Rating Qualities

8
Applicable
Innovative

Business Strategy
The Brian Tracy Success Library
Brian Tracy | Copyright © 2015 AMACOM, a division of American Management Association

In most industries, 20% of the companies – those with well-developed corporate strategies –
make 80% of the profits. Business author Brian Tracy explains strategy and discusses why it’s
so important. He identifies its components, outlines what strategy requires and elucidates how
companies can develop comprehensive strategies to achieve their goals. Tracy also provides a
fascinating report on how Alexander the Great’s superior use of strategy enabled his 50,000-man
Macedonian army to defeat the million-man Persian army in the 300s BC, though Tracy’s focus
is on strategy, not on precise history. getAbstract recommends this concise but solid manual to
corporate strategists, to those whose firms need strategic planning and to students of strategy.

Take-Aways
• Study and learn from the brilliant strategist Alexander the Great.
• Alexander’s strategy enabled his 50,000-man army to defeat Persia’s million-man army.
• The most profitable companies follow well-developed strategies, yet most companies fail to
develop formal strategies to achieve their goals.
• Follow seven “principles of effective strategy”: Have a clear “objective.” Stay “offensive” and
move forward. “Mass” your resources. “Maneuver” to be flexible.
• Emphasize “concerted action” so everyone works as a team. “Surprise” your rivals to keep them
off guard. Use “exploitation” to press your advantage without relaxing.
• Use “four strategic planning principles”: Create a niche with “specialization.” Stand out with
“differentiation.” Target buyers with “segmentation.” Focus with “concentration.”
• Develop and implement strategy in a five-phase process: “data collection and analysis,
formulation, project planning, implementation, and monitoring and updating.”
• Sometimes the best strategy is to stop what you’re doing and start something new.
• Sometimes you must accept that a well-liked, costly initiative just isn’t working.
• Your corporate strategy must reflect your organization’s values.

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 Summary

The World’s Greatest Strategist

Alexander the Great (356-323 BC) was king of Macedon, an ancient kingdom in northern Greece.
He was known as “the Great” due to his strategic prowess. When he became king at age 20, the
Macedonians ruled all Greece.

Alexander learned that disloyal plotters and rebels intended to assassinate him and free the Greek
city-states from Macedonian rule, so he reorganized the Macedonian army, appointing generals he
could trust. Then, he defeated the insurgent armies. By 21, Alexander was the undisputed master
of Greece. He set out to introduce Greek culture worldwide through conquest. He permitted kings
who didn’t oppose him to stay in power if they paid an annual tax to Macedon. Alexander invited
soldiers from other countries to join his army for the opportunity to capture booty.

“Strategic planning starts with knowing where you are now, envisioning your ideal
future, then focusing on what needs to change in the present to create the future.”

Darius and the Persian Empire ruled all the Middle East as far east as India and present-day
Pakistan. Alexander invaded the Persian Empire, and his 22,000-man army routed Darius’s
50,000-man army. Darius organized a million-man army to fight the Macedonians at Gaugamela.

The night before the battle, Alexander communicated his battle plan to his generals. The Persian
army was made up of more than 30 tribes with “different languages, different cultures, different
orders of battle, different religious rites and different military structures of command.” Their only
commonality was loyalty to Darius. Alexander realized that if he killed Darius, or made him flee,
these factions would quickly disperse. Alexander planned to attack the center of Darius’s army,
drive through it and kill the emperor.

“Strategic planning is…thinking through the action steps that you are going to take to
achieve your goals.”

Alexander invented the “oblique formation.” He lined up the Macedonian army “at an angle and
to the right of the center” of Darius’s army. Confused, Darius ordered his army to shift to the
right to confront Alexander’s maneuver. The Persian soldiers and their commanders preferred
to advance straight ahead, as had every other army in history until then. Taking advantage of a
breach in the shifting Persian line, Alexander charged his cavalry into the heart of the massive
army. Not anticipating this thrust against his command center, Darius mounted a horse and fled
the battlefield. The news of his abandonment spread and individual units of his army scattered.
The Macedonian army waded into the fleeing, leaderless troops, killing them wholesale. Some
400,000 Persians died. The Macedonians lost 1,247 men.

