Jeff Standridge:
Hey guys, welcome back to another episode. It’s great to have you with us today. I’m Jeff Standridge.
Jeff Amerine:
Jeff Amerine here as well. What are we gonna talk about today?
Jeff Standridge:
Man, you know, last week, we talked about problem-solving versus strategic thinking more at an individual level. How do we become good problem solvers? How do we become good strategic thinkers today? I’d like to talk about strategy and how we use strategy to move our, move our organizations forward.
Jeff Amerine:
That sounds great.
Jeff Standridge:
You know, you said it last week that, you know, most strategic plans are heavy on the plan part, but they’re very light on the real strategy. And I think that’s because, you know, as we talked about in strategic thinking, strategies involve theories, they’ve all, they involve uncertainties and by definition, they’re uncomfortable.
Jeff Amerine:
Yeah, no doubt about it. I mean, there’s, there’s some hypotheticals involved. There’s some prognostication involved there. You know, there may be various forms of analysis, but it’s, there’s a lot of uncertainty typically, no doubt about it.
Jeff Standridge:
Yeah. The best definition I can come up with for strategy is that it’s a, it’s a set of choices that positions your organization on a playing field or on numerous playing fields, uh, and their fields of your choice, but they’re also on fields and in games where you feel like you can win.
Jeff Amerine:
No doubt. And by necessity, there needs to be thought around both internal and external forces when you come up with strategy, right? It’s the things that, that are internal that are going to help define what’s in the realm of possible and what’s what the constraints are and there’s external things which inevitably get into regulatory environment, business environment, geopolitical competitive forces, et cetera.
Jeff Standridge:
Yeah. So, so the prototypical SWOT analysis comes into play, right? Where you have strengths, weaknesses, opportunities, threats, right? And so strengths and weaknesses are those internal forces generally, and opportunities and threats tend to be those external forces. Um, that’s, that’s one, probably the most widely recognized tool that’s used to try to dig in under and begin to understand potential strategy. What are some others that you use?
Jeff Amerine:
Well, there’s Porter’s Five Forces is a good one. Uh, sometimes called steeple, and there’s variations of that. It tends to be kind of risk oriented risk and opportunity oriented. When you go through that sort of an assessment, there’s something called systems thinking, which is used frequently, which forces you in kind of Venn diagram to come up with the internal and the external forces. And you figure out where you fit and how those are going to be dealt with. All of them are in some ways are just variations of a SWAT framework. It’s just ways of, uh, it’s kind of like the lean canvases when you’re going through a thought process. It’s really just a tool to categorize what you’re dealing with so that you can have some time to think and make true strategic trade offs and choices.
Jeff Standridge:
Yeah. So we established last week, last episode that strategic thinking is about identifying the future and then, and then backing into a plan to, to actually bring that future, uh, into reality. Uh, and so I like to describe it as a critical thought or reasoning process, uh, that helps us contemplate future, future possibilities, but strategy also has to be anchored in the mission or the organization’s mission, vision and values as well. Um, so vision is, is one of the very first, probably one of the very first steps in establishing strategy is to say, where do we want to be in three years, four years or five years down the road? And now what playing fields and what games on those playing fields position us best to actually get there.
Jeff Amerine:
Yeah. As often said, start with the end in mind, and you kind of work your way back from there and the way we do strategic planning, strategic planning facilitation is exactly that. I mean, that’s one of the things you get to early on is what’s that North star? What’s that guiding light that we’re proceeding to and how are we going to get there and you can break it down to smaller chunks as you go.
Jeff Standridge:
So I’ll throw these ideas out to you, and you can contemplate and maybe comment on them. Strategy attempts to articulate, these are the games in the playing fields where we choose to play because we can win here. This is what we must do to win consistently in these games and on these fields. Here are the capabilities that we have to have in place in order to win consistently. Here are the systems and metrics we’ll use to measure our success as we play those games on those fields. And here are the things that will likely get in our way. And here’s how we will remove those obstacles and resolve the issues.
Jeff Amerine:
Yeah. I mean, it’s, that’s a good systematic process, a great way of looking at it. And it, one of the things that’s, that’s kind of interesting is sometimes. People believe that strategy is all about the necessity of growing or having exponential growth and whatnot. Sometimes strategy can say a lot about what you’re not going to do. Right. Things that are going to be out of bounds, figuring out all those things that you’re not going to do so you maintain the right focus.
Jeff Standridge:
That’s right. Yeah, you know, we don’t use the word strategic planning in our practice very much because it’s, it’s done so badly, and it has such a negative connotation, uh, you know, visions of three-ring binders, uh, that are, that are four inches thick sitting on a shelf, getting dusty, uh, pages and pages and pages of small point fonts, trying to articulate everything that an organization does versus really trying to be discriminant in determining what’s going to move us to where we actually wanna go. So at the very least, you’re right, a good strategic plan, at least by omission, says a lot about what an organization’s not going to do as what it is going to do, at least by omission, sometimes by actual articulation.
Jeff Amerine:
Yeah. And you know, you find interesting and well-thought-out strategies sometimes in unexpected places. It is an example. There’s a, there’s an agency locally that we’ve gotten to know over time. And it’s a, it’s a marketing and PR agency. And they had some very specific parts of their strategy. They had a very specific sector and vertical that they were going to go after. They were very clear about it. They also had some constraints on strategy based on their own preference, which defined what they believed winning would look like. So as an example, they didn’t want to grow that agency any larger than $7 million in annual revenue. And I said, well, that’s interesting. You don’t hear that often. Part of the reason why that was an integral part of their strategy was that had implications as to the size of the team. And based on how they wanted the team dynamic to work and what they all hoped to get out of it, that was kind of a key constraint that they built into their strategy. Very clear, we’re never gonna get any bigger than this. This is a level that we like in terms of what it means in terms of team culture, team dynamic, and also who we can go after for customers.
