Which comes first: strategy, target, or plan?
Here’s the thing—if you’re making money, there’s a competitive strategy at play. The question is: do you understand what it is? Do you have one that’s optimized? Can it drive your growth trajectory?
The Rudder and North Star Framework
You need both, and they serve different purposes. Your competitive strategy is your rudder—it’s the underpinning choices that determine how you navigate. Your mission, vision, values—that’s creating the picture around the North Star. Your three-year winning ambition—all of that is to do with North Star.
But everything else is about how you’re going to position yourself in the external marketplace to win and then align everything you do behind that.
The Right Sequence
Only if you are driven by your competitive strategy will you unlock the full force of your organizational business potential. Here’s how it works:
- Strategy First: You’ve got to have a robust competitive strategy in play, and then you need to align behind it.
- Targets Second: You need targets that reflect successful execution of your strategy- targets must be set in the context of your competitive strategy.
- Plan Third: Then there is the sequenced set of activities and associated investments that are needed to unlock the performance.
Why Targets Can Actually Limit Performance
Targets are really valuable—they let you know whether you were realistic. They allow you to see how well your strategy is shaping up based on what you thought it could and should do. But here’s what we’ve learned: by having a target as the dominant motivating force, it can actually reduce what the business might achieve, because the target understates what could be accomplished. Targets can create a mindset which actually limits performance.
The growth mindset forces you to go, “How can we? What would need to be true? How do we make different trade-off decisions?” So it really forces you to create a plan that brings the teeth of your competitive edge into play.
The Private Equity Problem
The problem with being target-driven occurs when you’ve got a shorter-term mindset. When you’re rolling to a five-to-seven-year exit, and you’ve got those annual requirements—”if we’re going to do that, then we’ve got to hit this and hit that.” Well, maybe not.
Organizations sometimes need to invest ahead of their revenue curve in order to fulfill their potential. They have to have an absolutely strong case for doing so, and they have to demonstrate through milestones that they are on track to deliver.
The Scaling Question
When you’re at the stage where you actually need to scale, you want to employ your competitive strategy to get enough business in the door that you have enough of a pipeline, that you are not scrambling, that you can charge what you deserve, that the core bench is utilized.
Then you want to grow more volume and preserve the margin. Then you get to the stage where you go, “Okay, do we want to scale this? What options do we have to scale?” And that’s when you really come into play in terms of unleashing the full firepower of the business.
The Trade-Off Tool
You’ve got to use your competitive strategy to be able to do the trade-off discussions. To be able to say, “Yeah, that looks like a shiny new object over there, but it doesn’t really align with everything else that we’re doing, and it will diffuse our focus.” Or it is a “not now because these activities need to happen first to optimize our performance.”
The Bottom Line
Strategy-driven organizations don’t just hit their targets—they discover what’s truly possible. When you sequence correctly, targets become a floor, not a ceiling, and your plan becomes a vehicle for unleashing competitive advantage.
Is your strategy driving your targets, or are your targets constraining your strategy?