Strategy Means Choosing and Letting Go: Become the Best, Then Build Organizational Capabilities

Strategy requires being explicit about what to do and what not to do. Strategy does not mean trying to make every kind of money. We offer some services and products and decline others. Only then can we decide where to invest limited resources and where not to. Strategy means being able to choose—and having to let go. Only through choice and sacrifice can you focus. ------ Some companies have many strategic directions. They want to do this and that, and ultimately cannot focus. But if you cannot become one of the top three in a niche, do not contemplate expanding into a second business. There is no point. Every business you run will eventually hit a ceiling it cannot break through. Good companies become number one in a field and take it to its fullest potential before expanding into a new business area. ------- After making the original business number one and taking it to its fullest potential, consolidate the organizational capabilities built through it into a methodology: how to analyze customers, build teams, and establish rules. Applying that methodology in a new business may produce good results and naturally provide a chance to excel there too. If your original business has not yet become one of the industry’s top three, someone else could replace you at any moment. ------- Strategy is the process of giving up nine things to choose one. If you see a huge market worth hundreds of billions but your organizational capabilities cannot keep up, that market is essentially irrelevant to you.