Episode 18: Strategy: The Most Misused Word in Business
Episode Summary
Strategy is one of the most mis-used words in business today. There are people who love talking about the excitement of where the company is going, while others hate what can feel like an onerous and bureaucratic process. But chances are if you listen to either type you’ll hear about mission and vision, and tactics – but will you really hear about strategy? On today’s episode we talk about what strategy actually is in a context and a framework that will help you think pragmatically and productively about your own company’s strategy.
Episode Transcript
Stephanie Chambliss Gaffin : 0:00
Welcome to Right in the Middle Market. On today's episode, we want to continue our arc of talking about strategy. And we are strong believers and thinking about strategy development and strategy execution. So just to help make sure that you're with us in terms of what we've talked about so far, in Episode 11, which was titled Business Strategy Anchoring on Mission and Vision, we talked about the importance of having a bold vision, not just a vision, but a bold vision, even if it's focused on a particular market or particular geography, but that having that vision is critical to being able to maintain the mentality of a lofty or even an audacious, long term strategic goals. We also talked about the importance of a mission. You hear all kinds of organizations talk about being mission driven, but regardless of the size of the company or the trajectory, you've got to have a mission at the core to be able to create a self reinforcing culture. And to understand the why behind the work, this is important for talent retention. And for those who, again, really are looking for a mission driven company and mission driven career. So vision is about where we're going. Mission is about what we're doing today. And then in Episode 16, which was where we talked about, What good are goals anyway? And there, we started to say, how do you take the mission and vision and break them down into what are goals, strategies, objectives and tactics? Now, we want to come back and this actually came out of a question that we got out of our last episode- Out of Episode 16, Is "Okay, I get how you break them down. But I'm still a little bit confused about what is strategy." And as Mark and I started to talk about this, we realized just how many people actually are confused about this. Now part of it, there are a lot of different perspectives on it and a lot of very good different perspectives and we'll talk about some of them today. But again, here, we really like to try to make it very pragmatic. So today we want to talk about what is strategy in a very pragmatic bent? Why does it matter for the middle market and for middle market companies? Now before we jump in, and I wanted to talk about why the two of us are here talking about strategy. So I always say that my co host, Mark, lives where Strategy and Finance intersect. And he really has been involved in strategy development and execution, both in executive positions at public and private firms, as an M&A professional and as a strategy consultant at a tier one global strategy consulting firm. I true to saying that I live at the intersection of strategy and operations, have taken really a pragmatic approach, where I am often the one thinking about how do we take that strategy and translate it into day to day execution. So hopefully today we'll be able to give you a very pragmatic view on, What is strategy and why does it matter to middle market companies? So, Mark before we start to dive in, maybe it'd be helpful to talk about, I know that you have really strong views on strategy on what is strategy, and that you adhere to those because you believe that that kind of an underpinning is important to be able to actually develop an execute strategy. So let's start there. What shapes your approach to strategy?
Mark Gaffin : 3:31
Well, good morning. Yeah, I think after business school, I had the opportunity to look at and evaluate, and were interviewed by a number of strategy firms. And I was fortunate enough to join what I would consider one of the very best global strategy firms and got a chance to work with some outstanding teams on cases down in Australia. I was down there for a couple years, did work on projects in the United kingdom and then back here in North America. And some of the stuff we learned there, the pragmatic approach, unique insights, pragmatic approach and if you will, strategies that can be implemented as you kind of pointed out, we'll talk about a little bit later, is so very important to that approach. And that was you know, with me then and remains with me now. If I lpeek back at my old company's website, and they quote actually on there and I still love their approach, they say, "We combine bold thinking with a practical approach that focuses on getting the job done turning decisions into action and delivering results." So that results focus was very, very appealing to me when I when I joined them. And when we run client engagements, we were always challenged, fact based, think rigorously. But again, we needed to communicate things to the client in a way that they could answer the question. "What do I do on Monday morning", and I've always loved that quote, it's still with me.
