No one likes to be a party pooper, but here we go: trend chasing doesn't work!
Take the example of the 'Industry 4.0' trends. The impact they were predicted to have was heralded as the new industrial revolution. But despite significant hype and investment over the past decade, numerous studies have shown that the benefits of Industry 4.0 simply haven't Materialized (The Manufacturer, 2022).
Don't even talk about Industry 4.0. Even 'Industry 3.0', which has been on the agenda for over 20 years, is still a long way from being realized. Yes, a recent report by The Manufacturer (2022) suggested that only 23% of manufacturers have seen some benefits from the 'Industry 3.0' implementation.
This is why you should not fall into marketing gimmicks and sales tricks. To have a winning strategy, you need to avoid distractions.
Avoiding distractions, Focusing on the basics
In Strategy, one needs to be careful about distractions:
The chase of hot trends is an obvious one. In strategy, to make a real difference, you must focus on:
Things that the company can pursue right now, not some vague trend about the future;
Things that address the company's real challenge, not some cool trends; and
Things that give the company the highest odds of winning, not something the company doesn't have the slightest chance to win.
The pursuit of quarterly earnings is another obvious one. Yup, don't confuse execution with strategy:
Execution is above getting things done and monitoring the metrics to see if progress is being made. It's short-term oriented.
Strategy, on the other hand, is about deciding what things to be done. It's more long-term oriented.
For us to have a winning strategy, the execution must align with the strategy. In other words, the execution must be directed to achieve the long-term goal, not obsessed with the short-term metrics.
The chase of opportunities is the less obvious one. As I wrote in the GOSPEL of Strategy, most opportunities must NOT be pursued. Don't be mistaken:
A winning strategy is about concentrating all of your effort and resources on the one thing (or at least a few selective things) that you have smartly chosen to do.
Don't let the distractions drown out the thought and dilute the effort.
Instead, focus on the basics.
Lessons from combat sports
We can learn a lot about focusing on the fundamentals from combat sports, e.g., the case of Soke Yoshimi Inoue, the legendary karate master, who served as Japan's National Coach (this means he was recognized as one of the best karatekas in Japan, the birthplace of karate).
Yoshimi Inoue was called the champion maker for a good reason. Most of his disciples (over 20 of them) had become the world champions (such as Antonion Diaz, Mie Nakayama, Ryuki Abe, and Rika Usami).
But how did he do it? What was his secret?
In 2012, Inoue was interviewed about the secret of his success. He said the following in his broken English:
"Good Kihon [i. e., the basics] is the secret to good karate."
"The basics is very important. If the basic techniques are good, any advanced techniques can do..."
"The basics, although it may be boring, is extremely important. If the foundations of a house are weak, problems will arise."
Sakura Kokumai, an American karateka who won the gold medal at the 2019 Pan American Games, said the following about her experience training with Inoue:
"I practiced only the basics for days (about 10 hours of practice each day). We didn't even have lunch, and sometimes no dinner. It didn't make sense to me then, doing the same things over and over again..."
But doing those boring things repeatedly is exactly what made her a champion!
In combat sports like karate, when you master the basic techniques, your mastery of advanced techniques will automatically improve. On the other hand, if your basic techniques aren't polished, your karate will be weak and ineffective in actual combat or self-defense situations.
The basics of business strategy
Similarly, in business strategy, to win in the competition, you need to focus on the basics, i.e., why do your customers buy from you, not others? In other words, what gives you an edge and distinguishes you from your competitor?
Richard Rumelt, in his new book "The Crux: How Leaders become Strategists," proposes four things that can give you an edge:
The first is information unique to you. Think of a stock trader who is well-connected to everyone in the industry and finds out information before it becomes news. They will make a lot of money.
The second source of advantage is unique know-how. Google can lead in the driverless car sector because its google map data and software engineering capability give it an edge.
The third one is a unique position others cannot occupy in the market. For example, Dangote Industries, a Nigerian conglomerate, built strong relationships with the Nigerian government – resulting in import duties holding International players at bay.
The fourth source is efficiency, typically from scale (economies of scale) and experience (experience curve). For example, Tesla became increasingly efficient as it produced more and more cars, both by learning from the experience and becoming a more extensive manufacturer.
So, if your strategy doesn't exploit any source of advantage, doesn't distinguish you from the competitor, doesn't lead you to pursue your unique path (and doesn't deter you from chasing things that everyone is chasing); it means the basics of your strategy are broken. You better get it fixed soon.
Continue to explore the secret of Winning Strategy here.
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