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Eric Schmidt: Most Companies Get Strategy Wrong Because They Think Inward-Out

By Eric Schmidt · Leadership · 2 min read

Schmidt says most strategy starts with 'we're the best in the world' — which can't possibly be true. He prefers a different approach: figure out what the world will look like in 5 years.

Key Points

Most strategy conversations are inward-out — everyone assumes they're the best
Schmidt's approach: figure out what the world looks like in 5 years, then look at your offerings
Almost nobody does a 5-year plan. Most businesses do 1-2 years.

My problem with most strategy conversations is that they're always inward-out. We're the best in the world — which can't possibly be true.

The Inward-Out Problem

Schmidt: My problem with most strategy conversations is that they're always inward-out. First — we're the best in the world, because everybody thinks that, which can't possibly be true. Second — we see that all of our products are going to be successful, and therefore we'll be very successful in the future.

That's usually how strategy is done in businesses.

We're the best in the world, because everybody thinks that. Which can't possibly be true.

The 5-Year Approach

Schmidt: I prefer a completely different approach. Work very, very, very hard to figure out what the world's going to look like in 5 years. What will people be doing? What will your customers want? Where will costs be? In our case — what will networks look like? How important will phones be? What will the apps look like?

Spend an awful lot of time on that. And then take a look at your offerings.

Work very hard to figure out what the world looks like in 5 years. Then look at your offerings.

Nobody Does a 5-Year Plan

Schmidt: If you think about the media business — there are media businesses growing very well and others in great trouble. This was completely predicted 5 years ago.

The leaders and the ones in trouble should have done a 5-year plan and said — holy cow, what are we going to do? What are the things we can do? Maybe we sell ourselves, maybe we try something different.

Almost nobody does a 5-year plan. Most businesses do a 1 to 2-year plan.

Almost nobody does a 5-year plan. Most businesses do a 1 to 2-year plan.