Stephanie Chambliss Gaffin : 5:05
Okay, so I'm gonna, I'm gonna be like a dog with a bone here. So, you've talked about a couple things about how we might recognize a good strategy, because it's pragmatic, it tells you what you're going to do on Monday morning. We've talked about why it's important, but I want to keep pushing. What is strategy? Is it a thing? Is it a process? People talk about, you know, strategy, Oh, it's strategic planning. It's that, you know, annoying process that we go through every year or whatever. It's a template. So let's break it down and first agree, what exactly is strategy?
Mark Gaffin : 5:38
And that's a really good point in you talked about it, I think in your intro, that there are a lot of strategy perspectives out there. Too often, you'll see this devolve into a conversation about military and you'll use objectives and strategies in the military. I like to try not to do that if at all possible. But I think if you look on Amazon, for example, and if you search for business strategy books, you'll get over 50,000 hits with business strategy books. And some of the real well known ones are, In Search of Excellence, by Tom Peters, that goes back to 1982. And quick side story, Tom Peters and I are kind of Twitter buddies and we actually go back and forth, probably once a month on something. He's a great guy and has a lot of very interesting worldviews as well. Jim Collins, he wrote a book called, Built to Last back in 1994. And then he wrote another one, I think, which a lot of people really liked, which was, Good to Great. He wrote that back in 2001. And they all take kind of a similar approach. They go out and look at companies that seem to have done well. And they look at how they've grown versus the stock market overall, how they've grown versus their peers, and they come up with a list and then try and extrapolate some lessons learned from those companies. It's kind of really interesting, we'll see McKinsey, you followed up with a whole article on, Okay what happened to those great companies? So in 2017 they went back and looked at all the companies that were justifiably in those lists of Good to Great and In Search of Excellence and it's very wide you know, distribution of how they have failed. But I mean, the thing about strategy is, you know, it can be good for a while, but then it also needs to be adjusted to the times, over time's.
Stephanie Chambliss Gaffin : 7:43
I remember, I'll see if I can find a link to it and put it in the in the show notes, but there's a great sort of info video, an info- graphic that's a video that shows the change in the top I think it's the top 10 or 20 companies by year, over the last 50 years, and it's fascinating. And you look at companies, and you look back and you remember, oh my gosh, you know, your Kmart example is a really interesting one you think about Sears, you think about Polaroid, you know, very strong companies that, now, they're either totally gone or, you know, a shell of their former selves. And I think sometimes this can lead to a skepticism about strategy and just say, okay, so if some of the best companies in the world that were written up in these books, as you know, being exemplars of strategy, and now they're gone. Then why does strategy even matter? And by the way, I'm still not sure we've answered the question about what it is.
Mark Gaffin : 8:48
No, we haven't quite yet. What I want to impress upon us as kind of a foreshadow is it's not that they didn't have a good strategy at a point in time, and we can articulate a little bit more about the elements of a good strategy. What you'll see is not only do those have to be good at a good point of time, but they have to move over time. If you think of Sears, when I was young that was like the magical world, if you looked at the Sears catalog.
Stephanie Chambliss Gaffin : 9:20
Highlight of my summer, yes, I was a total geek as a kid, was getting the Sears and Roebuck catalog and going through an ordering my school clothes for the New Year, I loved it.
Mark Gaffin : 9:30
Right so you say Sears was at a time, amazing. And you look at other companies, I'll use Walmart, with what we picked up in our conversation with Chris Helmrath a couple episodes ago. That started off is very much a store, and it was a store with a very pointed mission on price points and delivering that. But it has grown from regional to national, now international, and it has taken on, we'll see how this battle goes on, but it has taken on Amazon's online kind of domain. They've just come out with what looks like a prime membership. So, that's where, you have to have a strategy, but that's not going to work forever, it has to face the people that are coming in the markets, the interest in the market, Circuit City. You know, some of those folks never saw some of the other category killers coming in, the Best Buy. But even Best Buy now, you know is horribly hurt by people what they call show showrooming where you go and you look at all the gadgets but you have your phone out as you're as you're looking at them and either in comparing prices and maybe ordering on Amazon as you're sitting there in the aisle. So the strategy's got to stay relevant to the market because the market doesn't stay the same. It changes.
