Our Definition of Strategy
A grounded and thoughtful strategic plan can be a powerful instrument for transformation and a roadmap for execution. However, we know that all too many strategic planning exercises are largely about financial projections that lack the proper logic and grounding.
We believe that strategy needs to be more than an objective or a rallying cry, but instead needs to provide a clear view of how the company will win in its markets and should provide a framework for making decisions between competing priorities that results in outcomes that are more than the result of a series of marginal decisions. To be effective the rationale behind the strategy needs to be understood by all of the key leaders and managers in the organization.
Strategy: Working Definition
In our work with clients, we usually follow a workshop approach, developing a strategy with you, not for you. This allows us to move quickly leveraging what you already know, while at the same time making sure that you question existing assumptions, ask the right questions and develop objective perspectives on the key issues. Most importantly, this results in the leadership team fully owning and understanding the logic of the strategy because they were instrumental in its development.
Strategy is not primarily about defining goals or quantifiable targets – in fact if set too early goals can actually get in the way. In truth, strategy is about defining a framework that allows your organization to make trade-offs and prioritization decisions in a way that leverages and enhances your strategic advantage, defines how you will win against your competition and so and so results in growing faster than your market and growing the bottom line faster than the topline.
We believe that strategy has to start with an honest look at the momentum of the business. This means assessing how you got to where you are and separating market and competitor effects from the impact of your own initiatives. Once we have identified the root causes of past performance, we can develop a point of view of how they will continue into the future. This allows us to create a realistic baseline assuming we do nothing fundamentally different to which we can compare alternative strategic options.
Finding You Strategic Sweet-Spots
With this in place, we lead teams through discovering and articulating strategies that fall in their sweet-spots. As the exhibit below shows, a sweet-spot is found at the intersection of what the customer should want and what you are uniquely qualified to provide.
Sweet-spots define areas where your company can better serve customer needs, deliver greater customer value and therefore win against your competition. Focusing on sweet-spots and potential sweet-spots helps define the strategic capabilities that should be maintained and developed and customer segments on which we should focus and for whom we should increasingly deliver greater value.
In order to find, articulate and gain confidence in your sweet-spots, we explore both parts of the equation. We start with understanding customer needs, building on what you know, but often expanding the definition of ‘customer’ to look more broadly at the market and understanding customers’ economics to try and find unmet needs, not just current customer demands. We screen these customer needs against our differentiation grounded in our key capabilities. In our definition, a capability is the combination of assets, people, processes and technology that enable a company to do something systematically better than their peers in a way that is hard to copy – i.e.: it is a source of competitive advantage. So, when we help assess your strategic assets, we hold them to a high bar for uniqueness, not merely a ‘core competency’ that may be shared by your major competitors.
Approaching strategy this way, we may also uncover potential sweet-spots: an unmet need that we cannot meet today, but that is not being met by others either. If we can focus and be the first to develop the required capabilities, especially if we can make them defensible, then this also qualifies as a sweet-spot. This logic allows us to define and prioritize capability gaps that must be addressed in order for the strategy to succeed.
From Strategy to Execution
Strategy is essentially the ‘connective tissue’ – the logic, of why some initiatives are funded and others are scrapped. For the strategy to be relevant and effective it has to actually change what the organization does. Which means that ultimately, you still need action plans and timelines implement the required changes; but how do you know if these plans are ‘strategic’? The key is ‘coherence’ – why this set of initiatives as opposed to all the other things we could have done with the smart people in our organization?
We work with your leadership team to translate the strategy into a clear set of actions that explicitly define what will be different. In our experience it is also important to define what the organization will stop doing in the future as it is to define the organization will do in the future.
Our framework for sorting through potential strategic initiatives is to sort them into five buckets as shown in the exhibit below:
With our support, clients can get relatively quickly to an actionable strategy that is easy to communicate and crystal clear in how it reprioritizes actions. The result is organizational alignment, focus and a dramatic reduction in management distractions – what some describe as chasing every shiny object.