Strategic biases
What mistakes do we make trying to think strategically?
There is a marketing joke. A shareholder of a shoe factory from a tiny island faced stagnation in demand. All the people on the island have already bought some shoes from him and didn't buy new pairs until the old ones would have worn out. The factory owner was contemplating an expansion to a neighboring island (let's call it "Island B") but had some doubts. And he sent a sales rep to the island. The sales rep came back upset, and he told the owner that people on Island B didn't wear shoes at all, they went barefoot. "There is no market there", he added. Then the owner sent a marketer to Island B. The marketer came back with her face shining with happiness. "It's such a great opportunity!", she exclaimed, "Nobody merchandises shoes on the island, so we can be the first!".

My new book (coming soon), "Red and Yellow strategies", is on business strategy, as well as about strategic mental biases. Strategic decisions are made by people, and "nothing human is foreign to them". At first glance, it may seem that analytics might be of significant help, but in fact it can only reduce the likelihood of possible mistakes – to some extent.

Let's imagine you're pondering your company's development by entering a new market. The market size is impressive, but there is a major player in the market, assertive, aggressive, and rapidly growing. Some might think that entering this market is a risky idea. But others might say that whatever strong the primary player is, the market will never belong to them, and there will always be enough space for competitors. After all, even market leaders rarely enjoy a penetration rate higher than 50%.
If a building becomes architecture, then it is art
Having or not having a respective experience can significantly distort our market perception. For instance, if an entrepreneur or employee has already worked in an industry, and that experience was negative, they will always be pessimistic about having business in this domain. And, vice versa, entering an entirely new market may seem mistakenly easy – we don't have an idea of what expects us there, seeing only the tip of the information iceberg.

Another typical aberration is the wrong thought that our company will evolve in the course of the strategic development, while the market and our competitors will remain the same over time. When a team discusses strategic alternatives, they base their conclusions and decisions on the current market status. For example, if the team is planning to compete by going deeply "digital", they ground this idea on the fact that the rest market players will stay as conventional as they are now. Though maybe at the very moment, their teams are also discussing digital development, and the chances are that they will move even faster.

Evidently, learning from the other companies' experiences does more harm than good. In my book, I investigate why people adore easy solutions in life and business, and following somebody's successful strategy is one of a kind. On the one hand, studying someone's success or failure is, beyond doubt, fruitful. On the other hand, every success story is unique, it happened in particular circumstances, let alone that each firm has its own "DNA".


The last common mistake I'd like to highlight is an attempt to employ a "strategy with a name". By this definition I mean popular cliches from business books, such as "cost leadership", "differentiation", "M&A strategy" and so on. The only way to succeed for a business is satisfying their customers' need by creating distinctive values for them, not choosing a strategy from a list. Those "strategies" are good for the MBA students, not for the real world where companies are fighting for every customer, every minute.

Don't forget to subscribe to this blog below – and you won't miss an article! Download a mini-book by Svyatoslav Biryulin "KPIs that will kill your business".

Read and listen to Svyatoslav's stories on Medium
Follow Svyatoslav Biryulin on Twitter
Follow Svyatoslav Biryulin on LinkedIn
Follow Svyatoslav Biryulin on Facebook