Stephanie Chambliss Gaffin : 10:56
So if I keep recapping, we've talked about strategy, it has to be pragmatic. It needs to be always changing so that it stays relevant to the current market, because the world around us is always changing. What is it?
Mark Gaffin : 11:10
So let me give you and I will get to what my view is, but I want to give you some perspectives of people that have helped shaped my thinking on it. And some of these have been consistent over the years. The one comes from Alfred Chandler, this is actually from 1962. His point was, "Strategy can be defined as the determination of basic, long term goals of objectives of the enterprise, and the adaption of courses of action and the allocation of resources necessary for carrying out those goals." So if you just think of Chandler's view, we've kind of talked about those before, right? We've talked about determining our long term goals. We could call that the strategy. It's out there, where do we want to go? And the objectives of enterprise, those are those milestones that get us there. So if you think about that, and then the resource allocation, which you have to pick. Resources are scarce, they need to be prioritized. The next one comes from Michael Porter, which I think a lot of people would be used to. The name would be familiar. His point was, "Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value." And so that will carve into his point about competitive advantage. What are you doing? He had a number of prescriptions about are you low cost, are you high differentiation in variety and things like that. So that was Porter, from 1996. And then a little more recently, Ken Favaro, and some of his co authors said, "Strategy is the result of choices executives make on where to play, how to win and how to maximize long term value" The last part of that of course, is cornerstone of what we do here.
Stephanie Chambliss Gaffin : 13:02
So I'm going to pull out four points from what you just said. And again, trying to make this really tangible, really pragmatic about what is strategy. Number one, is that it's about the long term goals and objectives and the resource allocation. So it's about where you're going, and how you're allocating resources to get there. And the second important point that you made, and this is really around your quote from Michael Porter, is differentiation. How are you doing this in a way that is different than every other company that is out there? Number three, and this is a concept I think we've talked about a little bit, but it's one that really deserves emphasis, and that I know we'll talk about more as we continue to chat about strategy, which is long term value. Long term value creation. So this is not about just creating something for the next quarterly results or even this year's results. It's about long term value creation. And I think the fourth point, was the important distinction around where to play, and where not to play. And I know that I've said on a couple of prior episodes of talking about that to me, you cannot prioritize anything without de-prioritizing something, or quite frankly, everything else. And actually, Arianna Huffington just had a great quote on that on LinkedIn. But to me, those four things are what I pull out of what you just said.
Mark Gaffin : 14:30
Yeah, I agree. I think that it harkens back to what we talked about, about being relevant over time. Because everything's changing. There's an old saying that you can never step in the same river twice, because it's changing. So your market is changing. So this goes back to one of the underlying questions of this episode was, Do middle market companies actually need a strategy? Of course they do. And where many small, small small companies started out, there was a specific niche in a specific, it might have been geography or a micro segment of the market, which they filled. And you know what they filled it successfully. If they're around five years later, six years later, seven years later, they've done something very, very right. But where we start to bump up against, getting bigger, creating value over the long term. Then these other things that we're talking about actually have to come into play, when you're thinking it's not just ad hoc anymore. It's not just whatever someone will pay me to do. I think there's the incremental revenue there. I'm going to go chase it, we actually have to thoughtfully allocate our resources in a very purposeful way to grow and that will change companies and if you look at the numbers of companies by size, there are hundreds of thousands of companies that are trapped, if you will, you know, below $5 million in revenue, and they get up to a certain size and they kind of stall there. They haven't broke through, the companies that break through are able to adapt, able to change, whether it's geographic presence, whether it's maintaining capabilities and adding capabilities to their portfolio. Adding products or customers, you know, we're selling to small people, can we break into institutional customers? Those kinds of things happen. And they're driven by a strategy, purposeful investment, and going after those things to grow the company.
