Strategy Affects Decision Making and Clarity Matters

I just reread Michael Porter’s classic essay, “What is Strategy?” It’s chock full of insights with the overarching one being that more often than not, strategy gets confused with operational effectiveness and this causes problems.

An undesirable outcome of confusing operational effectiveness with strategy is that a lack of real strategy causes inconsistent decision making. While a clear strategy leads to clear decision-making criteria and processes, an ill-defined one leads to inconsistent criteria and decision-making processes.

An undesirable outcome of ill-defined decision-making is a tendency to not make decisions at all. I love this short quote from the essay about avoiding trade-offs: Tradeoffs are frightening, and making no choice is sometimes preferred to risking blame forbad choice. I fall into this trap every now and then.  It’s completely understandable.

But for strategy, trade-offs are necessary and we must weave them into our daily vocabulary. ‘We’ve decided to become the best in the world at doing A at the risk of missing out on B.’

If a clear strategy is in place, then taking a risk to make a decision is less of a risk. A clear strategy will have your back. It’ll take most of the fear out of the equation. In a way, it serves a similar function as religion. It allows people in an organization to practice faith in the context of uncertainty.