Questions and Principles of Strategy

You may have heard about the importance of strategy, or how a lack of strategy leads to the death of a business. But you're not sure what having a strategy means or how to create one. So you have started researching and getting into the vast world of business strategy books, articles, and other content. Though you've learned more, some confusion remains. You're getting closer to understanding how to define your business strategy. This post offers practical advice you can use right away in your business.

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What is the big picture view of your business or life? What core principles guide your past and future decisions?

Or, as Roger Martin puts it in an example, “What is your diet?” is strategy, vs. “What are you eating today?”, which is not strategy.

According to Martin, strategy is "An integrated set of choices that compels desired customer action" (2024) — focusing on controlling internal decisions to influence customer behavior.

Strategy is the overarching framework behind your business or life decisions. A cohesive thread that unites your decision-making process. It is the container of all containers. Fundamentally, all decisions come down to “yes” or “no”.

Without a clear direction guiding your decisions, you may feel lost and overwhelmed by too many or too few choices. Committing to specific guiding principles can also be scary because you're limiting your options and won't know what other choices might have led to. You experience FOMO (fear of missing out) either way. Therefore, strategy is also about choosing what not to do.

A business without strategy lacks clear guiding principles. This creates confusion and dissatisfaction among team members, which trickles down all the way to customers, and it can/will create issues.

What is strategy#

Customers are at the core of strategy. Everything you do as a business is to continuously provide value to your customers. Your strategy provides the foundations to deliver value with consistency and high standards.

Strategy isn't only for top executives - people throughout an organization need to make strategic choices for success. The best organizations spread strategic thinking throughout all levels of leadership. This creates a system where strategy and decision-making are distributed across the organization.

Strategy doesn’t have to remain fixed. In fact, it will almost certainly vary over time because culture and nature aren’t fixed. Your decision-making framework needs to stay current with the times. This allows you to meet customers' needs and continue providing value. Failure to do so leads to the oblivion (i.e., no more relevance, shutting down).

Before intellectualizing too much though, start by offering value to customers because hands-on experience will help you strategize better than just theoretical learning.

Business has different levels. The first one is learning by doing.

Don't focus on strategy before starting your business. First, find customers and validate your market consistently. Only then can you think about strategy and other intellectual pursuits. You can decrease the time it takes you to achieve your vision by learning from the what the best people at the craft have already figured out.

Essential questions#

In his book “Playing to win”, Roger Martin provides five questions to determine strategy:

1. What's your winning aspiration?

   Defining what we truly want to accomplish is challenging, both as individuals and organizations. Every business is ultimately a group of people working together to create value that customers are willing to pay for.

   Our brain creates mental barriers when trying to answer this question, often through limiting beliefs about ourselves and the world. The intensity of such barriers varies within individuals, but they are present within everyone nonetheless.

   So, the first step in strategy is to define your winning aspiration—the thing(s) you are trying to accomplish. This is somewhat similar to goal setting. Picking one or two aspirations maximum is best. Write them up and elaborate on them clearly for increasing your chances of success.

   Being specific brings better results than being vague. When you clearly define your goals, you naturally start taking actions that align with those goals and move you closer to achieving them - even without conscious effort.

   Choosing your business direction is both complex and personal. You might feel torn between copying others' success and following your intuition.

   It’s okay and you will be fine. As humans, we naturally look to others for guidance and validation. This has essential survival implications, and it can also stifle any progress and action when overindexing on this instinct.

   Pay attention to your emotional and physical responses to different goals and targets—then make decisions based on those reactions. Too much analysis leads to inaction and prevents you from starting your business. Think of your business as a series of small experiments. Focus on learning and adjusting as you go. After all, experiments are meant for active discovery and learning through hands-on experience.

   Example: Helping rich people and digital nomads organize their travels; reducing the anxiety, effort, and time it takes to move often while also planning those travels. This enhances their experience as a whole. More time to work and earn money to continue fulfilling their dream to travel.

2. Where to play?

   This step involves deciding which market and location to target. "Where to play" means choosing the specific segment of customers you'll serve and the geographical areas where you'll operate.

   When selecting your target market, aim for a careful target:

   • Specific enough to be profitable

   • Not too narrow to limit growth

   • Not too broad to face excessive competition

   If you're new to business, don't get too caught up in perfecting this decision. Focus first on building a track record of satisfied customers - their feedback will help you refine these strategic choices naturally over time. See design thinking for more on this.

