Categorized | the strategy notebook

Thinking strategically, part one: the “lottery” strategy

We are smack in the middle of a strategy book for our Shoestring Venture series, so watch this space over the next few months.

In the meantime, we’re offering up these blog tidbits on thinking strategically. No, we’re not going to quote Sun Tzu or any of that other sociopathic “it’s a war out there” sophistry. Not only is a business not a war, it’s also not amenable to universal apothegms or sounds-good phrases. Instead, business strategy is about structuring your thinking and your actions. The structured thinking and planning that works great when you’re facing down the mighty Qin army aren’t necessarily those that make you successful at selling ice cream pops to the kiddies.

So, with the idea that strategy is about structured thinking and planning, let’s fire off our series with the premier strategy followed by most small businesses, entrepreneurs, solopreneurs, and, well, just about everyone trying to make a buck by themselves: the “lottery” strategy. And we’ll start with my play-it-at-home lottery game! But, naturally, after the break.

If you want to know what I think of the lottery strategy, you should try my “play-the-state-lottery-at-home” game. It’s outstandingly simple and doesn’t even require a trip to the Quiky Mart.

Step 1. Take a dollar bill.
Step 2. Put it in the toilet.
Step 3. Flush the toilet.
Step 4. Watch the toilet carefully, because, on the next Wednesday or Saturday, there’s a chance — a slim one, granted — that fourteen million bucks will gush out. The more dollars you flush, the better your chances of winning!

The nice thing about the play-it-at-home-state-lottery game is that you don’t have to use real dollars, like you do in the real game. Just write “one dollar” on each sheet of toilet paper that plays footsie with your nether parts. Here’s the thing: using fake dollars doesn’t actually decrease your chances of winning millions! But it sure decreases the downside.

If you think of strategy as structured planning and thinking (I’ll fill out this vague sentence in later blogs), then, by far, the most common strategic “structure” I’ve come across in my travels as a biz consultant among small businesses and entrepreneurs is the “lottery” strategy.

And you already know what I think of that.

The lottery strategy works like this: come up with an idea. Throw time, effort, creativity, and a few to many bucks at it. If it fails, then stop. If it works, then great!

Like the lottery, this strategy actually does work sometimes. An idea may actually be a good idea and fly without any structured planning whatsoever (like, say, pet rocks). Or somewhere between inception and failure, someone raises their hand at a meeting with the bright idea of actually coming up with a strategy and planning accordingly.

But, as with the lottery, usually the lottery strategy fails. I once worked for two very wonderful gentlemen who could generate business ideas like you and I generate carbon dioxide. I cannot tell you how many brilliant ideas hit the production floor and skidded to an ignoble loss.

The central flaw with the lottery strategy is to confuse the business or product idea with the business or product strategy. In the same way, people who purchase a lottery ticket see the ticket as a way to make millions. It’s not. It’s a ticket. There are trillions of ways to make millions and spending a buck on a ticket is the most difficult and expensive way to do it.

The same applies to marketing. A marketing idea is not a marketing strategy.

An idea is never a strategy. Even bad ideas married to the right strategy can make millions or, at the very least, provide a comfortable income or a stable business. But even the best ideas with no other strategy — or a poor strategy — mosey on down the dusty road to failure.

“But,” you say, having read all your psychopath Sun Tzu books, “what if the other guy gets to market first with my idea?” You’re thinking of that old saw, aren’t you, the one that says, “The early bird gets the worm.” Okay, but I’ve got another old saw that trumps yours: “The second mouse gets the cheese.”

Here’s business reality 101: almost all of the really successful business ideas you can name made the second or third or even fourth person really, really wealthy, while leaving the early-bird schlmiel who came up with the first idea holding little or nothing. Yes, you can show me some early birds who did well, but the big success went to guys who could think strategically.

One of the reasons the second (or third or fourth) mouse gets the cheese is because the first ones either don’t have or strategy or, more valuably, show what strategic mistakes must be avoided.

Bill Gates never had an original idea in his life. And, for that matter, neither has Microsoft. Well, at least, they’ve never had an original idea that made any money, as those of us who remember Microsoft Bob can attest. But Bill Gates built the most successful company in the world based on other people’s ideas and a whopping dose of effective business strategy, something the early birds skimped on.

It’s in that spirit — that a business, product, or marketing idea is never a strategy, that we here at Shoestring Venture are launching a short series about what business strategy really is. Just in case you want to do more than flush dollars down a toilet.

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4 Responses to “Thinking strategically, part one: the “lottery” strategy”

  1. Alberto Verdeja says:

    Interesting article. Definitely something to think about for some of us whe have the creativity and dreaming side more active than the logical one.
    I think is useful to have in the team both mentalities but not in the same head though. Team work. I still believe that the energy that is generated with the hope to win the lottery or the irrational side of the creative process, even if it try to go in the logical terrain, is important. It is a matter to control it and use it with the analytical approach such as the planning strategy.
    Just a thought to keep talking about.
    Thanks.
    Alberto

  2. Alberto — I’m one hundred percent behind this sentiment. When you partner in a business or hire employees, you want to balance your weaknesses and strength. If you’re an intuitive and creative thinker, you want to partner with someone who’s more analytical and detail-oriented. Put two dreamers together and you have a lot of dreams — put two analysts together and you have a lot of analysis. If you’re a networker, find someone who’s a worker. If you’re a worker, find someone who’s a networker. From the standpoint of strategy, however, intuitives and creatives can and do come up with sophisticated business strategies that go far beyond the “isn’t this a great idea” type of lottery strategy. They just do it differently and more rapidly than the analytical sorts.

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  1. [...] many businesses employ what I call a lottery strategy, which is self-explanatory. Here’s how I described the lottery strategy in an earlier post: [...]


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