Strategy is Not a To Do List

Strategy is about the unique position that a company will be able to achieve by executing on their process.

There are two general types of advantage: competitive advantage and comparative advantage.

Delivering more value at a given cost is a comparative advantage. Equivalent value at a lower cost is not a comparative advantage.

Strategy is about competitive advantage. A competitive advantage is a unique position that a competitor can never attain.

In concrete terms, for startups, you will always get the "What if Google did the same thing" question or the "What if Microsoft did the same thing" question.

The answers are "Google will never successfully compete in this space because it will have a negative effect on their advertising revenue" or "Microsoft will never successfully compete in this space because it will have a negative effect on their Windows or Office revenue".

So the stack looks like this:

  Strategy (Competitive Advantage or unique position)

  Process/Tactic (Customer Development and Product Development)

  Action (TODO list)

Strategy at the business/product level addresses the following four questions:

(1) Who is your target customer?

(2) What value (in the form of a product and/or service) are you delivering to this customer?

(3) What are your costs for delivering this value?

(4) Are you delivering more value at a given cost (value advantage), or delivering equivalent value but at a lower cost (cost advantage), relative to your competitors? In limited cases you can compete on both value and cost simultaneously (dual advantage).

The question is then what broad activities are you performing to deliver value to your customer (e.g., R&D, marketing), and what are the costs associated with performing these activities (e.g., time, equipment). Through activities, you want to maximize the wedge between value and cost for a particular segment of customers.

The "to do list" then flows from these activities.

When you finally get it, it feels like a light that was suddenly switched on. You cannot even imagine how it was to work with the lights off.

Modern military doctrine says that there are three levels of thought, not two. Strategy represents the idea that lets you achieve your objectives. Tactics represent the day-to-day actions that you take. The third level, Operations, sits between the two, and ensures that the tactics you are using actually implement the strategy you've chosen.

Customer Development isn't a strategy. Nor is it tactical. It's an operational tool to generate to-do lists comprising tactical actions.

The problem with using the word "strategy" is that too many people lack awareness of the depth of thought that the analogy encompasses, and fail to see past the common strategy/tactics binary misconception.