“The first thing to keep in mind about strategy is that it is not all that complex. You should keep it simple and always remember that, put simply, strategy is about choices. After years of working closely with leaders of large corporations, I have come to the conclusion that strategy is actually about a set of five choices that must be made:
1. What is our winning aspiration? 2. Where will we play? 3. How will we win? 4. What capabilities must be in place? 5. What management systems are required?
The very core of any strategy is the world of question #3 — the ‘how to win’ choices: Where are you going to place yourself on the playing field, and how are you going to win there? Answering that question is the hardest part of strategy.”
– Roger L. Martin
Read the full article in the September 2018 issue of Rotman Management.
“Wealth is the thing you want. Wealth is assets that earn while you sleep; it’s the factory of robots cranking out things. Wealth is the computer program running at night that’s serving other customers. Wealth is money in the bank that is reinvested into other assets and businesses.” – Naval Ravikant
“We’ve learned this year that assumptions you have about the future can be destroyed overnight. That’s true for the poorest to the most successful, the old dry cleaner to the tech startup. It was true in January, and it’ll be true again in the future. Things change.
If that’s the lesson, the question is: what do you do about it? How do you think about a world where fundamental assumptions about the future are so fragile?” – Morgan Housel
When it comes to recruiting and retaining employees, it can feel like an uphill battle for entrepreneurs with small, growing companies. They will likely have less capital at their disposal than their larger competitors, so attempts at salary bidding wars might not be a viable option.
But instead of playing to their weakness, the entrepreneur can leverage the advantages they have over many larger enterprises: flexibility, growth, innovation, and purpose.
Smaller companies have the luxury of being more malleable and adaptable to the unique situation of each employee. Flexibility is a critical advantage in recruiting and retaining employees looking for flexible working hours/locations, a significant component of wellness that many employers still (shockingly) overlook. Large corporations with rigid, bureaucratic corporate cultures have an especially difficult time competing with this.
For those not interested in climbing the corporate ladder in exchange for a few decades of their lives, smaller businesses are an ideal place to learn and grow at their own pace. Due to the flat organizational structure and entrepreneurial culture, small businesses can provide employees with plenty of career advancement as the business itself grows. This tends to be just as critical in retaining employees as recruiting them.
Allowing employees to be exposed to new skills and responsibilities offers tremendous growth opportunities for both the individual and the business. A chance to work in this environment will be a breath of fresh air for people coming from an archaic, arbitrary, and political employee advancement process that has crippled the spirit of so many in the corporate world.By focusing on helping the employee advance in their career, instead of just the company, small businesses are better equiped to attract and retain prime talent across the board.
Advancements in technology has made it possible to automate and even eliminate many tedious and boring tasks, and often for a fraction of the cost. Many corporations have embraced this technology for good. Still, others use it as an excuse to cut salary costs at the expense of their employees. Perhaps this makes the firm cost-efficient, but is it a truly efficient use of resources?
By substituting humans for technology, these businesses are draining their sources of innovation. A conscious entrepreneur will instead use this technology to enhance the employee output, rather than replace it. There is an abundance of cost-effective tools out there that can reduce the menial tasks so that employees have more time for creative and strategic work. Not only is this beneficial for employee wellness, but it also helps maximize returns on both human and tech resources.
This one is self-explanatory. Humans ultimately want purpose and meaning in life. Most large corporations still do a mediocre job of connecting their employees to their mission. Others simply have a shallow mission to begin with. Organizations whose top priority is to generate profits fail to inspire their people, and these businesses are bound to have unsatisfied people searching for an escape route. Entrepreneurs by design are chasing a specific and meaningful purpose, and this becomes an incredible strategic advantage when it comes to recruiting and retaining personnel. Finding someone who buys into the same vision and mission will go a long way in persuading them to join your team, even if your financial offer isn’t as strong.
There is no shortage of companies who are lacking in each of the above areas, and chances are they have great people who feel overworked, undervalued, or otherwise unwell. This is where small business can leverage their strengths to help these people achieve flexibility, growth, innovation, and purpose in their work.
