Figure Out Your Approach

Summary

This video script clarifies the distinction between strategy and strategic planning, emphasizing their importance for business success. A strategy is defined as a set of interrelated choices to overcome a strategic problem, involving shared aspirations, market focus, competitive behavior, and resource allocation. Strategic planning, on the other hand, translates this strategy into actionable plans with initiatives, actions, and results (IARs). The script also stresses the necessity of keeping the customer at the center of these choices to avoid self-serving strategies and potential disruption.

Takeaways

• 🔍 Strategy and strategic plan are not interchangeable terms; they serve different purposes in business planning.
• 🚀 A strategy is a set of interrelated choices made by a company to overcome its overarching strategic problem.
• 🎯 The strategic problem is the obstacle that stands in the way of an organization's success.
• 🌟 Shared aspiration is deciding what winning looks like for all stakeholders, including customers and investors.
• 📊 Market focus and position involve choosing the ideal customer profile, channels, product/service makeup, and geographies.
• 💼 Competitive behavior is about deciding on differentiation, cost leadership, or focus strategy and defining market segments.
• 🏭 Resources and returns involve determining what resources are needed to execute the strategy and the potential returns.
• 🔄 Strategy should be customer-centered; the customer should be at the core of all strategic decisions.
• 📈 A strategic plan translates the strategy into tangible results through initiatives, actions, and results (IARs).
• 📊 KPIs are essential for measuring operational and financial performance throughout the execution of the plan.
• 📚 For further assistance, a free course called 'A Million Dollar Strategy Blueprint' is available at cart.com.

Q & A

What is the main difference between a strategy and a strategic plan?

A strategy is a set of interrelated choices a company makes to overcome its overarching strategic problem, while a strategic plan is a detailed plan that translates the chosen strategy into tangible results through initiatives, actions, and results (IARs).

Why is it problematic for business leaders to use the terms 'strategy' and 'strategic plan' interchangeably?

Using the terms interchangeably can lead to confusion and result in a lack of clarity about the company's direction and goals. It can also lead to the creation of a strategic plan that doesn't effectively address the strategic problem or leverage the chosen strategy.

What is a strategic problem?

A strategic problem is an obstacle that stands in the way of an organization's success. It's the central issue that the company's strategy must address to prevent disastrous outcomes such as losing market share or struggling to attract talent.

How does a company determine its shared aspiration?

A company determines its shared aspiration by deciding what winning looks like for itself and its stakeholders, including vendors, investors, and customers.

What is meant by 'Market focus and position' in the context of strategy?

Market focus and position involve deciding on the ideal customer profile, the channels to deliver products and services, the composition of the company's offerings, and the geographies in which they will compete.

What are the different types of competitive behavior strategies mentioned in the script?

The script mentions differentiation strategy, cost leadership strategy, and focus strategy as types of competitive behavior.

How does a company decide on its competitive behavior?

A company decides on its competitive behavior by choosing the strategy that best defines how it will compete in the market, such as differentiating itself, being a cost leader, or focusing on a niche.

What is the role of the operating model in relation to the strategic option?

The operating model is chosen based on the strategic option to best fit the company's needs and to evaluate the activities required to deliver value in its market focus and position.

Why is it important to consider resources and returns when developing a strategy?

Resources and returns are important because they help a company decide what resources are needed to execute its strategy successfully and what the potential upside or returns of the chosen strategy might be.

What is the significance of keeping the customer at the center of the strategy?

The customer should be at the center of all strategic choices because a customer-centric approach helps to build competitive advantages, enhance the customer experience, and foster innovation, preventing disruption by more customer-centric competitors.

How does a company use IARs to develop a strategic plan?

A company uses IARs (initiatives, actions, and results) to break down organizational goals into manageable parts, define objectives, outline action steps, and establish key results to measure progress towards those objectives.

What is the purpose of defining KPIs in a strategic plan?

KPIs (key performance indicators) are used to measure operational and financial performance, helping organizations track the success of their initiatives and adjust their strategic plan as needed.

Outlines

00:00

🚀 Understanding Strategy

The speaker begins by clarifying the difference between a strategy and a strategic plan, emphasizing that they are not synonymous. They recount their own experience starting a company without a strategy, which led to mistakes and missed opportunities. The speaker outlines the process of developing a strategy, starting with identifying the strategic problem that hinders an organization's success. The process involves four key quadrants: shared aspiration, market focus and position, competitive behavior, and resources and returns. Shared aspiration is about defining what success looks like for all stakeholders. Market focus and position involve deciding on the ideal customer profile, product/service makeup, and geographic competition. Competitive behavior is about choosing a strategy for differentiation, cost leadership, or focus. Resources and returns involve determining what resources are needed to execute the strategy and what returns are expected. The speaker stresses that the customer should be at the center of these choices to avoid a self-centered strategy that could lead to disruption by more customer-centric competitors.

