If Your Strategy Isn’t Working, Check These Things First

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If you grow your company and you don't understand your working capital and what's required to support that growth, you could just grow yourself right into bankruptcy. I’ve seen it happen too many times, and I’ve been there myself in my early days. That’s why I want to share what I’ve learned after years of turning businesses around and helping them scale profitably.

Understanding the Difference Between Strategy and Plan

A common misconception in business is confusing a strategy with a plan. While these terms are often used interchangeably, they are distinctly different:

• Strategy: An interrelated set of choices defining where you’ll compete, how you’ll compete, and how you’ll win.

• Plan: The actionable steps for executing your strategy.

Failing to distinguish between these two often leads to confusion and poor execution. To create a winning strategy, you must begin with a clearly defined strategic problem—the key obstacle preventing your company from achieving its potential.

Start with the Strategic Problem

The cornerstone of any successful strategy is identifying your number one constraint. Without solving this constraint, companies waste time and resources while remaining stuck. Defining the strategic problem is essential before progressing with any initiatives or plans.

“You can’t define initiatives without defining the problem those initiatives are intending to solve.”

Just like the scientific method begins with a problem, strategy requires you to pinpoint and address the key constraint holding your business back, whether it’s acquiring customers, reducing costs, or retaining top talent.

The Ideal Customer Profile: The Heart of Strategy

Your strategy should always center around your customer. Yet, many companies fail to incorporate their customer’s needs into their strategy. A well-defined Ideal Customer Profile (ICP) helps you: 

• Focus on one dream customer who aligns with your product or service.

• Understand their motivations, pain points, and desired outcomes.

• Build offerings that address their challenges and help them achieve success.

Serving one ideal customer exceptionally well creates a strong foundation for scaling into a large organization. Trying to serve everyone often leads to compromises that satisfy no one:

“If you give warm tea to people who want hot tea or cold tea, nobody is happy. Focus on one type of tea and master it first.”

Tying Strategy to Finance

Growth at all costs is a recipe for disaster. To avoid this, your strategy must be economically viable. This requires evaluating its financial upside and ensuring it delivers a return on invested capital (ROIC) that exceeds your cost of capital.

When tariffs on solar panels in the U.S. disrupted our operations, I knew we had to explore international markets. I asked key questions like, “Is this desirable? Is it practical? Is it economical?” to evaluate potential strategies and identify a financially viable path forward. I’ve learned the hard way that if a strategy isn’t economically practical, it can damage the business—or even lead to its failure.

Strategy is a Continuous System

A common misconception is treating strategy as a one-time event. In reality, strategy is an ongoing system of refinement. After crafting your intended strategy, you’ll face disruptions and changes that require adjustments, resulting in an emergent strategy.

This iterative process ensures your business remains agile and focused on opportunities with the biggest upside. I regularly test assumptions, evaluate results, and adjust strategies to ensure they deliver real value.

Ready to Unlock Your Company’s Full Potential?

If your strategy isn’t delivering results, start by addressing these key areas:

1. Define Your Strategic Problem: What’s the one constraint holding your business back?

2. Focus on Your Ideal Customer Profile: Who is your dream customer, and how can you solve their biggest pain points?

3. Evaluate the Financial Upside: Is your strategy desirable, practical, and economically viable?

4. Iterate and Adjust: Treat strategy as a system, not a static event.

By tying strategy to finance and focusing on constraints, customers, and continuous improvement, you can transform your business into a thriving, profitable enterprise.