Strategy means sacrifice: What are you willing to give up?

5 July 2019

by Dr James Mills

Right Thinking

Resourcing constraints and the need to make strategic trade-offs limit what an organisation can do. The heart of strategy is selecting from among the vast number of possible activities an organisation could pursue, a select few which strongly reinforce one another. This requires leaders to define not just what their organisation will do, but also what it won’t do, to ensure sharp focus on the things that matter.

Strategy is often reputed to require an uncommon skillset, distinct from the considerations of everyday life and demanding exceptional mental acuity. Traditionally it has been the preserve of generals with decades of military experience; political leaders supported by teams of analysts and advisors; and the brightest business minds, selected for their perceptivity and sound judgement.

It is true that, given the great many factors that must be weighed when setting an organisation’s strategy, such as emerging industry trends, new regulatory developments, evolving customer and employee preferences, changing competitive forces and shifting political influences, determining the best course of action for any organisation is a significant challenge. However, strategic decision making is in fact more commonplace than is often recognised.

A strategy is simply a course of action intended to achieve a desired outcome. As individuals, we make strategic decisions all the time. For example, when deciding whether to pursue a full time qualification or enter the workforce, when choosing a job that offers greater development opportunities over one that offers a higher salary or when deciding whether to rent or buy property.

What makes these decisions strategic is that they all involve an element of sacrifice. Pursuing the qualification means sacrificing industry experience, accepting the better development opportunity means sacrificing the higher salary and investing in property means sacrificing financial liquidity.

Distinctive leaders find their niche

In general, executives are highly practiced at making strategic decisions at the personal level. In advancing to the C-suite most executives make myriad sacrifices, such as declining lucrative job offers that were not aligned with their career objectives, forgoing interesting development opportunities to focus on core development goals and often working longer and harder than their peers to deliver exceptional results.

As competition for advancement intensifies with greater seniority, it becomes increasingly difficult for individuals to excel on multiple fronts simultaneously. Recognising this, many personal development experts encourage aspiring leaders to build their own ‘personal brand’, becoming distinctive within a particular domain (Ashkenas 2010, Corkindale 2008).

By focussing their personal development energy on areas of natural ability, aspiring leaders can develop exceptional competency in a specific areas of expertise (Drucker 2005, Saunders 2013). In doing so, these leaders of tomorrow are adopting a differentiation strategy hoping to outshine their peers.

Distinctive organisations make sacrifices

Despite this proven ability to make strategic sacrifices at the personal level, we often find that executive teams struggle to make sacrifices at the organisational level. It is possible that this incongruity arises because when selecting the activities they will, or will not, personally be involved in, individuals can take comfort in knowing that capable colleagues will step in and take these on.

Nevertheless, just as successful individuals must often forgo tempting opportunities if they wish to develop a reputation for being truly distinctive in a certain area, so too organisations must make sacrifices to achieve differentiation. It is not enough to simply say ‘we want to deliver exceptional customer service’. If this is truly what matters for your organisation, strong leaders must ask, ‘what are we willing to give up to make this so?’

What are you willing to give up?

As you work to develop or refine your organisation’s strategy, we encourage you to consider, not only where your organisation will be distinctive, but also the areas in which it is acceptable to simply ‘meet the market’. This is the core of strategy. Strong leadership means avoiding the temptation of proclaiming excellence on all fronts.

When working with new clients, we often see the aftermath of such ‘strategies’: resources get spread too thinly across dozens of strategic initiatives with predictably poor results. Ultimately, failing to embrace sacrifice as an essential element of your strategy, means sacrificing your strategy.

Sacrifices protect your market position

In his seminal work ‘What is strategy?’, Michael Porter argues that ‘trade-offs are essential to strategy. They create a need for choice and purposefully limit what a company offers’ (Porter 1996). Just as individuals must make sacrifices in some areas to outshine their peers in others, to achieve a truly distinctive position, organisations must make sacrifices by leaning into trade-offs.

It is the sacrifices made when an organisation embraces trade-offs, that protect its market position from would be emulators. For example, a manufacturing company whose strategic focus is centred on customisation, may choose to structure its operations in a way that allows the customer to make choices on every design element. In doing so, the company likely sacrifices the custom of a price sensitive customer cohort to meet the needs of a segment for whom customisation is important. Because of this sacrifice, they have little to fear from a low-cost competitor who would be unable to deliver the same level of customisation without giving up its low-cost position.

References

Ashkenas, R 2010, ‘Define your personal brand with simple questions’, Harvard Business Review, January

Corkindale, G 2008, ‘11 ways to build your personal brand’, Harvard Business Review, March

Drucker, P 2005, ‘Managing oneself’, Harvard Business Review, January

Porter, M 1996, ‘What is strategy?’, Harvard Business Review, November

Saunders, E 2013, ‘How to allocate your time, and your effort’, Harvard Business Review, January

We hope the ideas presented here have given you something new to think about. We would love the opportunity to discuss them with you in more detail. Get in touch today.