The most important question in strategy

Building a sustainably profitable business is a bit easier, and a lot more likely, when you couple that drive with a strong strategy.

We all need something to drive us. A lifelong dream we’ve been carrying, an ambition we’ve been stoking, or an aspiration about our impact on the world.

It’s often the fuel we need to push ourselves, keep going, take risks, and be bold.

But building a sustainably profitable business is a bit easier, and a lot more likely, when you couple that drive with a strong strategy.

“A lofty mission statement isn’t a strategy,” Roger Martin says in Playing to Win. “It is merely a starting point.”

Knowing what we want to achieve, the mission we’re on, is just the vital first step. What comes next is reckoning with what’s possible, and answering the most important question in strategy:

What would need to be true?

Martin, who helped craft the strategies behind P&G’s renaissance in the late 90s and early 2000s, puts this question at the heart of his strategy process. And it’s valuable for businesses of all sizes and aspirations.

What would need to be true, for instance, to have a sustainably profitable business? As Martin points out, “All successful strategies take one of these two approaches: cost leadership or differentiation.”

So it would need to be true that we either fully committed to being the cost leader, focusing all our efforts on decreasing costs and increasing volume, or that we fully committed to a unique market position, focusing our efforts on fewer, more profitable customers.

Unless we grapple with what needs to be true and develop a strategy, we’ll find ourselves struggling to stay ahead of the forces exerting pressure on our business.

Of course, strategy isn’t always necessary to succeed, but it sure helps. Like Ogilvy said, sheer effort and drive “can sometimes find truffles, but it helps to know that they are found in oak forests.”

So how do you use strategy to turn drive or a dream into reality?

Consider what you truly want, long-term, for your business. Perhaps it is to have a larger impact on your community, more time to spend with your family, or to develop groundbreaking new services.

Imagine what would need to be true to make that reality. It first might need to be true that you’re spending your time each day more effectively, focusing on what matters most to you. Which means it might need to be true that your business is working with fewer, but more profitable customers and focusing on just what you’re best at.

That may mean it needs to be true that you’ve reduced your current product or service offering. And it may need to be true that you’re targeting a larger market than the one you used to service.

Then, make a list of the obstacles standing between you and what needs to be true. You might need more experience to know what you’re best at before you can focus. You might need to change your branding or marketing to fit an up-market position. You might need external support or partnerships.

Spend time with this list, and think of ways you could test out solutions to each obstacle. Perhaps by trying out new marketing language on different groups of prospects or by slowly scaling back the number of services you offer on your website.

Then, move forward with your proposed solutions, always checking against your greater goals, and what would need to be true, to make sure you’re heading in the right direction.

As business owners and leaders we are both blessed and cursed with ambition, a desire to change the outcome and create the future we dream about.

But for our dreams to come true, much else must also be true.

We must be different. We must offer something unique and special. And we must make decisions for the long-term benefit of our customers, ourselves, and our business.

Our ambition, mission, and drive got us started.

It will be focusing on what needs to be true that will take us where we wish to go.