Jeff Standridge:
Yeah, that’s right. And, and, you know, so we’ve talked about it, how it, it describes what you’re not going to do as much as it does what you are going to do, but good strategy should also kind of in parallel to that prevent distractions. So in other words, it should, it should provide a measuring stick against which you assess new opportunities that present themselves. And so, if a new opportunity presents itself, the first question that should be asked as well, how does this match with our strategy, our vision, and our strategy, if the answer fits squarely within that, then, then it’s pretty clear, okay, then we need to figure out how to do this. Another answer might be, no, it doesn’t fit within our strategy or our vision and our strategy. And so, the answer could be then, then we need to stay away from it because it’s a potential distraction. Or the answer could be, no, it doesn’t fit within our strategy, but we’re 18 months into a three-year strategy, and we didn’t contemplate the changing landscape around us when we built this strategy 18 months ago. So maybe it’s time to step back and re-look at our strategy in light of this opportunity and the changing landscape. But the point is, is that it doesn’t remove leadership judgment. Good strategy doesn’t remove leadership judgment provides a framework within which to make better decisions about where we’re going.
Jeff Amerine:
That’s right. I mean, done well, it provides sort of a discipline associated with how you assess whether something’s a fit or not, or whether or not your strategy is still relevant and a lot of times you’ll the businesses that really have trouble are the ones that are constantly chasing shiny objects and they dilute their effort on the things that are really important, or they don’t have a good way of discerning what’s really important because they really don’t have a strategy. It’s all been completely opportunistic.
Jeff Standridge:
Yeah, my experience as well is that good strategy, good strategic growth plans, uh, tend to, tend to get overlooked and maybe fall by the wayside during periods of enormous growth. So, uh, you know, take, take immediate post-COVID, some of the growth that we’ve experienced in the economy, you know, just in the last, you know, couple of years, but now we’re starting to hit a, we’re starting to hit maybe a plateau. There’s some pullback. The market’s not really sure. It’s kind of goes forward, then it steps back. We’ve got inflation. And so in uncertain economic times, we sometimes come to realize that our lack of reliance on strategy gets us in trouble because we’ve been growing and perhaps, revenue growth covers over a lot of sins, so to speak.
Jeff Amerine:
No doubt. And I’ll tell you what, in terms of boom and bust cycles, whether it’s in individual segments or overall, you see that a lot, there’s times when you’re just pouring more gas on the fire and going quick and doing what everybody else is doing, because there’s lots of space as those markets tend to mature. I mean, or as the air begins to come out of that boom cycle, like we saw in the dot coms, like we saw in the real estate financial crisis in 2008.
Like we might see in AI and ML at some point, as that begins to mature and cool off, the players who have had good strategic thought and good positioning and have thought about sustainability and have differentiation, they’re going to be fine, the ones who aren’t, they’re going to get killed and you see it time and time and time again, I think we may see some of that in within the, the electric vehicle space. Bunch of people have jumped on that bandwagon. There’s been the skew in the market based on governmental forces, driving people to go that way. At some point, they’re going to look back and say, do we have the right strategy? Or was Toyota right, for example, and they focus more on hybrids and plugging electric hybrids rather than full EV, just kind of a specific example there. But there hasn’t always been a commitment to good strategic thought. And that tends to kill even good organizations if they don’t spend the time on it.
Jeff Standridge:
Yeah. So the underlying message is there, the message there is don’t forget about strategy during great economic times. Uh, because if, if you’re, if you’re undisciplined during the great economic times, when, when something happens to change the economic landscape, you’re going to be upside down before you know it.
Jeff Amerine:
And those, those firms, those organizations that are good at strategy in some ways, they kind of align with what Warren Buffett said. When others are fearful, be greedy. When others are greedy, be fearful. The best businesses are figuring out how to use their strategy to advantage during a downturn. And that’s when they tend to make up, take up more ground and, and really are ready for the next boom cycle because they’re well positioned.
Jeff Standridge:
That’s right. Yeah, versus hunkering down and trying to just go sideways for 24, 18, 24, 36 months, till the economic crisis passes. They take market share during a down economy because they’ve been planning and executing strategically.
Jeff Amerine:
Exactly. Exactly right.
Jeff Standridge:
Very good. Any other thoughts on strategy and how to use it to move your organization forward?
Jeff Amerine:
Well, I think it’s got to be part of the thinking it’s got to be tied. We also talk a lot about strategies got to be tied to an execution plan so that you can actually implement it. It’s got to be connected into what you do every day. If it’s going to be something that helps you realize your vision. I think that’s another key part of it, but it’s, it’s a great topic. We can’t talk too much about this. This is so important.
Jeff Standridge: (12:40.346)
Mm. That’s right. Yeah. So, so just to kind of punctuate that a little bit, you know, even though strategy is based in theories regarding the future, they’re, they’re based on evidence that led us to those theories, but they still have to have coherent, doable action plans to execute and to, to actually act on those theories. Very good. Forward back, forward back, path independent. Where are we going? Those are the components of strategy and how you can use those. And just to summarize one more time, they answer the questions that what are the games and the playing fields where we’re choosing to play because we think we can win there? What do we have to do consistently to win in those games? What are the capabilities we must have in place to win consistently? What are the systems and metrics we will use to measure our success? And what are the things that we’ll likely get in our way and how will we overcome those obstacles?
Those are some of the key elements of strategy that we need to be thinking about when we’re building out our strategic plans.
Jeff Amerine:
Good stuff.
Jeff Standridge:
All right. This has been another episode of the Innovation Junkies Podcast. Thank you for joining us, and we will see you in the next episode.
Jeff Amerine:
Stay tuned, don’t miss the next one.