic change is even a large-scale Apple. Companies must also change their own business strategies, let alone ordinary small businesses?
The recent outbreak of pneumonia in Wuhan has greatly affected the global industrial chain, and local Chinese companies are also facing the issue of work stoppages. Layoffs, borrowing money, and finding alternative outlets have become the portrayal of Chinese companies during this period.
From these cases, you can know that there are many external factors that affect the strategy. Political and economic changes are only one of the links, and the analysis of various changes is also the strength of Mike Porter’s five forces analysis.
And what about the inside? In addition to looking at the tangible and intangible assets you own, you must also be very clear about the stage of your company, product mix, and human resource structure.
Third, the strategy must determine the allocation of resources
There are many things that companies can do. You can develop 10 products and enter 10 markets at the same time, or you can focus on making one product in one market. This involves resource allocation. If an enterprise has formulated a strategy, but has not considered resources, or has not made corresponding adjustments to resources, it will lose its strategic significance.
When setting personal goals, someone clearly prioritizes what they want to do. Health comes first, but I don’t see anything related to health in his plans for the next month. Regarding, the answer he gave me was to eat three meals normally, and then keep exercise habits.
If you are not even willing to set a fixed time for the most important thing, then you don’t really take it seriously.
The same is true in the enterprise. The boss will always say that you are important, but the key indicator to observe whether you are important is whether it is willing to spend time on you, because his time is the company’s most scarce resource, and your proposal Whether he is willing to adopt and invest resources can be observed in the boss’s mind about “important matters.”
The allocation of resources basically determines the degree of emphasis on the strategy.
Fourth, strategies have levels and combinations
If you are a large group, the group itself will have a group strategy, the companies under the group will also have their own company strategy, and each product under the company may also have its own product strategy, and the business unit will also have its own Some specific departments, such as R&D, may also have R&D strategies. Therefore, the strategy itself is actually hierarchical.
And because the strategic focus may be different between the upper and lower and the horizontal, but in order to ensure the maximization of benefits, the company must properly make an effective combination of these strategies. The management complexity of the ten-thousand-thousand enterprises is different, and the difficulty of the latter in resource allocation is also exponential.
Fifth, the strategy has a certain degree of reference
Some people say that unique strategies are difficult to replicate. This sentence itself is right and wrong. The right thing is that it is not easy to find two cases that are exactly the same in the four elements mentioned above; the wrong place is that most companies The problems they face are not as complicated as imagined. They can actually formulate their own strategies by referring to the routines of other similar cases.
There is a paragraph in the “Sun Tzu Art of War” that mentions “ten encircle the enemy, five encircle him, five encircle him, and fold him to divide.” This means that when one’s own forces are ten times the opponent’s strength, the strategy of encircling all sides is adopted; if five times Focus on the opponent’s attack; if it’s only twice the opponent’s, think of a way to use split and combined attack tactics.
What Sun Tzu’s Art of War was talking about was the “principle” of the art of war. He let everyone know that siege warfare is extremely beneficial to the defender and that there is no multiplier force and should not be attacked rashly, and this has become the majority of generals leading the army in siege warfare. The basic cognition of time is the so-called referentiality of strategy.
Stones from other mountains can always be used as a reference for us. If you think that you have encountered a unique predicament that has never happened in history, you will never be able to learn from the mistakes of others. This matter of strategy The same is true. Also check 50 pips a day forex strategy
Sixth, the strategy must be dynamically adjusted
Continuing the previous point, you must have seen many examples in history that violated this principle but won the battle in the end. When your strength is equal to that of the opponent, but the opponent can’t come out, it’s very detrimental for you to attack rashly, so you decide to instigate a certain general in the city and let him act as the internal response. You should open the city gate inside and outside so that you can drive straight in. When you have the ability to change The situation, you naturally do not need to abide by the principles of Sun Tzu’s Art of War.
In the second point, we mentioned that the strategy must consider the internal and external environment and resources, but the external environment and resources are dynamically changing at any time. In addition to adapting to changes, we can also take the initiative to create conditions that are beneficial to ourselves. As the environment changes, the strategy will naturally be adjusted accordingly.
In today’s content, I talked to you about what strategy is and my six important cognitions about strategy. I believe you will have some basic understanding of strategy after listening to it, but there must be a lot of questions about how to think about strategy. In the next article, I will talk to you about the strategic thinking structure that combines the theories of several masters with my six important cognitions.