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If yours is like many organizations, you’re likely deep into the strategic planning part of your business calendar, planning for next year.

The problem is that most organizations don’t really understand what strategy is – they confuse strategy with continuous improvement. Continuous improvement (while a good thing) is about doing many of the same things your competitors are doing, but trying to do them better or more efficiently.

That is not strategy – it doesn’t make you different.

A solid strategy is based on being different in a way that’s important to your customers. So, how do you go about creating strategic clarity for your organization? Ask yourselves these questions which are based on Jim Collins book “Good to Great”. What will make us different? 2. What do we have a passion for? 3. What will drive our economic engine?

By drilling down on those three questions will bring you closer to understanding what strategy is all about. And three steps closer to creating strategic clarity.

That’s the amazing thing about strategy. When you get it right, it’s simple to express, and it unites your people in their engagement and understanding of how their activities relate to executing on that single economic engine.

Strategy is about making choices. It’s about creating trade-offs. It’s about deliberately choosing to be different. Continuous improvement, focusing on operational effectiveness, on the other hand, means performing similar activities to your competitor, but in a way that better than them. So it’s a very different idea than strategy.

Here is an example that is used by Michael Porter in his work, who’s a strategy thinker from Harvard. It is the story of Southwest Airlines. All of us have flown, so we all know a little something about the airline business.

Southwest was started in the late ’60s by Herb Kelleher, and today, Southwest Airlines has had more profit in their existence than the rest of the airlines put together. Which raises the question, well how did they do this? What strategy did they employ?

When they started back in Texas, there were many national and several international airlines, like Pan Am. So it seemed a bit crazy to start a new airline when there were all these giant competitors.

What is it that they did that made them so successful? They picked a strategy that made them different, not better.

What was different about their approach? They decided from the beginning to focus on short flights. Regional connections where there was no baggage change and where they could use one model of airplane. These differences were unique advantage over their competitors.

The result of that kind of focus enabled them to be different than all the other competitors. In a way, you could say they were better than all the other competitors as well, at least when it comes to short flights.

This demonstrates what we mean by real strategy. It shows how you can identify something that makes your organization different serving a segment of the market that is not being well served.

It’s transforming in terms of the success. Southwest is amazing. This principle can be applied to all sorts of businesses. It’s the same process: what’s the passion, what will make us different and what’s the economic driver?

Sustainable success requires providing something different for stakeholders than they can get from competitors. If you cannot identify a way to be different that is important to customers you are left to compete on price which limits the number of winners in a given marketplace.

Originally published here.