Stephanie Chambliss Gaffin : 16:21
So let me see if I can summarize then about what strategy is. Could we say that it's simply a set of prioritized actions and decisions that a company takes to reach its intermediate objectives, which are hopefully set in the context of mission and vision. And this includes the influence of resource availability, and allocation, capability development, and competitive markets. And in all of that, it gives you a very clear direction on what do we do Monday morning?
Mark Gaffin : 16:54
Yep, I agree. I think that's absolutely right in which we'll talk about in future episodes, but you break this down, and when you talked about just now, resource availability and allocation, capability development. So we may not have all those things right now to achieve. If our vision is to be something much different than we are today, we may have to develop, grow or buy capabilities, attain resources that we don't have. That may require some of the things that we do elsewhere in the firm, which is finding capital to go out and buy those capabilities or access those or grow them ourselves. So those are all really important, so that you're doing that in a thoughtful manner ahead of time, so that you are not lagging the market all the time, that you're at, with or ahead of the market. Otherwise you wind up like some of those names we talked about not too long ago on the heap of people that weren't able to keep up.
Stephanie Chambliss Gaffin : 17:50
So let's come back to that concept right after word from our sponsor. Right in the Middle Market is brought to you by SLS Capital Advisors. SLS Capital Advisors is a boutique financial advisory firm working directly with middle market leadership to tackle critical growth opportunities, including exits, mergers and acquisitions and access to capital. The principles of SLS Capital Advisors bring deep industry financial and consulting experience to firms seeking tailored strategic opportunities, including capital for major growth initiatives and alternatives for those evaluating corporate transitions and exits. SLS Capital Advisors services include managing effective exits and sales processes involving sophisticated buyers such as strategic purchasers, financial buyers and operator to operator transactions, and raising capital to fund our clients growth including debt and equity elements. They also assist companies in capturing growth opportunities through focused and effective organic growth and M&A programs and unlocking profit potential through business portfolio rationalization and divestiture. SLS Capital Advisors focused on delivering consultative executions for clients seeking strategic growth and capital. Find us at SLSCaptialAdvisors.com to learn more about how we can help you. Welcome back. So we're here talking today about what exactly is strategy, and do middle market companies need a strategy? So I think, Mark, we've come to a working definition of what exactly is a strategy? And this is where, I think when people often think about a strategy, they think about the strategic planning process. But as we talked about just before the break, it is that set of actions. So it's really bridging that gap between the mission and vision and the tactics. What am I doing Monday morning?
Mark Gaffin : 19:43
Right. We talked about this in a prior episode. And I think you were excellent in capturing this in the strategic planning retreats. Well, what does that mean? How do you incorporate people's vision that's what's so important. Where people tend to have, I'm gonna give you one example where people tend to fall down in strategy. They believe that strategy is that list of goals, right? You go out to the strategic planning and budget retreat. And I want to make a very strong case for these two things being just delinked. I wont do that today. But I want to make a case for why those two fundamentally should be delinked.
Stephanie Chambliss Gaffin : 20:21
And when you see those two, you mean the strategic planning process and the budget process?
Mark Gaffin : 20:26
Right. So I'm just gonna give you an example, I did some research on what people spend their time on. You'd like to think that your CEO would spend an awful lot of time on strategy, thinking ahead, keeping a vision down the road. In reality, they spend about 10% of their time on strategic issues, like understanding customers, market and competitor analysis, prioritization and sequencing of initiatives, keeping things on track, business case development, strategic alternatives, and choices. So these are the kinds of things that are strategy development and growth, which we talked about. But they spend about 10% of their time on that. 30% of their time tends to be on talent, and culture management, that's HR issues, which are important. That's our team, and we should be spending a lot of time there. But 60% of their time, tends to be involved in operations. So that's reviews, financial reviews, crisis of the moment, admin work and kind of corporate governance. So what we're trying to do is, think about how do we talk about allocating resources, that's another resource we need to reallocate better, to thinking forward to the big picture, and how we're moving forward. So we don't come out of a strategic retreat with a list of goals that include operational performance and safety and all those things which are important, but they really aren't strategic. And they aren't initiatives that are moving us down the road towards the mission and vision. So, I think we talked about that before.
Stephanie Chambliss Gaffin : 22:04
Mark, I know that you are a big fan of David Dranove's book, Economics of Strategy. And in that, he takes a very economic focus to strategy. And I think maybe let's talk about some of the key points that he makes in that book. So you just gave a really interesting breakdown of how CEOs spend their time, right, some of the research around how CEOs spend their time. So now I would think that begs the question, Alright, so if I'm spending more time on strategy, what are the kinds of things that I'm thinking about? I like where David Dranove's book goes, in terms of giving a framework for what are those kinds of questions that we should be asking and thinking about?
Mark Gaffin : 22:50
Right, and the reason I think I like the economic approach to this is not just because it's my background and kind of metrics and statistics and finance, but if you think about it, it is an economic decision and not like in the graphs where everybody took micro economics so many years ago and drove some people crazy, some people loved it. But but we are talking about economic trade offs. And we will talk about long term value creation, that is an economic term. And so what we are trying to do is make choices that on the margin, marginal cost is better than or is less than marginal revenue. So, the economic point is very, very important. And he looks at it this way, so, To successfully formulate and implement strategy, again, which we call strategy development and strategy execution. A firm must confront four broad classes of issues, and let's talk about them when them as we go, the first one and this really goes back to Ronald Coase work back in 1937. For those of us that geek out to that kind of work, but he talks about the boundaries of the firm. We took this when I was a strategy consultant, it was one of the very first steps we did, what is the actual definition of firm? What do we do? Where do we stop? You know, where do we stop? And what do we do? Where do we outsource? Where do we do an internally? So the boundaries of the firm. What should the firm do? How large should it be? And what businesses should be in?
Stephanie Chambliss Gaffin : 24:20
Well, this to me, so I think of this again, I'm always kind of the pragmatics, I think about this as what space do we play in? But I think the lens through which you view that, is really important. And if you think about, you know, the buggy whip industry is something that, you know, is the old adage about it, you know, because it's an industry that obviously went away. But if you think about what i they had changed that lens to say we're actually in the transportation industry? So to me, what's important about the boundaries of the firm is, are you thinking about it in terms of what you do today? Or are you thinking about it in terms of what problem are we solving?
Mark Gaffin : 25:00
That's right, we use the concept and would love to go into this at some point, we're like shared costs and shared customers and this because you think about, you don't have to knit so narrowly define what where you play, that it's just one thing, but you think of about a bicycle manufacturer, if you manufacture bikes, and you have a clear, you know, clear path in the bike shops all over the country, and you want to go into bike helmets, right? You might manufacture those, but it's a slightly different cost, but you have the same customers, right? So you already have a path to those customers. That may be a logical expansion of the boundaries of your firm. But if you make bike shoes, you know, again, because the people that need those specialized shoes, you could be why not, we could make those. Let's figure out where they do that. But if you start getting into high electronics, and things like that for the bikes, then you're starting to get to the margin and can we actually do things better, or do we contract that out and buy it in through a joint venture or something like that, as part of our firms. So those are ways the boundaries of the firm, and they tend to be horizontal, vertical, how far back do you go? So we talked about vertical integration, how far back do you really need to go? If I make watches, do I really need to mine the gold to make the watch? Probably not, theres probably someone that can do that better than I do. So point number two then and this will sound a lot like the Michael Porter quote, we did, are the market and competitive analysis. So what is the nature of the markets in which the firm competes and the nature of competitive interactions among those firms in those markets, again, that goes to the intensity. When you think of Michel Porter's five forces, that was the one where your competitive intensity in the middle.
Stephanie Chambliss Gaffin : 26:50
So again, if I think about my pragmatic, always trying to bring this back to very plain language, I think about, alright, if I've defined the space that I play in, who else is in that space? Because it matters, right to think about who's just on the other side of the fence, and might be thinking about coming in, because they're looking at their shared customer, shared costs. So who else is thinking about coming in? But really understanding because if I, well, foreshadowing, but if I want to think about what I'm doing in the space, it is important to think about it in the context of others. Okay, so third, what's next?
Mark Gaffin : 27:27
So the third point, positioning and dynamics. How should the firm position itself to compete? What should the be the basis of its competitive advantage? And how should it adjust over time? Real important parts there to unpack.
Stephanie Chambliss Gaffin : 27:41
So this is that point of differentiation that I just found myself getting to when we were talking about the second point, but it is really important, right? It's not just that I'm going to come into this space and if I am just exactly like all of my competitors, you know, if it's a rapidly growing market, maybe you can do that for a little while. But quite frankly, you need to have a way in which you are different, a way in which you are able to compete more effectively, so that consumers will choose your product or service compared to somebody else's. And so this is one and I do think that over time component, really understanding, why am I different today? Is that a sustainable competitive advantage over time? This is where people hear about the phrase "barriers to entry". That's where this matters. So is this something where, the way that I'm competing, that I'm competing different, is something that is going to still matter and still differentiate me six months from now and six years from now.
Mark Gaffin : 28:45
No, that's right. I think that you can talk through some very interesting studies about how do you change a market? So there's the Ben and Jerry's, which is, you know, kind of done to death, you know, before they came around, ice cream, was ice cream, was ice cream, right? You could go get it at the ice cream store or you could get it for the home freezer, but it was really a commodity. So often there is some time somebody can rethink a market and have a breakout strategy. Now you have a premium category, but it's very different. If we were to make sugar, you can make sugar, but you better be really, really good at doing it at a low cost, right? Because the people's willingness to pay, which is a big problem, and we probably see that word a million times. You know, the phrase, that willingness to pay, people have to be there. So you have to constantly be aware of what are the substitutes for what I'm trying to do? What are the entrance and those entrance which we see, are those nimble little companies and people close sometimes Piranha's. They are little companies that are startups all the time, they're going to be nipping at your heels and if you're not cognizant of those folks, over time will catch up to you. If you're not aware of those things, so I think that's what his point on those last two things is. His final point is internal organization. It's so important where people sometimes fall down, it's a little bit more about execution, but how should the firm organize structure and systems internally and to me this goes to just devolving decision rights and those kinds of things, which are a big area of your practice.
Stephanie Chambliss Gaffin : 30:17
Yeah, I was going to say, this one really gets to the heart of what I love to do around again, that intersection of strategy and operations and thinking about get stuff done. I always say I'm a GSD girl. And this also goes back to what we were saying earlier about how are we marshalling the resources of the organization? So those are people, they are financial resources, they are time. It's not just where we're hiring people, but where are those people spending their time? And to think about, then how do we make sure that the organization is actually structured in a way that drives to those things that you've talked about doing.
Mark Gaffin : 31:00
Yeah, that's right. I think that it's really important in any company as it's moving along, you're going to have the run the business, right? Run it well. Even if you're doing iPhones like your Apple do and iPhones, they still want to get better at producing iPhones. Because the better you get, the more reliable they are, the less defects there are. And hopefully you're moving down the learning curve and making them more cheaply. So there's always always a reward if you're doing it correctly, to running the existing business that's really super important. But, to the concept of over time, there's that point of change the business, what do we need to do to change the business? What part of the business is probably needs to change to adapt to what we think of I don't hate the word, megatrends. But what do we think that's going to happen that we need to be ahead of, or certainly in pace with so that we can maintain our relevancy and we call that sometimes explore versus exploit. Exploits not in a bad term, but you're exploiting your current competitive advantage? How can I drive economics out of what I do that are superior to how other people do it. But if you're not exploring and developing those capabilities and resources to be able to exploit in the future, then you're going to be on the sidelines watching the gameplay.
