The Most Common Strategy Mistakes In Global Business

By M. Isi Eromosele

One of the biggest mistakes a manager can make is to assume the best results come from competing to be the best. Competing to be unique is a much more effective strategy.

Other common mistakes include confusing marketing with strategy, overestimating strengths and misunderstanding the definition of business.

The worst mistake but the most common one, is not to have a strategy at all.

Competing To Be The Best

The biggest of all mistakes is competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results. This is a hard race to win. Why? So many managers confuse operational effectiveness with strategy.

Overestimation of Strength

Another mistake is to overestimate strengths. There's an inward-looking bias in many organizations. You might perceive customer service as a strong area. So that becomes the "strength" on which you attempt to build strategy.

But real strength for strategy purposes has to be something the company can do better than any of its rivals. And "better” because you are performing different activities than they perform, because you've chosen a different iteration than they have.

Confusing Marketing With Strategy

Another common mistake is confusing marketing with strategy.  It's natural for strategy to arise from a focus on customers and their needs. So in many companies, strategy is built around the value proposition, which is the demand side of the equation.

But a robust strategy requires a tailored value chain; it's about the supply side as well, the unique configuration of activities that delivers value.

Strategy links choices on the demand side with the unique choices about the value chain (the supply side). You can't have competitive advantage without both.

Wrong Definition of Business

Another common mistake is getting the definition of the business wrong, or getting the geographic scope wrong. There has been a tendency to define industries too broadly.

Wrong Industry Definitions

There has been a tendency to define industries as global when they are national or encompass only groups of neighboring countries. Companies, mindful of the drumbeat about globalization, internationalize without understanding the true economics of their business.

The value chain is the principal tool to delineate the geographic boundaries of competition, to determine how local or how global that business is.

The Worst Mistake

The worst mistake and the most common one is not having a strategy at all. Most executives think they have a strategy when they really don't, at least not a strategy that meets any kind of rigorous, economically grounded definition.

There are so many barriers that distract, deter, and divert managers from making clear strategic choices. Some of the most significant barriers come from the many hidden biases embedded in internal systems, organizational structures, and decision-making processes.

The need for trade-offs is a huge barrier. Most Managers hate to make trade-offs; they hate to accept limits. They'd almost always rather try to serve more customers and offer more features. They can't resist believing that this will lead to more growth and more profit.

Many companies undermine their own strategies. Nobody does it to them. They do it themselves. Their strategies fail from within. If you listen to every customer and do what they ask you to do, you can't have a strategy. Like so many ideas that get sold to managers, there is some truth to it, but the nuances get lost.

Strategy is not about making every customer happy. When you've got your strategist's hat on, you want to decide which customers and which needs you want to meet. As to the other customers and the other needs, well, you just have to get over the fact that you will disappoint them, because that's actually a good thing.

The single-minded pursuit of shareholder value, measured over the short term, has been enormously destructive for strategy and value creation. Managers are chasing the wrong goal.

Having a strategy in the first place is hard. Maintaining a strategy is even harder. 

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

Copyright Control © 2012 Oseme Group