Guest post from Brad Chase:
No business subject garners more attention than leadership. There are endless leadership books, classes, websites and more. Everyone is searching for the essential qualities of a successful leader. But what if you had to pick just one quality? Think about it for a moment. What would you choose as most important to the success of a business leader? Do you have your answer yet? Don’t read on until you have one.
I have done countless speeches on strategy over the years at companies, conferences, and business schools. I always begin my speeches by asking attendees this very question.
The answers I get are all over the board. Values, judgement, trust, inspiration, compassion, knowing your competition, vision, intuition, power, charisma, culture, being tenacious, hiring good people, empathy and many more have been proffered as most important.
Ironically, what I believe is the most important component of a successful business leader has never been mentioned.
No great leader succeeds without a great strategy. Often the strategy is thoughtfully forged. Sometimes, it comes from trial and error, and sometimes a successful strategy is dumb luck, but a winning strategy is the business success imperative. You can be charismatic, you can know your competition, you can have good judgment, you can hire the best people, and so on and so forth, but if your strategy fails, you will fail as a business leader.
Strategy, your plan to compete, is all about making the right bets to achieve your goals. For most companies, there is one fundamental bet. Originally, Microsoft’s big bet was on the personal computer itself. Steve Jobs turned Apple around when he made a big bet on digital devices and consumer entertainment. Marie Kondo bet people care about tidying up. Costco bet on the concept of a membership warehouse. Big or small, profit or nonprofit, companies you know and companies you have never heard of, no matter where you are in the world or what industry you’re in, it all comes down to making the right fundamental bet. If you make the right bet, you still must do many other things right to be successful. And that includes the other critical components of great leadership. But if you make the wrong bet, it doesn’t matter what else you do; your business will fail, and you will fail as a leader.
As a leader, how do you decide what bet to place, what plan to make, and what strategy to pursue? To help figure that out, I created the Strategy First model. It’s s a twist on Einstein’s famous E = mc2 equation: Strategy = E × mc2.
E × mc2 is an acronym for the three key components of strategy. The c stands for customer value. Sometimes, when used in the vernacular, value means price, but in my model, customer value is much broader. It is the worth or the usefulness of something—that is, the perceived benefits in comparison to what you paid. In most strategies the value you provide your customer is most important, which is why it is squared. The second component is market potential, how much profit can be made in your business. Third is execution, how you run your business every day. Some people try to argue that execution is not strategic, but if strategy is your plan to compete, then execution must be central to strategy. It won’t matter if you make the right bets if you don’t execute well on those bets.
Strategy success does not happen in a vacuum. A key part of the Strategy First model is to remember that the effectiveness of your strategy depends, not on the quality of your strategy independently, but on the quality of your strategy relative to your competition’s strategy.
Strategy is never fixed in time. Great leaders must adjust and reset their strategy as they learn and conditions change. Netflix first bet that users were frustrated with late fees and going to a store to pick up a DVD, so the company created a subscription service with the now iconic red envelope. But the company recognized that streaming was coming (hence the name Netflix) and made an early successful bet on streaming. Then Netflix recognized, that to stay competitive, it could not rely on other companies’ content, since these companies would start their own streaming services over time. Again, the company adjusted its strategy and made a new huge bet on original content. Today Netflix is still in a leadership position even though it faces new major competitors like Disney, and it seems like every media company has a dream to stream.
Whether it is Netflix or Microsoft or Apple or any other company, strategy, more than anything else determines the success of a leader. Without a first-class plan you can’t be a first-class leader. Strategy for any business leader must come first.
About the Author:
Brad Chase is a veteran strategy, leadership, and marketing consultant to CEOs and senior executives. He spent 14 years at Microsoft leading businesses, including MSN and Windows marketing, and finished his tenure as a Senior Vice President and Executive Officer. He has served on many for-profit and nonprofit boards, including his previous role as chair of the board of directors for the King County Boys and Girls Club. Strategy First: How Businesses Win Big, due out in June, is his first book.