Myth 1: Strategy is about the long term
There are indeed industries where the competition dynamic remains unchanged for a long time. Leaders who stick to their strategy through thick and thin follow this process. However, if you think of strategy as a long-term commitment, you forget that strategy is about the fundamentals of how the business works: value creation sources, drivers of the cost to deliver it, and competition dynamic.
Strategy is not just about length, but also depth.
Strategy is about what we are going to do NOW, to shape the future, capitalizing on our core competence. We consistently align with our goals and create a pathway to actions that will deliver those plans. We establish a positive feedback loop, allowing us to work with changes and adapt with agility.
Myth 2: Disruptors change strategy all the time
Sometimes, innovation does indeed trigger disruptive change. It is easily confused with a change in strategic direction.
For instance, platform giant Google, who keeps changing strategy since they use most of their generated cash to innovate, having new products brought out yearly. For Amazon, however, most innovative products reflect a single, consistent strategy, familiar to business people since the 1960s. The strategy was to, ‘cut-price and add capacity’- basically still being used by today’s platform businesses but in different ways like “give it away and add users”. A more radical version of the strategy, but more than half a century old. Meanwhile, Apple, Netflix, Uber, and Airbnb are examples of introducing game-changing disruptive change.
Myth 3: You don’t need a Strategy; you just have to be agile
You need a strategy, but you must also be agile
There are agile firms, such as start-ups, that appear to have no plan. According to HBR, today’s start-ups are much more responsive, act quickly, and keep a high tempo. This may seem desirable. Especially when it may seem that some objectives and timeframes may not be achievable due to constant change. And responding to a crisis will exacerbate this. Agility is a valuable capability with operational benefits. However, it can have a long-term impact on a company’s competitive position unless the right decisions are made about where and how to direct short-term effort. Having a strategy helps.
A strategy is a decision-making framework, a set of guiding principles that can be applied as the situation changes but also focus on the longer term. Most start-ups fail because short-term strategies and focusing on revenue alone do not guarantee that you will be on the right path. With aligned operational plans, a well-thought-out strategic position will achieve desired outcomes and long-term positioning for consistent performance and stability.
Myth 4: Competitive advantage is dead
There is evidence that the time period over which advantage can be sustained is shortening, thus, achieving defensibility is harder. What works now, may not work tomorrow, and competitors are looking for ways to elevate your competitive advantage.
However, the full truth is not that competitive advantage is dead, but you need to rely on MULTIPLE advantages rather than just one, like Amazon & Co who are betting on building up lots of smaller walls that a single big wall. Start looking at things from a different angle. If you have your competitive advantage today, be prepared to make the changes. Then, start looking for the next one, and another after that.
Myth 5: You need a Digital Strategy
Digital technology indeed enabled us to do a lot of things. But developing a strategy for the digital area of your business only and leaving the rest will change the company as a whole. It will affect every aspect of the business, including sources of customer value and its delivery cost.
Strategy has always been about thinking through and classifying all the basic presumptions about your business and validating them. The world is uncertain, so companies need to think deeply and verify fundamentals to adapt and survive.