It’s widely recognised that strategic clarity – being clear about who the company serves and what it sells, resisting distractions – is a good thing. That is true, except for when it isn’t. There are times in the life of every business when strategic clarity is the last thing you need. Your business has been through one of these, and will probably enter another at some point. Knowing how to spot that point is crucial.
For most established businesses, strategic clarity is a good thing. They have found the formula that works, and need to stick to it. Any new development, new customer or new product needs to be tested against the success template. The danger to be guarded against is distraction, dilution of effort or loss of focus. It’s helpful to have simple rules, like the one enunciated by Herb Kelleher at Southwest Airlines; “it’s very easy to take strategic decisions here. Just ask, does this help make us the cheapest way to get from X to Y.”
However, remember one thing. It wasn’t always like this. At some time, every business was a startup. And the strategic rules were different then. For the mature business, the oddball customer request is something to be resisted. For the startup, it could the the key to the future. Remember, for example, that Paypal started out trying to be an encryption business. It repeatedly resisted requests from customers to develop a little money transfer product it had developed as a demo.
A mature business can reasonably expect most strategic initiatives to work. A batting average below 0.75 is probably, quite rightly, unacceptable. For the startup, on the other hand, every initiative is a step into the unknown. Refusing to move until you have reasonable certainty on the outcome is the recipe for paralysis, not success. For the mature business, strategy is about focussing on the few things that work best. For the startup, it is about trying many things in order to find something that works at all.
So there are two phases to business growth. The first we could call exploration, while the second we could call exploitation. Exploration ends when we find the model that works and start fine tuning it to the exclusion of other things. The two phases are very, very different, and require very different methods. Strategic clarity is valuable in exploitation, harmful in exploration.
But, and this is the really huge important scary point that so many miss, however comfortable you are in the exploitation phase (and exploitation can be very comfortable indeed), sooner or later you will need to go back into exploration. The world will change, and you will need a new template for success. Look at Nokia, for instance. It caught the start of the mobile phone boom, and rode it to huge success. Brilliant exploitation. But then the smartphone came along and Nokia could not respond. This needed an new exploration phase. It’s a shame that Nokia didn’t seem able to call on their history of exploration. They hadn’t always been a mobile phone company – they had arrived there through businesses in timber products and rubber boots.
It’s a uncomfortable thought that, at some point, we will need to leave the orderly, predictable, comprehensible world of exploitation and venture out again into the wild trackless wastes of exploration. But it will happen, and at that point strategic clarity is to be avoided.
This article was written by Alastair Dryburgh from Forbes and was legally licensed through the NewsCred publisher network.