The future is unpredictable. We cannot predict any future event with 100% certainty, although we can use past experiences and future expectations to infer potential outcomes. Even this has some risk involved since we cannot estimate all possible results in a world full of unexpected and random events. Most of us disregard the inherent uncertainty involved in the decisions we make and instead choose to believe that uncertain events are predictable. We see this in financial markets all the time when amateur investors think they can accurately predict future stock prices. Any unbiased and rational person would agree that this is a prime example of an uncertain outcome, yet many of us foolishly believe we can predict it with certainty.
The essence of investment management is the management of risks, not the management of returns.
If something is unpredictable, does this mean we should avoid it? Not at all. We should instead be welcoming it with open arms. Once we accept that we cannot predict the future, we can make better decisions in business, investing, and anything else – which is where risk management comes in. The entire premise of risk management revolves around knowing that most outcomes are out of our control, but by strategically managing our risk exposures, we can favourably affect the probability of beneficial outcomes occurring for us.
Risk management goes beyond business and investing. It’s fundamental to the decision-making process of all humans. Contrary to popular belief, risk management is not risk aversion. It’s about strategically managing your portfolio of risk exposures and deciding when, how, and how much to spend. Just like with money, reckless spending of risk could result in unmanageable debt burdens, overwhelming failures, and other undesirable consequences. That said, merely hoarding risk units without spending or investing them in potential return-generating opportunities will severely limit the ability of an individual or a business to grow, and ultimately maximize the returns on their risk. Risk management isn’t static, however. It continually changes based on circumstances. Like their investment portfolios, the optimal risk portfolio for a student will drastically differ from that of a retired senior based on their different stages of life.
If you are not willing to risk the unusual, you will have to settle for the ordinary.
But before we can manage risk, we must understand it. Risk is one of the most valuable assets any person, business, or other entity can possess. You can buy anything with risk if you have enough to spend. The more you are willing to pay, the more potential returns you can buy. Unlike many other tangible assets, its value almost always holds. It’s rare to see a high risk-low reward or low risk—high reward opportunity. When they do pop up, they quickly disappear. The former would become obsolete from lack of demand, and the latter would be capitalized on by arbitrageurs before immediately disappearing. For the most part, there is no free lunch when it comes to risk.
Strategic and intelligent thinking about risk can make a big difference in the decision-making process for businesses and individuals alike. Risk management involves actively controlling risk to achieve our goals. Once we have a clear understanding of our risk portfolio, then we can decide how to maximize the returns on a risk-adjusted basis. But it all starts with abandoning the fallacy of predictions and embracing the power of risk management.
If you don’t invest in risk management, it doesn’t matter what business you’re in; it’s a risky business.
With all the data out there today, there seems to be an endless amount of knowledge available to everyone. The difficulty lies in deciding when to call upon it, how to efficiently retrieve it, or even verifying its authenticity. The ability to acquire, process, synthesize, and ultimately utilize knowledge and information is critical to the success of all individuals, businesses, and other entities. For that reason, the world’s top strategists have made intelligence operations a priority, and who better to model after than the global intelligence community (IC).
Here are three key IC applications every organization and their personnel can use:
1) The Intelligence Cycle
The intelligence cycle is a foundational component to the IC and is the continuous process of turning data into information that is useful for decision-making. The process breaks down as follows:
Planning and direction: Laying out the end-user’s intel objective and create a roadmap to achieve them.
Collection: Assemble the necessary data from available sources.
Processing and exploitation: Convert the data points into comprehensible and useful information.
Analysis and Production: Evaluate, synthesize, and transform information into the desired final format (report, graph, presentation, etc.).
Dissemination: Present final format to the end-user. If it agreed that the objective has been met – then case closed. If not, the cycle starts again.
Evaluation: Constantly acquire and evaluate feedback on each step, as well as the overall cycle. This is critical to identify opportunities for improvement and adjustment to meet end-user objectives.
2) Types of Intelligence
The IC produces multiple types of products that serve different purposes, and each one can be applied to your organization’s intelligence strategy. At a high level, three broad categories will be apart of every strong intel framework: current intelligence; trend analysis; and long-term assessments.
Current intelligence is your day-to-day analysis of the present landscape in your market, industry, country, etc. This is essentially ‘breaking news’ that is prioritized in terms of potential impact and consequences on the organization. This can also be a source of early-warning signals for future developments.