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 “One management skill is always the most valuable, and that is the ability to develop
a clear, workable strategic plan that gives you a competitive advantage in your
marketplace.”

Alexander, then 23, became the ancient world’s most powerful leader. The seven essential
strategic principles he used to defeat Darius remain valid and applicable for strategists – including
corporate planners – as they were in ancient times. Organizations and armies that fail to apply
even one of the following strategic principles can experience catastrophic defeats.

The “Principles of Effective Strategy”

To succeed, put these seven principles to work:

1. “The principle of the objective” – Success requires having a firmly established goal. You
must know how you will accomplish it, and your employees must know what they are supposed
to do. Alexander’s goal was to become ruler of the world. That required defeating the Persians
and getting rid of Darius. Alexander communicated his battle plan and strategy to his generals,
so everyone would know what actions to take.
2. “The principle of the offensive” – Napoléon Bonaparte said, “No great battles are ever
won on the defense.” To succeed, go on the offensive with “new products, new services, new
processes and new ways of doing business.” Alexander knew the only way to defeat the Persians
was to take the fight directly to them. To beat your competitors, do the same to them.
3. “The principle of the mass” – Generals defeat enemy armies by massing their forces “at
a critical point at a critical time.” Alexander beat the Persians by creating a breach in their
lines that he could exploit. In business, take advantage of this principle by delivering the best
products or services in your niche. Don’t expand into other product or service areas until
you lead your niche market. According to Bill Gates and Warren Buffett, the most important
element in business is focus. Always focus on the products and services that your company
does best.
4. “The principle of maneuver” – Generals who prevail outmaneuver their foes, just as
Alexander outmaneuvered the Persians. Expert strategists remain flexible; they consider “what
might happen” and plan accordingly. Be ready to “move forward, backward and sideways in the
market, if necessary.”
5. “The principle of concerted action” – Teamwork is paramount. Alexander knew he
could count on his troops because he trained them to be the world’s most disciplined soldiers.
Promote a culture of teamwork where employees always speak of “us, we and our” and see the
company as a “logical extension of themselves.”
6. “The principle of surprise” – Alexander surprised the Persians and kept them off-balance.
Do the same to your business rivals by introducing innovative products and services and by
using novel strategies and processes.

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 7. “The principle of exploitation” – Once you achieve your goals, don’t stop. Keep moving
ahead to exploit your advantage. Your competitors will do everything they can to make up lost
ground. Stay on the offensive.

Five Critical Strategic Questions

Strategize to improve your company’s return on investment, secure a new position in the
marketplace, exploit opportunities and spearhead new actions. To carry out strategic planning,
ask: 1) What’s your current situation? 2) “How did you get to where you are today?” 3) “Where do
you want to be in the future?” 4) “How are you going to get there?” and 5) “What do you need?”
That is, can you identify the assets, such as “skills, resources or money,” that you require for
achieving your goals? Strategizing includes conceptualizing an “ideal future” for your company
and working backward to figure out the steps required to achieve that future.

Strategic Planning Principles

Include everyone who will directly implement your strategic plan in the process of formulating
it. The senior executive “ultimately responsible” for implementing the strategy should participate
in the entire process. Otherwise, this executive will have no investment in the strategy and may
prove reluctant to fully support implementation. Corporate strategy concerns “products, services,
customers, markets, finances, people, technology and production capability.” Whatever your
focus, make sure your goals are clear. Communicate them to everyone in your company and to
your shareholders, stakeholders and consumers. Follow four strategic planning principles:

1. “Specialization” – Focus on what you do best. If you expand beyond your core products or
services, move only to an “adjacency area” – a new product or service line that expands your
core business.
2. “Differentiation” – Separate your firm and its offerings from your competitors.
3. “Segmentation” – Target the ideal customers most likely to buy your goods.
4. “Concentration” – Apply your resources where they will do the most good.

