Strategy Basics Flashcards
Mission
What are we trying to achieve? Why does our company/team exist?
Vision
What does the world look like when we’ve achieved our mission?
Goals
How will we measure progress against our vision? Eg., MSFT: X% of homes with a computer.
Roadmap
What do we need to build, in order, to achieve our vision?
Task
A unit of work we can tackle next.
Strategy
A cohesive response to an important challenge.
Strategy Kernel
From “Good Strategy, Bad Strategy.” Three key parts: 1) Diagnosis - clear definition and understanding of the challenge, 2) Guiding Policies - high-level principles to guide response, which complement each other and form an integrated design, 3) Coherent Actions - specific steps to implement policies and overcome the challenge; must be plausible and feasible.
Crux
Part of the Diagnosis in the Strategy Kernel. You must find the Crux of your problem - similar to identifying the hardest part of a rock climb. If you can’t solve this critical challenge, the rest of the strategy becomes irrelevant.
Good Strategy Characteristics (Richard Rumelt)
1) Concise 2) Fluent - company can repeat it 3) Easy to find 4) Targeted with clear tradeoffs 5) Compounds with other components 6) Has clear horizon 7) Used for prioritization 8) Evolves over time 9) Achievable Good strategy is a “way forward.”
Episodic vs. Annual
True strategy work happens episodically, as needed, rather than annually, like Strategic Planning.
Bad Strategy Symptoms (Richard Rumelt)
1) Fragmented - trying everything 2) Random work without purpose - long list of things to do 3) Unmeaningful/incremental work 4) Frequent goal changes 5) Lack of purpose/understanding 6) Inconsistent goals 7) Lack of buy-in 8) Surprise ceilings
Hallmarks of Bad Strategy
1) fluff - superficial restatement of the obvious plus buzzwords, 2) failure to face the challenge - identify and analyze obstacles, 3) mistaking goals for strategy, 4) bad strategic objectives
Not a Strategy
Skipping over problems. Delegating what to do. Spreading rather than concentrating resources, acting to placate internal and external interests. Leaders not saying no.
Decisive Asymmetry
Strategy brings relative strength to bear against relative weakness. Imposes asymmetric costs on an opponent. Harness power and apply it where it will have the greatest effect.
Leverage
Find crucial pivot points and exert force. This can produce a cascade of favorable outcomes. Requires anticipation, insight, and concentrated effort.
Anticipation
Look for predictable downstream effects of things that already happened. Consider the habits, preferences, and policies of others, as well as various inertias and constraints on change.
Concentration
You must concentrate force/effort because resources are limited.
Pivot Point
Finding a pivot point magnifies effort.
Threshold Point
Critical level of effort necessary to affect the system. E.g., pulses of advertising or rolling out new product design by region.
Proximate Objective
Target that can reasonably be hit. E.g., landing on the moon to beat the Soviets in the space race. Creates energy and focus. Turns complexity/ambiguity into a simpler problem. The more uncertain/dynamic, the more proximate a strategic objective must be. Helps create positional advantages. Lay out the steps to get there, as Kennedy did. To concentrate on an objective, you must have mastered the basics first.
Chain-Link Systems
Don’t strengthen other links when you have a weak one.
Limiting Factors
Identify them and find the ones that can be fixed.
Sequential Campaigns
Several campaigns, one after the other, focusing on a single objective or problem (or link in the chain). Sometimes you must focus on change as the objective and shut down normal systems of measurement. This may require centralization for a while.
Premeditation
Design and plan in advance
Anticipation
Judgment or anticipation concerning the thoughts and/or behavior of others.
Design of Coordinated Action
Effective strategies are often designs, not decisions. A master strategist is a designer. Performance = capability + clever design.
If the organization has few resources …
The challenge an be met only by clever, tight integration.
When to consider the competition?
Always, even when no one tells you to do it or you don’t think its important.
Window of Opportunity
Recognize when next one is opening and take an aggressive position.
7 Sources of Power (Hamilton Helmer)
1) Brand, 2) Process power, 3) Cornered resource, 4) Counter-positioning, 5) Scale economies, 6) Switching costs, 7) Network economies
Product-Market Fit (PMF) Degradation
Decline in existing product-market fit that occurs in two ways: 1) Red Queen Effect - constant adaptation needed to maintain position, 2) Over-optimizing for power users at expense of casual users
TARS Framework
Method to measure feature performance across four dimensions: Target Population, Adoption, Retention, and Satisfaction
Types of PMF Expansion
1) Adapted: Low cost/risk, high certainty (geo expansion, tech adaptation, unbundling) 2) Complementary: Medium cost/risk/certainty (horizontal, vertical, platform) 3) New: High cost/risk, low certainty (strategic sequence, diversification, first & best customer)
Growth Strategy Components
Three main components: 1) Acquisition loops 2) Retention loops 3) Monetization strategy
Viral Growth Types
1) Word of mouth (e.g. Uber) 2) Organic (e.g. Dropbox) 3) Casual Contact (e.g. Survey Monkey) 4) Incentivized (e.g. Robinhood)
Feature Map Components
Three main sections: 1) Target Population - who the feature is for 2) User Value - problem description, frequency, severity 3) Business Value - impact and strategic importance
Strategic Planning vs. Strategy
Three to five year rolling budgets combined with market share projections. Planning is fine, since it guides resource acquisition, construction, training, etc. It makes sure resources arrive when needed and helps management detect surprises. Typically done annually.
