What does it take to have a good category strategy?

Failing to reject it. And if you really do not have time to read more – the first sentence sums it all up. You can take it as a fact and go back to doing your day job. Or… If you want to understand why it is better to try rejecting strategies as opposed to trying to prove them, please read on (I actually do care if you read. Or comment.).

It is not a secret, that behavioural economics is now the fashion. Neuroeconomics is a science branch. Scientists observe human brain responses to economical triggers. For instance, buying things cheaper, achieving savings actually causes a reaction in the pleasure centre of human brain. Procurement, just like any other specialist area (HR, government) could be learning from scientists. My most recent re-discovery was a confirmation bias. This post is about it’s impact on business and main ways to eliminate it.

Confirmation bias

Confirmation bias is not something you never knew existed. I am pretty sure you have experienced it more than once in your life: falling in love, focusing on something special that you care about very strongly. The moment is nice. But what tends to happen – people get blind to anything else around them. Defining new category strategy is like falling in love all over again. If you selected a strategy and are working on it’s analysis, your naughty (lazy) brain will do everything to help you achieve just that: prove, that the selected strategy is the right one. It will kindly switch on other mechanisms: availability heuristic, selective hearing / understanding / reading, halo effect and many other “tools”. You cannot blame your brain – it is just trying to protect you from having to work more finding a different strategy.

Impact on business

A lot of times, category managers tend to overestimate potential good outcomes and underestimate the bad ones. Then businesses find themselves running procurement (HR / IT / Operations) projects with budgets, which are higher than anticipated benefits. Or implementing changes that have lost their meaning along the way. Adapting changes, that are useful for only one function, and bring harm to the business. To put it shortly – activities end up in failures (or, if you prefer, “lessons learned”) and wasted resource.

Failing to reject it

It is a lesson from scientists. For ages, to prove something, scientists form hypothesis and focus their efforts to reject it. My approach is to form the strategy and try to find the weak spots  – that helps “think differently”.

Another method is adapted be various top management people. Successful leaders ask a question: “imagine you are in time two years in the future. Your strategy has failed. Why?”. Similarly as the example above, this exercise will help you focus on things that might go wrong. Let’s admit, in a real world, if something can go wrong, it will most definitely do so.

Another tool you could use murder boards. Agree with your colleagues, that you will be polite in the meeting room while questioning the selected strategy, but leave the political correctness behind the board room door. You do not want to find yourself implementing big project only because it was not politically correct to say, that you do not agree or do not understand assumptions or conclusions.

Be brave enough to admit that things can and do go wrong. Be strong enough to resist doing things for the sake of doing it, without seeing the benefits. Falling in love is great. Becoming blinded by biases in business is dangerous.


What does it take to have a good category strategy?

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