Strategy is an action plan designed to achieve certain short-term or long-term goals. In terms of business, it can be defined as a master plan designed to gain competitive advantage, satisfy customer’s expectations, and achieve the overarching goal of an organization. In today’s competitive world and dynamic markets, strategy formulation has become the foundational aspect for any business. It is a common notion among business owners that strategy is a big large document that defines every process and operation in a company. However, there are different strategies for different hierarchical levels in an organization. A corporate-level strategy is on the broadest spectrum that defines the long-term goals of an organization. Further down the line, there are business strategies that are similar to different verticals in an organization and at the lowest level, there are strategies on the functional level that defines the day-to-day operations of the organization.

You may wonder that understanding the theoretical part of strategizing is one thing, however, formulating is altogether different. Strategy formulation has two major aspects: knowing what to do? And what no to do? At a most fundamental level, strategy is the outcome of your understanding of what you want to achieve and as a result what steps you should prioritize to reach your goal. You cannot do everything in an organization; so knowing what not to do can channelize an organization’s resources towards what to do.

Emphasizing What Not To Do

Business strategy is nothing but knowing what not to do so that you know what to do.

The right strategy entails the understanding of your customer, the products you produce, and the ways they reach your customers. Choosing a target audience and making products for that particular base is a trade-off that a company should take to formulate a well-defined strategy. For example, Facebook, in the beginning, was designed especially for students. This made it easier for the developers to decide on what kind of user interface they need or what features to put in. In short, having a target audience helped facebook’s to efficiently use their resources rather than waste them where it is of no use.

If put in simple words, once the choices are made it is the matter of strengthening the cohesion of chosen tasks and activities to achieve the desired result. A well-formulated strategy puts forth the operations that need to be performed. Moreover, it also divides the operations in terms of their priority so that the most important resources are allocated to the most important tasks.

Prioritizing is The Key

Now that you have understood that strategy helps in prioritizing operations. However, why prioritizing is important, and why do many organizations fail at prioritizing if it is important?

In an organization, various operations happen simultaneously. Within each operation, multiple choices are required to be made. Prioritizing the tasks helps in making those choices. It helps to decide the order of activities and ensure that suitable time and resources are allocated to every task.

However, prioritization is something the majority of the organization fails at. One of the major reasons due to which companies fail at prioritizing is not being able to choose what truly is urgent and eventually giving priority to the wrong areas. This can be understood from the classic example of Kodak. In the 1990s, Kodak invested billions in developing digital technology, however, they abstained from producing digital devices. On the other hand, Canon in Japan prioritized the production of digital cameras and latched on to the opportunity provided by digital photo technology. Today we all know canon is one of the largest producers of digital cameras. The scale of damage due to wrong prioritizations can be huge.

We have observed that there are two major reasons why companies fail at prioritizing: