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PunchTime - Why Strategy Is Your Superpower
Ready to take your skills to the next level? Learn how to become a strategic thinker.
Andrea Puenchera
February 23, 2024
Hi there, welcome to PunchTime đź‘Š
In a world where technology evolves at breakneck speed, and AI is taking over the world, the power of strategic thinking has never been more crucial.
Whether you’re a novice looking to learn or an expert looking to refresh concepts, my goal is to make strategy actionable for everyone through powerful decision-making tools, habits, mental models, systems, and frameworks and help you position yourself for success in your professional and personal life. I’m glad you decided to join me on this journey and am looking forward to getting feedback on what you liked and how to improve.
Rock on!
- Andrea PĂĽnchera
Table of Contents
Why Strategy is Your Superpower
A Superpower Worth Nurturing
Execution eats strategy for breakfast they say, or as Packy McCormick put it “For some reason, it’s a badge of honor in tech to shit on strategy”. In reality, strategic thinking is key to your success, and executives chose it 97% of the time as the most critical skill.
Strategy is not a fancy thing reserved for “important” executives and board members, but a SUPERPOWER that we all possess. With the right knowledge of mental models, systems, and frameworks we can all become excellent strategic thinkers to elevate our decision-making and actions in our professional and personal lives.
Though we usually don’t intentionally think about it, we’re constantly making strategic choices in daily life. From choosing what to say in meetings, buying groceries, or even when traveling. Let’s make strategy an intentional lifestyle that nurtures critical, analytical, and strategic thinking.
What Is Strategy?
There are many definitions of strategy…
Strategy is the creation of a unique and valuable position, involving a different set of activities
The integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition
No matter how you try to define it, the topic of strategy always emerges from a desired outcome in the future. For strategy to be relevant, two conditions have to be present:
A certain status quo (e.g. resources, capabilities, historical information, positioning, etc.)
An uncertain future (e.g. anticipation of what the future looks like, trends, technologies, regulation, competitors, etc.) with a desired outcome
It’s easy to take action if you know the outcome. How do you act when the outcome is unpredictable?
Uncertainty creates unlimited opportunities and risks, whilst certainty creates definitive and secure paths. Let’s do a simplified thought experiment. Imagine your goal is to earn $100k. In scenario A, I guarantee that I will pay you - and only you - $100k if you draw me a painting of a house within a year. In scenario B, I simply tell you that I have $100k to spare, and that by the end of the year I will spend it on something from whoever brings me the most value.
As you can probably see, scenario A does not require a strategy, the outcome is certain. Painting of a house = $100k. You simply need to execute.
In scenario B however, the situation is far more complex. The outcome is uncertain. You don’t know for sure what I will value in a year from now, and you also don’t know if someone else will make something that is more valuable to me. You can certainly try and test multiple things, but that all costs time and money.
Because we have limited resources (time, money, assets, etc.), we need to be intentional on how we use them over time. This is where strategy helps us find a solution to the following challenge:
In an uncertain future, how can we build a sustainable system to maximize our chances of success?
Strategy is about
analyzing and having foresight
being disciplined and being creative
optimization and innovation
challenging views and learning
creating new ideas and making trade-offs
Thinking and executing
Therefore, strategic thinking requires one to constantly ask questions. Once we know the questions, we can use tools, mental models, and frameworks (that I will share in future editions of this newsletter) to help us get insights from those questions. But to think about a system, we need to (i) fully understand our status quo and (ii) have a strong view on what the future will look like.
Understand your current state and anticipate the future state
Some questions we can ask ourselves to understand our status quo are:
- What do I do today? How does my portfolio look like?
- Where do I stand today in comparison to competition?
- What capabilities do I have or can I build?
- What resources do I have or can I build?
Some questions we can ask ourselves to anticipate the future are:
- How will the world look like in the future?
- What are the major trends?
- What will customers value?
- Are there any demand and/or supply shifts?
- Where will technology and regulation be in the future?
The insights we get from understanding today and tomorrow, allow us to define how we want to position ourselves. This guides us in designing systems and principles that sustainably create and capture value, while taking into account what, where, how, and for who we build products & services.
From insights to systems & principles to create value
Now this is where it gets a little bit complicated. In the classic definition, a system is a collection of interrelated components, exchanging information, energy, and matter with its environment while working towards a specific objective. In other words, a system is a set of things working together smoothly to achieve a goal. But for that, all components need to be in sync and ideally reinforce each other.
Components of a system have sub-strategies that can be analyzed in the same way as the general strategy. Similar to Fractals in nature, the framework repeats itself and is applied in each component and its sub-components to design systems in line with the overarching strategy. In an ideal case, this repeating and reinforcing system trickles all the way down to daily decisions.