05:01

📈 Transitioning Strategy to Strategic Plan

In this paragraph, the speaker moves on to discuss the transition from strategy to strategic plan. They explain that once a strategy has been explored and tested in the market, an organization needs a plan to turn this strategy into tangible results. The speaker introduces the concept of IARS (Initiatives, Actions, Results) as part of the plan, which involves breaking down organizational goals into smaller, manageable parts. Initiatives are the aims of the organization, actions are the steps taken to achieve these initiatives, and results are the key performance indicators used to measure progress. The speaker also mentions the importance of defining KPIs to measure operational and financial performance. They stress the distinction between strategy and strategic planning and caution against confusing the two, which can lead to listing initiatives without a clear strategic foundation. The speaker invites viewers to a free course on their website to learn more about developing a strategy and achieving profitability, and they encourage feedback in the comments section.

Keywords

💡Strategy

Strategy refers to a set of interrelated choices a company makes to overcome its overarching strategic problem. It is central to the video's theme as it lays the foundation for how businesses should approach their challenges. The script uses the term to describe the process of identifying a strategic problem and then making a series of choices to address it, such as shared aspiration, market focus, competitive behavior, and resources and returns.

💡Strategic Plan

A strategic plan is a detailed roadmap that outlines how a company will execute its strategy to achieve its goals. In the video, the speaker clarifies that while strategy is about making choices, a strategic plan is about turning those choices into tangible results. The plan involves breaking down goals into initiatives, actions, and results (IARs) and defining key performance indicators (KPIs).

💡Strategic Problem

The strategic problem is the main obstacle that stands in the way of an organization's success. It is a crucial concept in the video, as it is the starting point for developing a strategy. The speaker explains that every organization has a strategic problem, such as losing market share or struggling to attract talent, which must be overcome to avoid disastrous outcomes.

💡Shared Aspiration

Shared aspiration is a concept where a company decides what winning looks like, both internally and externally, considering stakeholders like customers, vendors, and investors. It is part of the strategy formulation process described in the video, where the company aligns its goals with the expectations of its stakeholders.

💡Market Focus and Position

Market focus and position involve a company deciding who its ideal customer profile will be and the channels it will use to deliver its products and services. It is a key choice in the strategy process outlined in the video, where the company defines its target market and how it will compete within that market.

💡Competitive Behavior

Competitive behavior is about how an organization decides to compete, whether through differentiation, cost leadership, or focus strategies. The video emphasizes that understanding and choosing the right competitive behavior is essential for a company to define its strategy and gain a competitive advantage.

💡Operating Model

The operating model is the framework that a company uses to deliver value based on its strategic choices. In the video, the speaker mentions that organizations need to choose the best operating model that fits their strategic options, which is essential for executing the strategy successfully.

💡Resources and Returns

Resources and returns refer to the resources a company needs to execute its strategy and the potential upside or returns from that strategy. The video describes this as a critical step in the strategy formulation process, where companies must consider what they need to invest and what benefits they can expect in return.

💡Initiatives, Actions, and Results (IARs)

IARs are a part of the strategic plan that involves defining what the organization aims to achieve (initiatives), the steps they will take to achieve it (actions), and the key results they will measure to track progress. The video uses IARs as an example of how to break down a strategic plan into manageable parts.

💡Key Performance Indicators (KPIs)

KPIs are the metrics used by organizations to measure their operational and financial performance. In the video, the speaker explains that KPIs are essential for tracking the success of a strategic plan and ensuring that initiatives are on track to achieve the desired results.

💡Customer-Centric

Being customer-centric means putting the customer at the center of all strategic decisions. The video emphasizes the importance of being customer-centric, stating that if a company's strategy does not consider the customer's needs and experiences, it may be disrupted by more customer-focused competitors.

Highlights

The difference between a strategy and a strategic plan is crucial for business leaders.

A strategy is a set of interrelated choices a company makes to overcome its strategic problem.

Every organization has a strategic problem that stands in the way of its success.

Strategy development begins with identifying the strategic problem.

Shared aspiration is deciding what winning looks like for all stakeholders.

Market focus and position involve choosing the ideal customer profile and how to reach them.

Competitive behavior is about deciding on differentiation, cost leadership, or focus strategy.

Resources and returns involve deciding what is needed to execute the strategy successfully.

The customer should be at the center of all strategic choices.

A strategic plan turns the strategy into tangible results through initiatives, actions, and results (IARs).

Organizations need to define KPIs to measure operational and financial performance.

The strategic plan is a detailed execution plan derived from the strategy.

Confusing strategy with strategic planning can lead to listing initiatives without a clear strategic process.

A free course called 'A Million Dollar Strategy Blueprint' is available to help with strategy development.

The course aims to help businesses reach and surpass a million dollars in profitability.

Feedback from viewers on the strategy explanation is encouraged.

The presenter emphasizes the importance of applying these principles to business for success.