A trend analysis report provides deeper insights on single or multiple events and is far more extensive than current intelligence. This intel is vetted and cross-referenced across multiple intel sources over an extended period (weeks to months) to ensure the accuracy and credibility of reports. This helps analyze the impacts of new competitor products, geopolitical conflicts, consumer response to marketing campaigns, and more.
Building on trend analysis, long-term assessments are intelligence reports on an ongoing issue that often take months to produce. Whether it be a changing social landscape, evolving consumer interests, or even internal culture trends, long-term assessments can provide a detailed analysis and project future developments that will aid in an organization’s strategic response.
3) Intelligence Objectives
Each year, the US Office of the Director of National Intelligence (ODNI) produces a report on its National Intelligence Strategy (NIS). This report contains several business and organizational applications, but the one most intriguing is the mission objectives. The ODNI describes these objectives as “the activities and outcomes necessary for the IC to deliver timely, insightful, objective, and relevant intelligence and support to its customers.” In the 2019 NIS, the first three mission objectives were broad and foundational by nature (such as current intelligence), and the remaining four addressed specific areas (such as cyber threats). When building your organizational intelligence framework, your mission objectives should follow a similar breakdown. Here is an example from a business perspective.
Given all the information available today, it is imperative that organizations develop a better understanding of the intelligence process, the different types of intel available, and setting intelligence objectives. Those that do will be able to filter through the noise and strategize accordingly. Those that do not are doomed to fail as they drown in a sea of endless data with no clear path forward.
The battle within our mind is a continuous and unrelenting conflict that must be won every day. Without winning this fight, one cannot expect victory in any other aspect of life. Even the most formidable and technically gifted individual cannot devise a winning strategy in business, politics, sports, or any other environment if they cannot master themselves. Emotions and impulses bend our perception of reality and cripple our rationality, which severely hinders the mind’s strategic capability. The more we let emotions dictate our actions, the more vulnerable we are to defeat. Great strategists throughout history have understood this and have been able to use it to their advantage.
Strategists take a pragmatic approach to conflict, and their mastery of mind and emotion allows them to accomplish their objectives in even the most hostile situations. Even in the face of insults and aggression, the strategist will parry these attacks and maintain composure. Rather than engage in the hostility, they will seek to interrupt the attacks through delay, obstruction, and misdirection. Letting the other side waste precious time, energy, and resources on emotionally driven tactics will eventually tire, frustrate, or demoralize them – causing them to unveil a weak point in their strategy. Time is a great advantage in conflict, but one that can only be utilized through a rational and disciplined strategist.
In his book, The 33 Strategies of War, Robert Greene makes a fitting comparison between two key figures in Greek mythology: Ares and Athena. Ares, the god of war, was a quick-tempered and ruthless warrior known for his lust for violence and brutality. He was hated among humans (except Spartans) and gods alike and considered untrustworthy due to his reckless and wasteful approach to war. Athena, on the other hand, was known as the goddess of wisdom and war (among other things). She represented the intellectual and philosophical side of war that Ares failed to master. While Athena was a powerful force on the battlefield, it was her craftiness and rationality that helped her defeat aggressive and impulsive enemies. There are countless stories throughout Greek mythology of Ares suffering defeat, but Athena never lost a battle. With this in mind it is clear that the superior general is Athena, so why then do so many follow the Ares approach to conflict?
Channeling Ares comes naturally to us. Ares lies within our animal brain that reacts to our environment at a faster speed than our rational, “Athena” brain can. It takes time, discipline, and determination to tame our impulses and emotions. Unfortunately, most people are unwilling to make this sacrifice and instead choose to repeatedly shoot themselves in the foot by giving in to anger, greed, pride, or any other emotion. We see this in sports when a player takes an undisciplined penalty that costs their team the game; in financial markets where investors recklessly buy overpriced assets that blow up their portfolio; and in marriages where spouses hurl insults at each other that turn a small disagreement into a relationship-killing fight. We have all been in situations where we have given into to our primal instincts and ultimately cost ourselves a chance at achieving our long-term goals.
In the end, brutes may win battles but strategists win wars.
“When there is no enemy within, the enemies outside cannot hurt you.”