What’s Your Strategy?

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

What would you say if I asked you this question – Are you ambitious?

Chances are you might say – “Of course I am ambitious…”

That’s great if you are, but many people confuse ambition with strategy. Simply being ambitious is not a strategy. Just setting goals too is also not a strategy.

Author Richard Rumelt, in his book Good Strategy Bad Strategy wrote, Executives who complain about ‘execution problems’ have usually confused strategy with goal settingWhen the strategy process is basically a game of setting performance goals – so much market share and so much profit- then there remains a yawning gap between these ambitions and action.

In our industry/profession too, I have seen many distributors and advisors articulate their strategy in terms of their performance goals – this much AUM, that much revenue, these many clients, so many SIPs and other metrics. And in most cases, there is a huge gap between their ambitions and actions. But strategy is not about goal setting rather it is about problem solving and moving your organization forward. In this post, I unpack the word ‘strategy’ and then discuss some of the finer points of Good and Bad Strategy in the context of our work.

Richard added further, “Despite the roar of voices wanting to equate strategy with ambition, leadership, vision, planning, or the economic logic of competition, strategy is none of these. The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.

A leader’s most important responsibility is identifying the biggest challenges to forward progress and devising a coherent approach to overcoming them. But here is an example of a leader spouting slogans and announcing high-sounding goals, calling the mixture a ‘strategy.”

A specialist in bonds, Lehman Brothers had been a pioneer in the new wave of mortgage backed securities that buoyed Wall Street in the 2002-2007 period. By 2006, signs of strain were appearing: US home sales had peaked in mid-2005, and home price appreciation had stopped. A small increase in the Fed’s interest rate had triggered an increase in foreclosures. Lehman CEO Richard Fuld’s response, formalized in 2006, was a ‘strategy’ of continuing to gain market share by growing faster than the rest of the industry. In the language of Wall Street, Lehman would do this by increasing its ‘risk appetite.’ That is, it would take on the deals its competitors were rejecting. Operating with only 3 percent equity, and much of its debt supplied on a very short- term basis, this policy should have been accompanied by clever ways of mitigating the increased risk. A good strategy recognizes the nature of the challenge and offers a way of surmounting it. In 2008, Lehman Brothers ended its 158 years as an investment bank with a crash that sent the entire global financial system into a tailspin. The consequences were disastrous for Lehman, the United States, and the world.”

Can just continuing to gain market share by growing faster than the industry ever be a strategy?

Nope, we know the answer when someone else does it. But we don’t often remember this when we do it. Many leaders including the ones in our industry/profession proclaim they have strategy, but they do not. The reality is that good strategy is not very common but it’s absolutely the need of the hour for all of us.


Because we face a plethora of challenges ranging from regulation, pricing pressure, competition, predatory practices by many people/institutions, changing consumer preferences, short attention spans, and so on.

Simply put, strategy should mean a cohesive response to an important challenge.

If that is the case:

  • What is your cohesive response to the pricing pressure and regulatory challenge you face?
  • What is your cohesive response to stand out in the light of all the competition you face?
  • What is your cohesive response to make competition irrelevant and get 100% share of the heart, mind, and wallet of your customer?
  • What is your cohesive response to achieve real organic growth?
  • What is your cohesive response to make your firm valuable?

Richard explains good strategy and bad strategy with some interesting lines.  “A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action. The guiding policy specifies the approach in dealing with the obstacles called out in the diagnosis. It is like a signpost, marking the direction forward but not defining the details of the trip. Coherent actions are feasible coordinated policies, resource commitments, and actions designed to carry out the guiding policy.

Bad strategy on the other hand is more than the absence of good strategy. Bad strategy has a life and logic of its own. It may actively avoid analysing obstacles because a leader believes negative thoughts get in the way. Leaders may create bad strategy by mistakenly treating strategy work as an exercise in goal setting rather than problem solving.”

Or they may simply maintain the status quo by not doing anything. Complacency is considered one of the biggest strategy traps established big corporations and small ones fall into all the time.

Let’s look at a simple case within our industry – A firm in Bengaluru is currently at Rs. 200 Crore. The firm has ambitions of growing to Rs.1000 Crore. In the previous three years though, despite setting ambitious targets, growth stagnated. The only growth this firm (like many others) saw was the mark to market appreciation and the money that came through the SIP book. Other than this, there were no meaningful net new assets added. There were no new ideal clients added but many non-ideal ones were onboarded. At the same time, some ideal clients left the firm. The principals of the firm kept making grandiose plans. After three years of doing this, the principals stopped looking at the numbers. And life just goes on. When I asked them about their strategy, they responded with an ambitious number.

But a detailed diagnosis would have revealed that the firm had too many clients. Therefore, the principals were busy all the time and there was not enough time for prospecting and acquiring ideal clients. Additionally, they did not have 100% of the wallet share of most ideal clients. On top of this, their offering was not differentiated enough. Once the diagnosis was clear, the firm could have set a clear guiding policy of focusing on the entire financial life of their ideal customer (who we figured together were corporate executives of a few technology firms) instead of simply focusing on selling a product to everyone who stopped by. The guiding policy (besides other things) also included a clear capacity constraint of focusing on 150 ideal client families.

The final element of the strategy as you know by now is to not stop by simply setting the above policy. After all, strategy is about action, about doing something and a good strategy must contain action. More importantly, the actions within the strategy should be coherent. That is the resource deployments, policies, processes and tactics should all be consistent and coordinated. The coordination of action provides the most basic source of leverage or advantage available in your strategy.  At the same time, as Peter Drucker wrote, There is nothing so useless as doing efficiently that which should not be done at all.”

Now that you know what strategy is not, what’s your strategy?