Strategy needs to allow for coherent execution. All components have to be in sync and ideally reinforce each other
For example, let’s say based on my insights, the strategy is to sell sustainable T-shirts to Gen-Z (Component). Thinking about production (sub-component 1), I apply the same framework, and based on my insights I design a system that is both sustainable and scalable for the future.
As I design the supply chain (sub-component 2), I realize my status quo is limiting me because I don’t have enough insights into sustainable suppliers. At the same time, my anticipation of the future tells me that consumers want a more active role in designing the products they buy.
Therefore, I decide to create a social media campaign (another sub-component) to let people propose and vote the most sustainable suppliers for their T-shirts. Of course this is all fictional, but as you can see, the components create a system that is in sync and reinforcing.
Examples of guiding principles & systems
A guiding principle could be as simple as a prioritization matrix or evaluating every new opportunity by its value to customers (1 low to 5 very high), its risk (1 low to 3 high), and its effort (1 low to 3 high). Take the number from the customer value and deduct the risk and effort numbers. Only pursue if Value - Risk - Effort > 0.
A system usually includes a smart combination of activities leading to more value for customers. A classic example would be Toyota's Just-In-Time system generating value through lower costs.
Another classic is Netflix’s systems and activities to entertain us. Initially DVD rentals, then they anticipated the future and changed to streaming, then bringing us data-driven recommendations and original content to increase customer value.
Not to make it even more complex, but as opposed to popular opinion, strategy is not a one-off thing that is set in stone for 5 years, but rather a dynamic wheel that moves with time and constantly generates new data & insights to learn and evolve.
Things take time to build, and a long-term future vision should not change drastically unless new data shows that the strategy is truly not feasible anymore. An example of such a drastic change could be a new technology or regulation that completely changes the rules of the game. However, these major changes do not happen that often.
What happens often is changes in sub-strategies, smaller parts of the larger system that can be fine-tuned. We need to constantly innovate parts of our strategy to stay relevant. Strategic thinking helps us do exactly that, it’s a way of approaching daily tasks with intention. Informed by new data & insights of the sub-strategies, we can improve and innovate our strategic activities to reach our long-term vision.
The long-term strategy wheel executed over time. Data & insights inform changes and learnings in sub-strategies
Because strategy is dynamic, execution and strategy go hand in hand. In a world where everything is predictable and certain, there is no place for strategy, there is only planning and execution.
However, as soon as we have uncertainty, we need strategy to help us create certainty, or at least perceived certainty, so that we can execute in the right direction.
Strategic thinkers often talk about zooming in and zooming out, balancing the operative short-term tasks and the big picture. I have my own interpretation and framework for this.
As seen below in the “strategic zoom matrix”, strategy gives us the direction that allows us to move from the fuzzy long-term vision to a focused strategic plan. Additionally, strategy gives us systems & guiding principles that allow us to navigate the uncertain short-term obstacles and make decisions in a way that are coherent with our goals, letting us move from uncertain challenges to synchronized execution.
Strategy moves things from the uncertain intangible world to a more certain and tangible world, allowing us to execute.
At the same time, we can zoom out and question ourselves everyday whether or not our execution is in line with our principles, our plan, and our vision.
Though I don’t think there is the need for another definition of strategy, I still want to end this with my take on it. I would say…
Strategy is a coherent set of systems and activities, based on insights from the evolving status quo and future, to sustainably create and capture value.
How Can You Apply This In Real Life
To start, there’s two immediate ways you can apply this in either your professional or personal life.
Take inventory & position yourself
Take a few minutes to reflect on your current personal life, your team, or your company:
What are the resources and capabilities that you currently have?
What do you want to achieve in the next month, year, or decade?
How do you think the future will look like by then?
Taking into account your status quo, the future, and your desired outcome, how do you think you need to position yourself, your team or your company to succeed?
With all the insights from this process, create simple guiding principles and systems to help you execute towards your goal
Zoom in and out
Next time you’re about to spend time on something, use the “strategic zoom matrix” to ask yourself the following questions:
Does this task add value to my future vision?
Is this task part of my strategic plan? Or can it be added to the plan?
Do I know how to tackle this based on systems & principles? Or should I build a system to tackle this again in the future?
If the answer to any of these questions is no, ask yourself if there is a more impactful task to solve, or how you can justify spending time on this right now. Prioritize work that adds value, be aware of the trade-offs, and be intentional.
Trends & Interesting Finds
Tools & Resources
I’m convinced that the ability to think clearly, critically, and creatively is dependent on well-being. That's why I want to share some resources to improve five key areas.
Health
Wealth & Achievements
Relationships
Knowledge
Fun
Jobs
Experienced hires
MBA Internships
I’m always looking for feedback and ways to improve. Also, please connect if you’re looking for someone to help brainstorm or want help with strategy, GTM, financial modeling, and innovation projects. I’d love to hear from you. Thanks and Rock on!