Your numbers exceed the outlook? Hold the champagne.

“Sainsbury’s Profit Beat Market Views” – this headline in The Wall Street Journal caught my attention this morning.

It sounds like good news – but it’s not that simple.

When a company performs below the targets, we blame the leadership team. When the results exceed the outlook, we praise them.

But why?

Both deviations indicate that the company’s planning system is broken. It’s unable to make accurate forecasts.

Alternatively – we can embrace the idea that the world is too volatile and unpredictable for accurate forecasts.

But in this case, we shouldn’t pay much attention to such deviations.

Profit is yesterday’s result of the day-before-yesterday’s decisions

As a board member and advisor, I often receive financial reports from the companies I work with.

When a company’s profit is below target, my colleagues often ask: “Why did it happen and what have you done to fix it?”

My typical question is “Which part of the system isn’t working?”

If a middle manager sees a problem, they’ll try to fix it.

If an executive notices a problem, they should improve the system.

Today’s problems stem from the day-before-yesterday’s systemic poor decisions.

An executive isn’t a fixer, they are an architect of the system.

Generic strategies: junk food for thought

Alchemists tried to find the Holy Grail. Strategists try to find a universal principle of success.

Michael Porter is a brilliant mind, but even he got drawn into the game – with his Four Generic Strategies.

What’s wrong with the idea?

1. Every company and each market is unique.

2. A business’s goal isn’t to defeat the competitors but to deliver value to customers. What value can Porter’s differentiation strategy deliver to them?

3. Competing in a market is a race to the bottom. Instead, we should create our own markets.

Don’t follow others’ playbooks, create your own.

Svyatoslav Biryulin

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So, my little booklet of strategic jokes and musings — Strategy Quips — is up for grabs! As always, it’s free for all my subscribers. Read it, smile, and share it with a friend if it makes you chuckle. Download it here. Stay tuned!