2. Good Strategy vs. Bad Strategy - Understanding the Difference

In this document, we will explore the key differences between good and bad strategies through practical examples from real-life cases in technology companies. Strategy plays a critical role in guiding teams and organizations toward success, and knowing how to distinguish a well-constructed strategy from a poor one is essential for any product manager or business leader.

What Defines a Bad Strategy?


A bad strategy is often filled with jargon, aspirational statements, and vague goals without clear direction or actionable steps. It may sound impressive on the surface, but it fails to address the core problems and provide a concrete plan of action.

Characteristics of a Bad Strategy:

  1. Lack of a clear diagnosis: The problem is not clearly defined or understood.
  2. No clear approach: It offers no specific solution or angle to tackle the problem.
  3. Unclear actions: The strategy doesn't provide clear, actionable steps for the team to follow.

Example of a Bad Strategy:

"Becoming a multi-channel mobile-first platform for all banked users in Latin America."

In this example, we see that while the statement sounds ambitious, it fails to provide clarity on the real challenges or what should be done to overcome them.

What Defines a Good Strategy?


A good strategy is focused, actionable, and based on a clear understanding of the problem. It breaks down the situation into manageable pieces and provides a clear path for the team to follow, enabling them to overcome obstacles and achieve meaningful results.

Elements of a Good Strategy:

  1. Diagnosis of the problem: Clearly defines the nature of the problem and its causes.
  2. Guiding policy (point of view): Describes the approach or angle the team will take to address the problem.
  3. Coherent action plan: Lays out a series of coordinated actions that the team will take to achieve the desired outcome.

Real-World Examples of Strategy


Let's take a look at two real-life cases from Revelo, a marketplace connecting tech professionals with companies in Brazil, Mexico, and the United States. These examples illustrate how good strategy can be developed in response to specific challenges.

Case 1: Profile Completion Challenge

1. Diagnosis:

At Revelo, the recommendation algorithm required complete candidate profiles to function effectively. However, only a small percentage of users completed their profiles, limiting the algorithm's performance. At the same time, forcing users to provide too much information during sign-up reduced conversion rates, as seen in past experiments.

2. Guiding Policy (Point of View):

In the previous quarter, the team learned that users showed a strong interest in completing tests after registering. This suggested that users had an appetite for interaction beyond sign-up, making the dashboard a potential tool for re-engaging users and encouraging them to complete their profiles without adding friction to the initial sign-up process.

3. Action Plan:

Case 2: PLG Funnel for B2B Growth

This case focuses on product-led growth (PLG), a strategy that leverages the product itself as a key tool for acquiring and converting leads.

1. Diagnosis:

Revelo was losing a significant percentage of leads during the registration process. Users were asked to schedule a call with sales, but many did not follow through with the meeting. This was likely due to leads not being warm enough or ready to engage with the sales team, and the call-to-action on the website might have created false expectations about the user experience.

2. Guiding Policy (Point of View):

By observing customer success (CS) demos, the team realized that companies became most engaged when they saw the list of candidates available for hire on the platform. The aha moment occurred when companies saw the product’s real value. Thus, the strategy was to bring this moment earlier in the funnel by allowing leads to preview candidate profiles before engaging with sales. However, it was essential to roll this out carefully to avoid cannibalizing the existing sales funnel.

3. Action Plan:

Key Takeaways: Building Your Own Strategy


The examples above illustrate how to create a one-pager strategy document, which can be used to guide a team over a specific period. This document should include:

  1. A clear diagnosis: What is the problem, and why does it exist?
  2. A guiding policy (point of view): What is the team’s chosen approach for tackling the problem?
  3. An action plan: What are the next steps, and how will the team execute them?

This structured approach ensures that the team has a clear direction and focus, which is essential for successfully overcoming challenges.

Materials You Need to Build a One-Pager Strategy

To build an effective one-pager strategy, several key materials and elements are required:

1. Clarity:

You need a deep understanding of your company's goals, market position, and recent performance. This includes answering key questions:

2. Timing:

Consider the timing of your strategy work. Factors that impact timing include:

3. Buy-In:

Securing buy-in from leadership is crucial for your strategy’s success. Without leadership’s support, your work may be ignored, or your recommendations may not be implemented. Involve leadership early by sharing drafts and involving them in the process.

Conclusion

A good strategy clearly defines a problem, chooses a focused angle to address it, and lays out actionable steps for achieving the solution. In contrast, bad strategies tend to be vague, filled with jargon, and lack a concrete plan. By following the principles outlined in this document, product managers and business leaders can create strategies that guide their teams toward real, measurable success.