Battle-tested ideas to cut through strategic confusion

Great strategists are people who once saw the world differently. In this post, I’ll tell you what they see – and you’ll be able to see it, too.

Strategy isn’t about seeing what others see but thinking differently. It’s about seeing what they miss.

“What the f…k is strategy?”

One sunny summer Sunday in 2010, I sat in my kitchen, drinking scalding coffee and reading a thick red book. It was Thompson and Strickland’s textbook Strategic Management: Concepts and Cases.

It was a great book – interesting to read, with many examples. The only thing driving me nuts was that it didn’t answer a simple question: what the f…k is strategy? Not long before, I had become CEO of a retail company, so what exactly should I do to craft a strategy for my business? I didn’t find the answer in this 600-page doorstop.

I later found out that I wasn’t the only one. Other CEOs admitted they knew they should think strategically — and that their businesses suffered because they didn’t. But none of them could answer the question: What the f…k is strategy?

It took me 10 years to figure out what ‘strategic thinking’ truly means. I’ve made many mistakes, but every time I did, I wrote down a principle or thesis for myself.

The few core ideas and 13 commandments I share below are the essence of my unique experience as a CEO, a strategy consultant, and a board member.

Core ideas

My own evolution as a strategist was far from easy or straightforward. I started with stone-age methods – I even used SWOT analysis (don’t tell anyone). But my allergy to clichés and strategic dogmas — combined with a relentless urge to question everything — pushed me to develop my own set of core ideas about strategy.

It took me a long time to move from thinking that business exists to make a profit — to realizing that profit is just a result, not the purpose. That’s not what business is really about.

Here are my core ideas:

– The world is a vast marketplace of value. People and organizations exchange value. Your business creates value for others and captures value from them.

– The more value your company creates for customers and other stakeholders, the more value it can ask for in exchange. To create value for somebody, you need to identify their needs first.

– The more value your business creates, the more successful it is.

– Your company isn’t what you can see in the org chart or P&L statement. It is a value machine, a set of business processes that deliver value for stakeholders – customers, employees, shareholders, etc. I call them Value Waves.

– Your job as a leader is to tweak the processes in a way that helps your business deliver more value – and capture more value in return.

– Your strategy is a list of actions you should take to enhance your business processes (aka Value Waves) to make your business stand out as unique and special in the eyes of your customers.

It took me years to realize that my business had to create value for others first — and only then, maybe, it would create some for me.

Create value for your stakeholders, and the 13 commandments of practical strategic thinking can help you make it happen.

13 commandments of strategic thinking

1. A strategy should help executives and middle managers make their daily decisions. If it doesn’t, it’s not a strategy. Ask your team if they know the strategy — and whether they actually use it when making decisions. The answers might surprise you. They once surprised me.

2. You can’t make all decisions in advance. So, a strategy should be a set of central principles rather than a list of decisions, goals, and objectives (read more about central principles below). These principles don’t give ready-made answers to all possible questions but set the rules that can help managers find the answers.

3. Your strategy must explain how the company plans to meet the needs of six key stakeholder groups: customers, employees, shareholders, business partners, regulators, and society.

4. Customers are a special group of stakeholders. They bring money into the business, while others draw resources from the company. So, an organization should pay the utmost attention to its customers’ needs. I wish I knew it in 2010.

5. Business success depends not on the scale of its leaders’ ambitions but on the scale of the customer problems it solves. It’s hard for me to feel much sympathy for Elon Musk these days — but there was a time when he genuinely wanted to make the world better by building EVs.

6. Profit can’t be the goal of a company — it’s merely the outcome of how well it serves its customers. The true medium-term goal of a strategy is customer satisfaction. As Steve Jobs said, “focus on your top line, and the bottom line will follow.”

7. There should be a strong internal logic in a strategy: your target customers define whose needs you’ll fulfill, the needs define what values you’ll deliver to the customers, the values define what assets you need to create or develop, the assets define what processes you need to build or enhance.

8. An ambitious vision does more harm than good because it distracts your attention from customers. Instead, shift your focus on your mission — who you work for and why — and your purpose — what you want to change in the world. We don’t always know the names of the people who create useful, affordable, well-made products for us. But they’re the ones who make our lives better.

9. Your strategic goal is not a point in the future where you want to get someday. It’s more of a direction in which you’d like to develop and the pace of development you aim to maintain.

10. The true long-term goal of business is to build a great company that outlives its founders and continues creating value for stakeholders for decades, rather than just achieving annual targets. Tesla was a success two years ago. But will it stay that way?

11. The true goal of a strategy is to create a new market for the company rather than compete in someone else’s. It will help to achieve the long-term goal.

12. Interim objectives like annual profits of market share matter less than the ability to learn, redesign itself, and keep creating greater value for stakeholders.

13. A strategist sees a company as a set of Value Waves — processes that create value for stakeholders. Strategy is about choosing how to reshape those Waves to deliver more value to customers.

Business isn’t about stuffing your pockets — it’s about creating so much value that customers can’t wait to throw their money at you.

Central principles I mentioned in the commandment #2

Here is an example of central strategic principles:

1. Which types and segments of customers are a priority for us?
2. Which of their needs do we address first?
3. What customer values do we create to meet these needs? Which products are, therefore, a priority for us?
4. What is our policy regarding hiring and staff development?
5. What corporate culture do we aspire to?
6. How do we regard product quality? What is our priority – high quality or low cost?
7. How do we manage costs?
8. What do we primarily invest in?
9. How do we work with business partners?
10. What contribution do we want to make to societal development?

Keep refining your central principles until every manager can rely on them when making key decisions.

You can dive deeply into my approach to strategy by reading my book.

The best strategy quips of the week

• I’ve met founders who truly believe they can change the world through sheer willpower. Funny though — I’ve never seen any of them will their way out of a traffic jam.
• An executive’s status = headcount × budget. So obviously, the best strategy for them is the one that maximizes both.
• Some call the strategic goal a “North Star.” But if you sail, staring only at the stars, you might hit an iceberg.

Just a reminder: you can download a booklet full of strategy quips here for free.

Svyatoslav Biryulin

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Read also: Machines Don’t Belong Here — They Fail in Their Own Ways

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