Facts
- Multiple large-scale studies (including long-running work cited by McKinsey and Harvard Business Review) consistently show that between 60-70% of strategic initiatives fail to deliver their intended outcomes.
- Organizations that demonstrate high coherence between strategy, capabilities, and resource allocation are 2–3x more likely to outperform peers on long-term total shareholder returns.
Strategy is one of the most frequently discussed - and least consistently understood - topics. For many organizations, it equates to growth targets, annual plans, or long lists of initiatives. Yet none of these, on their own, constitute strategy as they are outcomes, tools, and artifacts of management.
At its core, strategy is something more fundamental. It answers a hard truth many organizations avoid which is “you cannot be everything to everyone.” It also lays out how an organization will win given where it has chosen to compete.
To understand strategy, a useful starting point is to clarify what strategy isn’t.
What Strategy Isn’t
- A vision statement or purpose narrative: While vision is an organization’s anticipated destination and purpose serves as the core identity of an organization, neither explains how you will win in your market.
- An annual operating plan: Usually revenue or cost-led rather than value-led, an operating plan often focuses on executing the status quo more efficiently, whereas strategy might dictate changing the status quo entirely.. Operational plans outline execution but do not specify which choices will create advantage.
- A compilation of best practices: Strategy is about differentiation. If you are simply doing what everyone else is doing, you are caught in a race toward operational effectiveness. This eventually leads to competitive convergence, where all players look the same and margins are squeezed. Strategy is about being unique - and not being better.
- Incremental improvement: Strategy involves discontinuity. Incrementalism assumes the external environment and the competitive landscape are static. True strategy identifies where the game is changing and shifts resources to capitalize on that change, rather than just polishing existing processes.
- A guarantee of success: Strategy is a hypothesis, or an educated bet on how the market will react. A good strategy reduces uncertainty, but it never eliminates risk.
Strategy & the Illusion of Action
Strategy is a deliberate commitment to a specific way of competing. It requires choice (which involves exclusion), accepting trade-offs, concentrating resources, as well as aligning the organization around a few decisive priorities where advantage can be built and sustained.
Rather than beginning with aspiration, strategy begins with reality. It asks clear-eyed questions about the environment, the organization’s capabilities, and the constraints it faces while also confronting uncomfortable truths about where the organization can truly win - and where it cannot. In doing so, it provides coherence to decision-making that ensures that day-to-day actions reinforce one another instead of pulling the organization in conflicting directions.
At its best, strategy creates focus and establishes a logic for why certain customers, markets, or problems matter more than others, and why the organization is uniquely positioned to serve them. This logic guides choices about investment, talent, partnerships, and risk, allowing leaders to say no with confidence as often as they say yes.
|NerdAFRICA 2024 - Over 40% of profitability variance within industries in Africa is driven by where companies choose to compete.
However, in an attempt to maximize resources, leaders often fall into the straddling trap of pursuing too many, and sometimes, conflicting priorities at once. This makes them to lose sight of where to compete, the tradeoffs that truly create value - and triggers the pressure to be everything to everyone - which ultimately cause a dilution of competitive edges.
After observing 108 firms - startups especially - across major African planes, we consistently identified three key organizational pressure points that cause leaders to struggle with their firms’ self-developed strategies. They include the following:
- The Growth Mandate: The belief that any revenue is good revenue, leading to scope creep where the organization chases customers it isn't equipped to serve profitably.
- Internal Consensus: The desire to keep every team member happy by including their specific goals in the strategy, resulting in a bloated list of priorities that cancel each other out.
- Loss Aversion: The fear that by choosing a specific direction, the organization is permanently missing out on other market segments.
These lead organizations to drift toward the middle of the market where they are unable to create meaningful advantage and a self-reinforcing cycle where resources consistently get misallocated.
To escape the Everything Trap, leaders must be willing to embrace disciplined focus.
