This series of posts is a primer on business strategy inspired by Richard Rumelt's book titled "Good Strategy / Bad Strategy" combined with my personal experiences.  This series will give you a solid knowledge base so you can set a good strategy for your organization and avoid the bad strategies that plague far too many organizations today. 

In today's post, I want to focus on "What is good strategy."

Rumelt defines good strategy as "focusing energy and resources on one, or a very few pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes." This is a great definition of strategy, but we cannot forget that whatever objectives we are shooting for must matter to our clients (current or potential) and must differentiate us from our competition. It does you no good to pursue the same strategies as your biggest competitor unless you are quite certain you can beat them at their own game.

A simpler definition of strategy is "the tactics and steps you will take to get your organization from where you are today to where you want to be on a given date in the future". This strategy must take into consideration your changing competition and customers.

If you've ever sat down at the beginning of the year to lay out your goals, you know how easily your list of goals can grow out of hand. What was supposed to be a list of reasonably achievable goals can begin to look more like a list of things to do before you die.  When you try to execute on too many goals at once, you will find that your energies (and time) are spread way too thin and you accomplish very little towards your goals. In fact, research by the Franklin Covey group found that when a team has 2 to 3 primary objectives they are likely to achieve 2 to 3 objectives. If they have 3 to 10 objectives, they are likely to achieve 1 or 2. If they have 11+ objectives, they are likely to achievenone!

The benefits of a strong, well-executed strategy are many. Increased organizational value, improved financial performance and greater employee engagement are just a few of the potential paybacks.

A bad strategy can be more detrimental than having no strategy at all. 

Good strategy focuses energy on a problem. It does not disperse the organizations talents haphazardly. Below are the steps that I have found that lead to a good strategy, which are slightly different that Rumelts':

1. Define the problem or the obstacles between the organization and its goals.

2. Create a solution to fix or overcome the problem.

3. Create action steps and make someone accountable for carrying out each step of the solution. 

4. Have a definite, easily measurable goal that will let you know when the challenge has been met.

The greatest problem for far too many organizations is that they think they have a strong strategy, but really have a broad set of vague aspirations. 

If you will follow the 4 steps above when you set the strategy for your organization, you will already be much closer to accomplishing your goals. 

In the next post, I'll take a look at some of the most common forms of bad strategy. 

In the meantime, please join the conversation at our website and forward this to a friend if you found it useful.   

About Curt Fowler

Curt Fowler is the President and Founder of Fowler & Company, a business advisory firm founded to help its clients maximize the value of their organizations. Curt is a Certified Public Accountant and earned his Masters in Accountancy from the University of Georgia. He also earned an MBA in Strategy and Entrepreneurship from the Kellogg School at Northwestern. He has spent 20 years studying and learning from some of the best businesses in America including Verizon, Sara Lee, Cox Communications and many more.