Mistakes companies studied by experts.

Companies like to speak out about their new strategies. Often these strategies look like this: “We will be presenting a unique service for our customers,” “We will increase its profit by so much percent a year,” “our company’s market share will increase annually at such a pace, and income – to grow by this much then “,” Soon we will grow to a global company, and reduce the cost of so much “… According to Richard Rumelta, author of the bestseller« Good Strategy, Bad Strategy »(« A good strategy, bad strategy “), all of these statements are not strategies . Moreover, to make such statements – in itself a bad strategy.

Main differences between a good and bad strategies

Rumelt has studied a large number of companies and highlighted the key points that should be feared. Such moments are strong statements that are not based on anything, without significant goals determine how to achieve them, a lot of goals, uncoordinated, without clear prioritization. All of this can be covered with different beautiful words and figures. For example, the infamous Enron company has always been persuasive reports, full of facts and figures, which confirmed their plans and “strategy.” In this case, the fact that the market for their products is significantly different from the markets for electricity and gas, was released from sight – or deliberately concealed.

Few understand what strategy is not successful, you also need to be able to consider a good strategy. Any real strategy, Rumelt argues, must contain three components: an indication of the challenge for the company, how it solutions and specific actions to be taken. The first component involves narrowing of the range of challenges that will or may occur in the enterprise, in order to understand what may be critical for the company. But understanding the winning strategy is difficult not only to outside observers, but also the top managers of the company. MBA courses there on a special assignment for this situation: the students will be all the possible information about the company – the financial situation and the description of the individual leader to the current market situation – and they have to find their own and determine the probable factors of success and failure. It is often neither strategy nor the company’s mission does not show what is really important for the company.

As an example, consider a company slogan Wal-Mart: «Save money, live better.” They are opening stores in places where previously there was no discount stores, as well as outside the cities. But the real strategy of the company – not in the way are shops. Even the man. Far removed from retail, it’s easy to understand that in a small village and can sell some. True strategy – in the way of the network. Due to the large number of stores they are able to efficiently allocate goods on them and overtake competitors. Of considerable importance is the fact that this strategy is not easy to copy: it is much more difficult to create a network of stores than to open one.

Risk, without which you can not do

Jim Collins (created bestseller “Good to Great”) and Morten Hansen wrote the book «Great by Choice» («be a great choice”), which allows you to track successful and failing strategy. In this paper, called the ten companies that in the past 15 years have increased their business tenfold. The authors have considered only those companies that knowingly walked to success, to plan and clear strategy.

In the book, the growth of these enterprises compared with the overcoming of the marathon 20 miles. In order to get to the finish line, you need to calculate the forces. This means that a company it is important to rely mostly on themselves, not on external circumstances. At what the circumstances may be both beneficial and not so. Collins and Hansen describe the great care with which the company Southwest Airlines manage the growth of their business. They added only four of their new routes, despite the abundance of interest in this city, which later emerged. With this strategy, Southwest Airlines during the crisis rose to the occasion.

Consequently, successful companies differ from conventional so that they can better anticipate tough. A sure way to quickly disappear is just the motto “for success need to act quickly and with the risk.” Council Collins and Hansen is that you have to be “constructive paranoid”: think about every step with the greatest possible care to remain vigilant, do not wait for the moment to connect all possible potential, but instead constantly thinking about what could go wrong . Keep only those experiments that do not fall apart from all the business in the event of failure. And most importantly – do not rush to give up the time-tested ideas in favor of new, even very promising. Bill Gates continued to work on Windows, even after the market launch of its OS2. And Steve Jobs is very carefully worked on the development of chain stores Apple. Remember one thing: the desire to act quickly or caused by herd instinct, or overweening confidence in the fact that you have a “completely unique case.” Try to stop yourself and turn into a cold and calculating strategist.