Most business strategies fail not because they are poorly executed, but because they are built on assumptions that were never tested. Here is the right sequence.
Strategy development has a sequencing problem. Most organizations begin with the question 'where do we want to go?' — and then build a plan to get there. This feels logical. It is backwards. Before any meaningful direction can be set, the actual situation has to be understood. Where you want to go is irrelevant if you do not know where you are.
The first step in developing a business strategy is not writing a strategy. It is diagnosing the situation. That means examining what is actually true about your business, your market, and your competitive position — not what you believe to be true, not what your internal reports suggest, but what the evidence actually shows.
This is harder than it sounds, because every organization carries assumptions about itself that feel like facts. The diagnosis phase is about separating those two things — finding where belief and evidence diverge, and building from the evidence side.
A useful diagnostic covers four areas: the business itself (what is working, what is not, where value is actually being created), the market (what the category rewards, where the white space is, what competitors are actually doing versus what they are claiming), the customer (what problems they are actually solving, what makes them choose you over alternatives, what makes them leave), and the organization (what the real constraints are, where alignment breaks down, what leadership believes versus what frontline people experience).
Once the diagnosis is complete, strategy development becomes significantly more tractable. The options available to the business are now constrained by what is actually true — which is an advantage, not a limitation. A strategy that is possible is more valuable than a strategy that is ambitious.
Evidence-based strategy development asks: given what is actually true about this business and this market, what is the most defensible position we can occupy? What do we need people to believe for them to choose us? What do we need to stop doing to create the focus required to win where we can actually win?
Strategy development done in this order is slower at the front end and faster overall. The diagnostic phase adds time before any plan is written. But it removes the wasted time of executing a plan that was based on wrong assumptions — which is almost always more expensive than the diagnosis would have been.
Start with the right diagnosis
Before committing resources or changing strategy, ensure the diagnosis is correct.