Excerpt

A contrarian by nature, I have always taken issue with those claiming that operational excellence is the only key to business success. Yes, I understand that cash flow is important to keep a company running. I accept that investment in technology and developing a protectable asset base from that research is key to commercializing a differentiable portfolio to customers. As a marketer by training, I have always believed that addressing customer needs and promoting a scintillating value proposition is important for driving customers to purchase a company’s products. And I have no doubt that an effective sales team facilitates the consummation of the manufacturer-customer transaction.

Yet every day, companies succeed without first-rate technology. Capital markets assist companies to weather cash-flow shortfalls. Products sell in spite of poorly crafted positioning statements and ineffective sales teams. So a simple examination of the annals of our most successful companies demonstrates that none of the important factors mentioned above are singularly responsible for a company’s success or failure.

To me, there has to be something more that is contributing to corporate success. I propose that good decision-making is the underappreciated element of successful businesses. It is a foundational competency that permits companies to augment innovative technology, develop effective product brands, and drive significant growth.

All decision-making plays a role in company performance. However strategic decision-making is most often undervalued in business circles today. Yet it is a highly valuable capability that impacts the future prospects of a business. Before a company can succeed at any operational tasks, it first needs to set the company’s strategic direction—for what good would it be to set sail if the course has not been plotted? The hallmark of effective strategy is consistent, quality strategic decision-making that can be broadly supported by employees.

Strategic decisions are like a corporate sextant, the tool used by sailors to track the movement of the stars as a guide for plotting a ship’s course. At points throughout a corporation’s journey, the firm will face junctures where it must modify its course in order to reach port. These junctures are the points where strategic decision-making occurs. Choose poorly, and the company strays off course, perhaps so severely that the cargo spoils before the ship makes port. Without strategic decision-making, the company’s execution suffers: disengaged employees devote halfhearted effort to their tasks, divided executive teams apply their resources against misaligned priorities, and parochial expense budget battles stall progress. The ship flounders. In the worst-case scenario, a missed market opportunity dooms the company.

So why title this book “Stratification?” Stratification is defined as dividing or arranging things into a hierarchical order. This is the nature of strategic decision-making. Namely, analyzing different strategic alternatives— stratifying them, seeking the strategy that is best for the company. This book explains a simple process that can help your organization make strategic choices more effectively and efficiently using a strategic-decision process called the Lean Strategic Decision Model®, often abbreviated in this book as LSDM.

I arrived at the subtitle, “How strategic-decision processes will create sustainable competitive advantage.” But honestly, I struggled to develop a subtitle that accurately portrays what I believe this book delivers. Sustainable competitive advantage is a big promise, and a good friend told me that I should avoid claiming a way to solve the world’s business problems. So at the risk of over-promising, here is the reason why I settled on this subtitle. Sustainable competitive advantage stems, in part, from company competencies. And most companies lack a strategic decision-making competency. So, if you improve yours by reading this book, you will have an advantage over your competitors. And by applying it whenever you face a strategic issue, you can sustain that advantage.

Companies of all sizes and industries face strategic challenges. They must successfully address these hurdles to achieve business objectives.

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Fundamental Proposition

All kinds of business challenges can dictate a strategic evaluation of the company’s circumstances. But strategic decision-making is performed poorly in the corporate world today. Decisions are often based on political expediency and inaccurate executive intuition. Even in this age, where information is so freely available, facts essential to a decision are left undiscovered. In some instances, decisions are made so quickly it would be ludicrous to believe adequate analysis has been performed. Ironically, in other situations, decisions take so long that changes in market forces make the delayed decision irrelevant.

Research has shown that strategic decisions are successful only 50% of the time in the corporate world today. That is the same odds as flipping a coin! Who among us would think that a coin toss is an effective approach to setting company strategy? Strategic decisions should not be left to the chance that a head or a tail rests face up. While no one is suggesting that this actually occurs in business organizations, many companies are making strategic decisions without a process; that is almost as risky. Failing to implement a process for strategic decision-making is comparable to solving the strategic issue by chance.

Developing effective strategic decisions requires the right tools. Haphazardly formulating strategy is the danger to which executives are inattentive. Consider the Lean Strategic Decision Model®, a decision process that concisely compares strategic alternatives by applying a disciplined approach to arrive at a strategic decision. It is intended to drive strategic decisions in weeks, not months, without requiring hundreds of man-hours or mountains of data. It is an approach that helps corporations improve strategic decision outcomes. The chapters in this book are designed to teach you this simple process so you can implement it yourself, thereby helping your company form strategy more efficiently and effectively.