How to make better strategic decisions

How to make better strategic decisions

Don't be a dinosaur! Here are some of the most common mistakes to avoid when making strategic decisions:

stephen lynch coo on IdealogTunnel vision

Business owners, and charismatic leaders are used to getting their own way, and can tend to downplay opinions and evidence that conflict with their point of view. Do you have an emotional investment in a course of action that is past its "use by date"? It's hard to pull the plug on projects and activities that we have played a part in creating - but we must remember that everything has a finite lifespan.

Silence the critics

We tend to listen to the optimists and people who agree with us – and shut down the pessimists and people who disagree with us. Warning: if you are not willing to hear arguments for and against a course of action, you will not properly consider the downside risks and consequences. If you do not have a 'devil's advocate' in your team, you had better appoint one right now. They will frustrate the heck out of you, but you will make far better decisions by having them point out the flaws and negative consequences of every option.

Gut instinct

Our first impressions influence us more than we think, and they can easily mislead us into making irrational decisions. To make better decisions - put aside your preconceived ideas of what seems right at first glance. What does the data say? Is it evidence or just opinion?

More is better

Growth for the sake of growth is not strategy. Mergers and acquisitions usually destroy value. Brand extensions - trying to be all things to all people - may increase revenue in the short term, but usually cause long term brand damage. Offering too many products and services to be able to do them all justice ends up shortchanging those with the highest future growth potential.


Three quarters of people rate their automobile driving ability as above average. Of course this can't possibly be true. CEOs tend to rate themselves in the same way - and such overconfidence can lead them to ignore warning signs. Your ability to control your company and effect external outcomes is smaller than you think. Luck may have played a bigger role in the past than you give it credit for.

Planning for yesterday

Many companies are planning to win yesterday’s war. Frequent and careful analysis of the competitive forces that shape industries must be undertaken – because the rapid pace of structural change means the ground can quickly shift under your feet. Dinosaurs were big, fast, strong creatures. But as Charles Darwin said, "It's not the strongest who survive, nor the most intelligent, but the ones most responsive to change."

Throwing good money after bad

We want a payoff for the time and sunk costs we have spent on our investments, and tend to keep pursuing a course of action long after we should abandon it. What do you need to stop doing in your business?

The lure of simplicity

We latch on to simple solutions as being the answer to our prayers (e.g. “we need a new marketing message”) when there may be many contributing factors to poor performance (wrong people in key roles, wrong strategy, ineffective business execution, poor product quality, outdated product offering, wrong pricing model, wrong distribution strategy, weak sales force, poor customer service etc).

Misplaced concerns

We have a higher fear of sharks than fear of drowning. We worry more about airline crashes and less about heart disease. Statistically we worry about the wrong things! We place more importance on low-probability events that cause an emotional reaction, and underestimate high-probability events that have less of an emotional component.

We overestimate the importance of copying competitor moves when it may make better sense to pursue our own course. Creating a winning strategy is not about being 'better' than the competitors.

What is strategy again?

Strategy means choosing the right actions to ensure your future success. You need to understand the forces that will likely impact your industry. Then you make clear choices about how you are going to compete and how you will make money in the future.

You choose the target customers you are going to focus on, and how you will position and deliver your offer in a way that makes you meaningfully different from your competitors. You choose which activities you are going to perform and which activities you will say NO to.

Stephen Lynch is chief operating officer – global operations at, a company specialising in business execution software, with offices in New Zealand, Canada and the United States

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