Written on 26 September 2021
For the past few weeks, I have been deep in "strategy" mode. I was talking to marketers, learning more about performance marketing, hiring, and reflecting on our marketing strategy.
I'm fortunate to be in a position to help think about and shape ReferralCandy's marketing strategy. And I want to make sure it's as good as it can get. While we already have a marketing strategy in place, things change and we have to evolve accordingly. For example, when teammates leave or join, we get to reorganize ourselves and do things differently.
Something I did is to revisit one of my favorite strategy books, Good Strategy/Bad Strategy: The difference and why it matters, by Richard Rumelt. I thought you might find some of my highlights and notes useful.
I'll be grateful for any advice or resources on crafting a good strategy too!
A good strategy is actionable
"Strategy" is not this fluffy thing that only senior management talks about at a high level. A good strategy informs people in the team what they should be doing.
the term “strategy” should mean a cohesive response to an important challenge. Unlike a stand-alone decision or a goal, a strategy is a coherent set of analyses, concepts, policies, arguments, and actions that respond to a high-stakes challenge.
A good strategy includes a set of coherent actions. They are not “implementation” details; they are the punch in the strategy. A strategy that fails to define a variety of plausible and feasible immediate actions is missing a critical component.
There are 3 elements of a good strategy
A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action.
The kernel of a strategy contains three elements: A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical. A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.
We should always start with a diagnosis
I used to like jumping to the "solution". "We should do this (or that)."
But that is not helpful if we don't know what we are actually trying to solve.
A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And if you cannot assess a strategy’s quality, you cannot reject a bad strategy or improve a good one.
If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have either a stretch goal, a budget, or a list of things you wish would happen.
The diagnosis for the situation should replace the overwhelming complexity of reality with a simpler story, a story that calls attention to its crucial aspects. This simplified model of reality allows one to make sense of the situation and engage in further problem solving.
For now, I think the main challenge for our marketing team is to drive both self-serve signups and high-touch signups as a small team. Our best customers are interestingly both small merchants who signed up on their own and big merchants who had more questions and required a bit more support. We are trying to reach and convert these two groups with a small marketing team of three.
A guiding policy keeps things coherent
Bigger teams with more resources might be more tempted to try a variety of things. Smaller teams like ours cannot do everything, which helps encourage us to find complementary things. This is where a guiding policy is helpful.
The guiding policy outlines an overall approach for overcoming the obstacles highlighted by the diagnosis. It is “guiding” because it channels action in certain directions without defining exactly what shall be done.
design-type strategy is an adroit configuration of resources and actions that yields an advantage in a challenging situation. Given a set bundle of resources, the greater the competitive challenge, the greater the need for the clever, tight integration of resources and actions. Given a set level of challenge, higher-quality resources lessen the need for the tight integration of resources and actions.
In 2003, I worked with a company whose initial “strategy” was to (1) close a plant in Akron and open a new plant in Mexico, (2) spend more on advertising, and (3) initiate a 360-degree feedback program. Now these actions may all have been good ideas, but they did not complement one another.
Contrary to the example above, I'm reminded of Disney's business recipe, drawn by Walt Disney in 1957. See how interconnected the various components are!
I try to fit my strategy into a flowchart to map out how interconnected the various components are. If I find the process hard, it's likely because my ideas are not coherent.
Tradeoffs are necessary
There are always many new things to try: podcast, YouTube, TikTok, and more. Just because many companies are starting their podcasts does not mean we should too. It is important to consider how a podcast (or any new initiative) will complement our strategy.
Any coherent strategy pushes resources toward some ends and away from others. These are the inevitable consequences of scarcity and change.
good strategies are usually “corner solutions.” That is, they emphasize focus over compromise. They focus on one aspect of the situation, not trying to be all things to all people.
A strategy is a hypothesis
A good strategy is, in the end, a hypothesis about what will work. Not a wild theory, but an educated judgment.
A strategy is essentially saying, "I believe if we do A, B, C (a set of coherent actions), we will achieve X results (the challenge to overcome)".