   Example: Rich people (net worth > 1m$) and digital nomads—people who move across locations often (i.e., more than 3 times per year).

3. How can you win?

   Once you know your market, choose how you'll compete (i.e., how you’ll play the game of business). As popularized by Michael Porter (a very prominent person in the world of strategic management research), there are two options on how to compete/play:

   1. Cost Leadership (think Amazon): Offer your products at competitive prices below market rates. This strategy works particularly well when customers prioritize low prices, or you want to disrupt a stagnant and inefficient market.

   2. Differentiation (think Apple): Stand out from competitors by providing superior quality, unique features, or exceptional service that justify medium/high prices. With this approach, you can command premium prices since customers value your distinctive offerings more than cost savings.

   Choose one strategy and stick to it. Attempting both strategies at once often leads to failure—being “stuck in the middle” with no clear positioning. Being stuck in the middle means competing weakly against everyone, without establishing a clear market position. This expands the pool of competitors and decreases your chances of winning the game. You have to be able to answer the question: “why would I choose your product over someone else’s?” Be specific.

   

   Example: Differentiation strategy. Concierge high quality service that takes care of everything to the highest standard according to customer preferences. Proven process™️ and automations to maintain standards.

4. What capabilities must you have that competitors don't?

   Once you choose how to compete, identify what capabilities you need. These are the specific features and systems that will help execute your strategy. For cost leadership, focus on capabilities that maintain profitability while keeping prices low, such as:

   • Economies of scale

   • Efficient production processes that reduce production costs

   • Strategic automation to reduce staff costs

   • Streamlined operations

   For differentiation, concentrate on capabilities that deliver exceptional value and justify premium pricing. These might include superior product quality, unique features, outstanding customer service, great marketing and brand IP.

   Your capabilities protect your market position from competitors. While single capabilities are easy to copy, building multiple complementary capabilities takes time and creates a stronger competitive advantage. The good news is that these capabilities become more valuable and harder to duplicate as they develop over time.

   Software as a strategic advantage. Automation for consistently high quality delivery. Clear process™️ for delivery.

   • High-end client portal (also with app) for collaboration

   • Clear process™️ and automations

   • Excellent communication and service in the client’s interest

   • Network of adjacent service providers and partners

5. What management systems need to be in place?

   Finally, establish management systems for both people and processes that will consistently deliver on your capabilities and execute your strategy effectively. These systems form the backbone of your business, ensuring you can maintain your capabilities and achieve both economic and human success through consistent strategy execution.

   For example, create an excellent onboarding process that quickly prepares new team members for execution. Implement regular performance reviews to maintain low turnover and provide clear paths for success and rewards. Build automated systems in key areas to reduce costs and maintain quality.

   Over time, these systems become stronger and harder for competitors to copy.

   AI agents specialized in specific verticals of the process™️. Clear visibility of progress and communication to customer.

Practical actions/next steps#

To get started, take these five strategic questions and write down your initial thoughts for each one, letting your ideas flow freely. After this brainstorming phase, go back through your answers and refine them to create a clear, focused strategy document.

Example#

1. What's your winning aspiration?

   To become the leading data-driven marketing agency for B2B SaaS companies, helping them achieve predictable revenue growth through innovative digital marketing strategies. We aim to transform how B2B companies approach marketing by combining creative excellence with measurable results.

2. Where to play?

   Target Market: B2B SaaS companies with annual revenue between $5M-$50M, primarily in Asia, who are looking to scale their marketing efforts and require sophisticated, data-driven approaches.

3. How to win?

   Differentiation strategy through:

   • Advanced data analytics and AI-powered marketing solutions

   • Industry-specific expertise in B2B SaaS

   • Guaranteed ROI metrics for clients

   • Integrated approach combining performance marketing with brand building

4. Required capabilities

   • Proprietary marketing analytics platform

   • Team of data scientists and marketing strategists

   • Deep understanding of B2B SaaS customer journey

   • Strong partnerships with major advertising platforms

   • Content creation excellence focused on technical B2B topics

5. Management systems

   • Project management software customized for marketing campaigns

   • Weekly data-driven performance reviews

   • Quarterly strategy alignment sessions with clients

   • Continuous learning program for team members

   • Client success tracking and reporting automation