Stephanie Chambliss Gaffin : 32:16
So I want to just recap these four points really quickly. And because again, I think they provide an interesting framework and answer to the question about as a business executive, if you want to spend more time, if you want to be somebody who's spending more than that average 10% of time thinking about strategy. These are some great things to be thinking about. Right? So our first point on this was the boundaries of the firm. What space are we in? What do we do? What do we not do? Number two, the marketing competitive analysis. So what are the other competitors in your space doing? Number three is positioning and dynamics. How are you differentiated and how is that evolving over time to make sure that you're staying current with everything that's happening around you. And fourth, the internal organization. Are you marshaling the resources of the organization to support what you're trying to do strategically? And have you organized the internal structure of the company to support and make it easy and as straightforward as possible to do what you're trying to do?
Mark Gaffin : 33:27
Agreed. Exactly. To me, a business is what's called a complex adaptive system. Right? And in and of itself, and it actually lies within a competitive market we've talked about. That market itself is a complex adaptive system. And we're going to talk more about that in future episodes. I think I'm actually working on a blog right now. And it's a much more longer form discussion. But it's super important when you actually think about systems thinking on how you change a dynamic system. So that's really important. And I think that that's our approach here. The key takeaway, though, I think is about business strategy itself to be effective in supporting long term value creation over time. The strategy development in the strategy execution process, regardless of firm size, it must be based on facts, not biases. So you've got to consider our recent episode on ERP, where we talked about getting data to knowledge to insight, so that you're actually not making decisions on heuristics or guesswork. So you must consider the dynamics of the external environment, and that's including, as you said, the competitor reactions. So that actually starts to talk about game theory, which was another part of what we used to do. You can't just, you're not making your decisions in a vacuum and no one else is going to react to them, your competitors will react to those. So you have to think about these things in terms of the game theoretic standpoint. And then it's got to be robust to uncertainty. Uncertainty is always present, right? It's always present. It's a part of the gig. And it may be exacerbated right now as we speak in the fall of 2020, because of a whole bunch of things regarding, you know, the pandemic, regarding the election, regarding the economy, but those companies that want to be around for 10 years, 20 years, 30 years, there will be recurrences of these types of things. So they have got to be able to, to plan in some consideration of those things happening again. So again, my point was, it's got to be balanced to explore versus exploit between operation efficiency, and innovation.
Stephanie Chambliss Gaffin : 35:42
So as we wrap up today's episode, I want to come back and I want to end on our definition of strategy. And then we're going to do two quick pragmatic tips. And then we'll wrap for today. So we talked earlier about, strategy is the set of prioritized actions or decisions that a company takes to get where it wants to go. And that's in the context of the mission and vision. It includes understanding your resources and prioritizing them along those objectives. It's understanding what your competitors are doing. It's understanding the space that you're in, and how you're organizing internally to get there. So that you know, what are we doing Monday morning, and strategy is how you're bridging that gap between the mission and vision and what I'm doing Monday morning. So with that, two pragmatic tips, Mark, you go first.
Mark Gaffin : 36:37
So I want to really go back to I think, I don't want to make this one A, and one B. So I think your point about being consistent with your mission and vision, right and the objectives there has to be alignment. So check for alignment on those points. That the vision is lofty. The mission is clear. Because that's going to help you develop culture, gonna help you to retain people. And then balance what you're doing, making sure that there's a balance between exploit versus explorer.
Stephanie Chambliss Gaffin : 37:12
So my pragmatic tip is to go look at your resources today. So whether you look at the budget that you have, you might actually be starting to develop your budget for 2021. But look at it and say, are we allocating our resources in a way that is consistent with our strategy, and that is helping us achieve our mission and vision. So again, it's alignment, but very pragmatically go look at how you're spending your resources and figure out if those two are aligned. So with that, I'm Stephanie Chambliss. Gaffin. And you've been listening to Right in the Middle Market, a podcast about running, growing and selling your middle market business. We'd love to hear your comments about today's episode. Is this been helpful for you to understand a little bit more about strategy and the role in the middle market? Or what else do you want to hear us talk about in the future? Send me a message on LinkedIn or drop me an email at podcast@gaffingroup.com. And until next time, be well, and be bold.