Why your company must also be an “idea”.

You’ve probably noticed that a lot of my writing focuses on the importance of communication in strategy. Or, more specifically, making your case.

Standing in front of a group of people.
Explaining your thinking.
Laying out the plan.
And getting them to enthusiastically agree.

Indeed, I have gone so far as to say that if you can do this, then the content of the strategy doesn’t really matter – you’ll probably win anyway.

Now at first glance this sounds sort of ridiculous. How can we say that spinning an enticing story about your strategy is more important than the actually strategy itself? It doesn’t add up, it seems superficial – until, that is, you realise just what is required to spin such a story.

You see, you can’t even attempt a story without this:

An idea.

An actual novel, creative, thought with practical substance. Something to pitch to people in the first place.

Most businesses don’t have this. I mean like 99% of them. We tend to believe that the reason businesses is fail is because they were a “bad idea”, but that’s not actually true. Businesses fail because they aren’t an idea at all.

Look at these examples:

Not an idea: “An ad agency with great creative”.
An idea: “An ad agency that does creative for free and makes its money on production”.

Not an idea: “A sleek speciality coffee shop”.
An idea: “A coffee shop that only sells flat whites”.

Not an idea: “A casual fashion brand”.
An idea: “A fashion brand that only makes clothes for wet weather”.

Quite honestly I think all of those ideas I listed there would probably succeed if executed well – and indeed probably a couple of them exist already. And this was me thinking about it for like 2 minutes, these are not particularly well considered (think I stole the coffee one from Rory Sutherland’s “flat white and fuck off” idea actually).

But the “not an ideas”? Almost certainly they would fail, because there’s nothing there – just as there is nothing there in the case of most businesses, who only succeed because of contacts, graft, or sheer dumb luck.

People talk about the “survivorship bias” of outlier companies, but no, it’s the ORDINARY companies that are examples of survivorship bias. They represent the 1% of non-idea businesses that actually worked.

Bringing it back to the pitch of your strategy then, can you see how I could easily construct an compelling pitch for the idea-businesses, but not for the others. I mean what would I even say? “People love good coffee and so we’re going to give it to them!”. Not exactly thrilling is it. But the argument for the flat-white only one could have so many layers and angles to it:

  • It could be incredibly fast
  • It could be incredible stripped back and cheap to run
  • It could become famous
  • You could absolutely nail that one type of coffee
  • It could be housed on a tiny premises that other cafes couldn’t
  • Etc etc.

This is why the quality of the story is the key metric in judging strategy – because it shows that you actually have one in the first place!

Taking it one step further, you’ll note that my thesis doesn’t only require you to have the story, but for it to be convincing. For the people you tell it to to say “yeah, that sounds cool actually”. You don’t pass this test if people say “I don’t get it”, or “yeah, errm, sounds kinda interesting”. This is where you really get into rarified territory, because if just getting an idea is hard, getting a convincing one is even harder.

Just run the (somewhat made-up) maths here:

  • 99% of businesses are not an idea at all
  • 0.9% of businesses are an idea, but most people think it’s dumb
  • 0.1% of businesses are an idea, and people think it’s smart

That’s an incredibly high bar – a bar you only clear if you have a case you can make, which people are excited about. Is it possible that after all that the strategy is still shit? Yeah sure, but I’d suggest it’s unlikely.

(Incidentally almost all of those 0.9% of “bad idea” businesses are tech brands, who generally manage to cross the idea threshold, but are usually pretty unconvincing)

So with all that in mind, here’s a little exercise to consider. Explain your business using this formulation:

“My idea is [describe business]”

In other words, frame it as an idea, not just a business. Can you even do it without sounding absurd? Do you have the innovative meat to cross that threshold?

To be honest I’m not sure I can do it for mine. Even though I have a good strategy I think it falls short of this higher standard, so I’m going to think on that.

I suggest you do too.

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