Transcripts

in this video I want to explain the

difference between a strategy and a

strategic plan because they are not the

same thing but often times I hear

Business Leaders use these terms

interchangeably with their teams and if

you fall down the same trap it could be

really problematic for your

organization look when I started my

first company I didn't have a strategy

let alone a strategic plan and as a

result I made a lot of mistakes and I

left a ton of money on the the table and

I don't want you to make the same

mistakes instead I want to help you to

FastTrack your path to success so let me

explain the difference here starting

with strategy a strategy is a set of

interrelated choices a company makes to

overcome its overarching strategic

problem so at the top here we have

strategic

problem in other words every

organization is grappling with an

obstacle that stands in the way of its

success and if it doesn't overcome this

obstacle whether it's losing market

share whether it's struggling to attract

and retain the right type of talent or

whatever may be if they don't overcome

this strategic problem it could be

disastrous for the organization so

whenever I work with companies and I

start building out their strategy I

always begin with the Strategic problem

then organizations need to explore

possibilities for overcoming the

Strategic problem and it involves

walking through four quadrants and

making choices in each of these steps so

number one in the first quadrant we have

shared aspiration and I'm going to

abbreviate here but shared aspiration is

when a company decides what does winning

look like not just for itself internally

but also externally by considering other

stakeholders

such as vendors investors and especially

customers when organizations can decide

on their shared aspiration then they're

ready to move to the next box which

includes Market focus and

position I'm abbreviating and my

handwriting is terrible my kids tell me

all the time so I'll be very clear so

you can grasp these very important

Concepts but in box two here we have

Market focus and position and this

involves a company to deciding who its

ideal customer profile will be and the

channels it will pursue to deliver its

products and services to this ideal

customer it also involves deciding the

makeup of a company's products and

services and the geographies in which

they'll compete and a variety of other

decisions related to where it will

compete so when a company can make

choices about its Market focus and

position then it moves on to the next

box which includes comp

competitive behavior when it comes to

deciding how to compete organizations

can pursue a differentiation strategy a

cost leadership strategy or a focus

strategy and a part of a focus strategy

is defining which Niche a company will

pursue and as part of that segment it

may decide to do a hybrid approach of

the two other strategies that I just

mentioned in other words an organization

can pursue a focus strategy in in that

Focus they can differentiate themselves

or they can choose to be a cost leader

so that's how competitive Behavior

unfolds is when an organization decides

which type of strategy it will pursue in

order to Define its competitive Behavior

also organizations need to choose which

operating model is best fitting based on

the Strategic option and evaluate the

activities that the company is pursuing

in order to deliver value in its Market

focus and position so you can see how

each of these decisions build upon

another in the last box I have

resources and

returns and in this step of the process

a company decides what resources will

they need in order to make this

strategic option viable in other words

what do they need to execute

successfully on their strategy and in

addition what is the upside or the

returns of this given op option so as

you can see here a strategy is a set of

interrelated choices to help an

organization to overcome a strategic

problem to build competitive advantages

to enhance the customer experience and

to Foster Innovation now at the center

of all these squares right here I like

to draw a circle because this is

where the customer should live because

when you're making these choices for

your organization you have to make it

customer centered because if you don't

have the customer at the center of your

strategy then you're just pursuing a

very selfish strategy and if you're not

walking in your customer shoes and

you're not empathetic then you're going

to be disrupted by another organization

that is very customer Centric so the

customer has to be at the very center of

all these

choices this is a strategy folks next is

a plan so once you explore your

strategic options and you choose which

possibil is best for your organization

and you go out there and test it because

remember we'll roll out a strategy

that's our intended strategy but then as

things unfold really an emergent

strategy arises and that's how we build

measure and learn along the way but you

need a plan in order to take this

strategy and turn it into tangible

results so that's where a plan comes

into place so you take this and as part

of the cultivar framework we help

companies

establish I ARS which stands for

initiatives actions and results and

really what we're doing here is we're

taking organizational goals and we're

breaking them down into bite-size pieces

which includes an initiative what the

organization aims to achieve their

objective the action steps they will

take to push their initiatives forward

and then the key results that they will

measure to determine whether or not

their initiative are on track in

conjunction with this organizations need

to Define their kpis This Is How They

will measure their operational and

financial performance along the way so

as you can see here this is a strategy

then organizations use iars to develop a

plan they establish initiatives actions

and results and that's a part of the

plan to go execute and bring forth the

strategy that they've designed here so

as you can see here there is a huge

distinction between strategy and

strategic planning and that's why it's

important to disaggregate these two

things so you don't confuse them because

otherwise what you'll do is you'll say

your strategic plan is your strategy and

you'll fall into the Trap of just

listing out a bunch of initiatives

without walking through this critical

process of identifying your strategic

problem your shared aspiration your

Market focus and position your

competitive Behavior

and your resources and returns if you

want help with this process you can go

to cart.com I'll leave a link below in

the video description and there you can

take a free course called a million

dooll strategy blueprint it's free

there's no gimmicks you don't need to

sign up for anything you can literally

go to cvar decom click on the button and

start watching the course today my goal

is to help you to get to a million

dollar in profitability and once you get

there to go to the next level now before

you sign off I want to hear from you

does this make sense if so can I get a

yes in the comments box below also I'd

love to hear your feedback so drop any

comments you have down below as well and

I'll be sure to get back to you and

until next episode all the best to you

as you take these principles and apply

them to your business cheers

[Applause]

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