February 26, 2018

How to identify a bad strategy

November 12, 2013    PracticeРаспечатать эту статью

How to identify a bad strategy

Experts cite other people’s mistakes

Often, the company says in its new strategy , using high-sounding phrases like ” We will provide our Clent perfect service”, “Every year , our earnings will continue to grow “, ” Very soon, we will become an international company , and our costs are decrease every year for so many . ” Author of the book ” Good strategy , bad strategy ,” Richard Rumelt argues that these are not all of announcements strategy , and in themselves they represent a bad strategy.

What is the difference between a good and a bad strategy

After analyzing the work of many companies , Rumelt has identified some factors that should be avoided . Here are some of them: high-sounding phrases , not confirmed any actions lofty goals without specifying how they will be achieved through a lot of priorities and goals are not mutually compatible . According Rumelta like of announcements can be complemented with beautiful figures. The reports of Enron, known for its unsuccessful history, have always been the presence of such beautiful words and numbers that sort of confirmed the plans and strategy of the company . Thus fell the fact that the markets for products of Enron’s very different from the markets for electricity and gas.

It is not enough to be able to reject a bad strategy , you need to be able to see and horoshuyu.V good strategy always three elements: an indication of problems to be solved , how to solve this problem and the list of actions that the company plans to take. As to the first part , everything is clear : it is necessary to outline the range of actual and potential problems in order to find out which of them can be critical for the company . However, determining what zaklyuyaaetsya winning strategy , as it is difficult for people from the outside, but also the management of the company . Therefore, students in the MBA courses are always invited to complete information about the company , from the person of the head and ending with the situation, which at the time was on the market. So students need to figure out the factors that can be both successful and vice versa – to cause problems. After all, it is often such that companies did not mention what she puts any of the mission or in the strategy.

Take for example the slogan of Wal-Mart, which reads: ” Save money , live better.” The company is committed to expanding its network of stores in those places where the discounters have never been . A key element of the strategy is not in the location of individual stores . After all , even the most distant from the retail person is aware that in the village where very few people, the demand for products is much lower than in the city. a key factor in the strategy of the company is exactly how the chain stores : as a network of so many small shops , the distribution of goods between them becomes much easier, and it allows you to beat the competition . Most importantly, this strategy is not easy to copy , because open up a whole chain of stores is much more difficult than to open one store .

The risk that can be avoided

In the book “Choosing to be a great ” Morten Hansen and Jim Collins rassakazyvayut of those strategies that have in the past led the company to success , or , or provalu.Samye successful companies they called 10Xers, are included in this list of the companies , whose business has grown over 15 years 10 times. In this case, were taken into account only companies that were clear strategy and well aware of their plans.

The process of development of these companies authors equate the marathon length of 20 miles . Only properly calculate the forces , it is possible to overcome this distance . That is, you first need to rely on yourself , and then to external circumstances . At the front of the screen than it is in those cases where the circumstances are terrible, and when they are favorable . Also, Hansen and Collins in his book, describe in detail how to care company Southwest Airlines to manage the development of their business. Annually route map of enriched only 4 of the city, despite the fact that hundreds of cities were interested in it. And when washed over the crisis , Southwest Airlines has flourished .

It turns out that the difference between ordinary and successful companies is that the latter can anticipate tough times . And if you act on a ” take risks and to act quickly in order to succeed ,” you can very quickly come to failure. Therefore, the authors recommend beginning businessmen remain “constructive paranoid “: it’s better to measure seven times and then cut off, to avoid their full potential , and to always think about what could go wrong .

If you want to experiment , it is best to do so, even in the event of failure , you will not regret it . Do not try to follow new ideas , no matter how promising they may seem at first glance, better use the old but proven methods. Bill Gates does not work on Windows prekraal even after the market has its OS2. Steve Jobs has approached the question of chain stores with considerable accuracy. And if you want to act quickly , it is excessive or samondeyannost or herd instinct . In such cases, svegda stop yourself and try to be a cold and calculating strategists .

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