Strategic vs. Opportunistic

“What’s the difference between being strategic versus opportunistic?” a friend recently asked.

After thinking about it, I answered, “Suppose you want to make $1,000. Being strategic means you come up with a strategy or plan that you reasonably expect to make that amount, perhaps investing in a stock or bond, or take a job that pays that much. Being opportunistic means you wander the streets looking for loose change.”

It is usually straightforward to know how a company operates by looking at its portfolio of business lines. Strategic companies have fairly similar-looking opportunities, almost cookie-cutter in their appearance. By knowing what they do well, they develop plans to replicate their successful endeavors. Having this tight focus enables them to have better insights into how these ventures work, and hopefully work together for greater efficiencies.

Opportunistic companies are always on the lookout for “a good deal.” Their portfolio is a collection of seemingly unrelated ventures, with little or no cross-venture benefits. They may still make a good deal of money, but they are dependent upon a sufficient number of acceptable deals to come their way. In essence, they wait for opportunities to come to them, instead of making the opportunities happen.

If we look at the world’s largest companies, we see 14 banks in the top 50, 6 oil companies, 6 automotive companies, 6 insurance companies, 5 utility-like companies, 3 drug companies, 3 tech companies, 2 consumer electronics companies, and 2 consumer packaged goods (CPG) companies. There is only one potentially opportunistic company among the 50, Berkshire Hathaway, although they may actually be an insurance company that also invests opportunistically in a wide variety of industries.

These are the most valuable companies in the world, and they show the value of a focused strategy. They didn’t become that valuable waiting for opportunities to come along. They made the opportunities happen.

Using a disciplined portfolio strategy will enable you to set audacious goals and develop a plan to achieve them. Contact us to start you on the path to becoming one of the LARGEST COMPANIES in your industry.