“Formulation and Implementation”

The Kepner-Tregoe consulting firm suggests a five-phase plan for creating and
implementing strategy:

1. “Strategic intelligence gathering and analysis” – Use only the best data available.
2. “Strategy formulation” – Include a time frame and an endpoint. As you formulate a plan,
catalogue your “current, modified and new products.
3. “Strategy master-project planning” – List and prioritize all your projects. “This pool of
projects is your master plan for the strategy.”

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 4. “Strategic implementation” – Put the proper structure in place. Align your strategy with
your organizational structure, and communicate your strategic plan.
5. Monitor your strategy – Update as necessary.

“First…think about and agree on the foundation principles of your business.”

Everyone in your organization must team up to make your strategy work. The business units
must integrate their actions. Offer incentives tied to the strategic initiative to motivate employees.
Implement the necessary controls to keep everyone on track.

The strategy you choose determines who your rivals will be; their responses will require further
strategizing. Make the effort necessary to ensure that your customers view your products or
services as their best choice.

“Driving Force”

Consultants Benjamin Tregoe and John Zimmerman stress the importance of identifying your
driving force, that is, your primary strategic concept and your “quantitative principle.” This force is
the “point of the spear” of business planning. Each of these factors can be a driving force:

• “Product or services” – Align your offerings to fit the scope of your market.
• “Market needs” – Provide what consumers want.
• “Technology-driven driving force” – Structure your business by using the
latest technology.
• “Production capability” – Ensure that you possess the capability to keep up with your
projected growth. Ikea, for example, constantly creates more and improved furniture for
greater numbers of consumers in markets that keep growing.
• “Method of sales” – You could use “retail, wholesale, direct mail, Internet, distributors or
manufacturer’s representatives.”
• “Size and growth” – For example, automaker Toyota’s motivating force is to consistently
increase its market share. As sales grow, Toyota applies “economies of scale” to lower
production costs and increase profits.

“KWINK”

Sometimes, the most important strategic insight to embrace is “knowing what I now
know” (KWINK). This means honestly accepting that certain initiatives – no matter how much you
want them to do well and no matter how extensive their sunken costs – aren’t working. When you
identify dysfunctional or underperforming products or services, ruthlessly discontinue them or
divest them.

“The most successful men and women in the world seem to be those whose values are
clear to them. They refuse to compromise them for any short-term gain or advantage.”

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 To move forward, you may have to abandon products or functions that worked in the past. Having
to divest should never make you cautious or lead you to think small. Be ready to create an entirely
new market if you find a promising niche, product or service. When Netscape introduced its web
browser – which reshaped the video rental business, consumer viewing habits, film and television
distribution and audience polling – it fearlessly unveiled a “new product for unknown customers.”

The Importance of “Your Corporate Mission”

Strategy should carve out and delineate the path to accomplishing your mission, whatever it may
be. Stating a crystal-clear mission requires knowing “your values, your vision…and your purpose.”
Use a specific and measurable mission statement to spell out your goals to everyone in your
organization.

“Get the facts. Get the real facts. Not the apparent facts, the hoped-for facts, or the
obvious facts. Get the real facts based on analysis. Facts don’t lie.” (Harold Geneen, ITT)

You can start with a generic mission statement as a model and insert your company specifics. A
generic statement might read: We will provide the finest example of our product to the correct
market to create significant improvements in our consumers’ professional and home lives. We will
always upgrade the quality and functionality of our offerings and never stop seeking out, finding
and selling to new and ever-more loyal consumers. We will increase our market share and profits
by at least 20% annually.

“Peter Drucker once said that, even when a business is starting out at a kitchen table, if
the business does not dream of world leadership, it will never be a big success.”

Your strategy should reflect your company’s qualitative – never quantitative – values and
foundational principles, such as “integrity, quality, customer service, innovation, entrepreneurship
and profitability.” Your strategy should also support your vision. The right strategy can make your
vision – however ambitious – a reality.

About the Author

Brian Tracy is chairman and CEO of Brian Tracy International, a training and development firm.
His other books include No Excuses!, Eat that Frog!, Maximum Achievement and The Psychology
of Selling.

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