If you ask me what is the Strategy, I will response that, “it is something that everyone loves to talk about but probably not everyone aware of it”. Each person is in love with it. It is something what sounds really cool and “corporate” at the same time gives you feeling of captain of the ship.
Am I the best person to explain to you what is strategy? No. But, I can probably tell you “what is not a Strategy” and share with you main guidelines how to build yours in simple steps. But, to make it interesting I’d like to start with common beliefs about Strategy, which are definitely not right so that you can avoid them from the start.
- Operational effectiveness is not a Strategy
Companies always try to improve their operation. They want to produce at lower costs and earn more while the difference in between of those 2 is the profit. This is for what company lives. If a company points out that its strategy for next periods will be doing the same stuff but cheaper/better it is not a strategy, instead, it is an operational framework.
- Strategy is a corporate soul, not a single team or executive job
This is the most critical point, I’d say. Strategy always considered as a high level job to be created and managed. Unfortunately in most of the companies specialists who are in hierarchical base of organizational structure, do not have any idea about where their company is heading. Since specialists and teams who are real “do – ers” in company, their inability to feel the direction immediately impacts the end result. Just imagine a ship. It has a captain who gives orders to maneuver the big and complex machine. And while captain tries to avoid the iceberg, he orders immediate turn to left and full speed. Everything is OK here except the fact that, since workers in engine sector cannot feel the urgency they can be late of putting full speed or even realize it not in needed amount. That is strategy linkage to execution. It is the most common fail why Strategies stay at presentations and does not get to real.
- 100 pages document cannot be a strategy
It is absolutely, the most favorite item of mine. People are not satisfied when they see pretty much several bullet points, where as, their expectation is 100 page thick confidential document stock which is prepared by Nobel price winners in underground bunkers of the company. No! If you cannot explain your top-level strategy to your staff in several simple formulated sentences, then probably you still have homework to do. If you are curious, you can look into the websites of favorite global brands and go to the strategy pages. They say, where they are heading to and what are the critical competitive advantages they are striving to achieve. Strategy is a map with waypoints. It shows where you are, it says where you want to be and the idea about how you are going to reach there. Strategies become unique with their answers to the “How?” question. This is what differentiates winners from losers.
- “5-10 year Strategy” days are gone.
In earlier decades when information technologies did not exist like we have today, companies had the luxury time when once prepared strategy was working over the years. Even, it was a “secret” and top level document passed from a generation to another. Without immediate information it was taking years for markets to adopt the situation and companies were happy to continue once defined way of successful operation. “If you wake up, do what you did yesterday and it worked then lets continue repeating it everyday” – idea was dominant.
Fortunately or unfortunately those years passed. With today’s Internet and mobility world, information became the fastest traveling commodity and industries are changing with amazing speeds. While having this situation, I’d like to ask you to think about 5-10 years strategy building process. It will be a waste of your time, for sure. Breakthrough innovations and technological rally is so fast that it is almost impossible to imagine or guess in 10-year terms.
If you ask my advice on this subject, I’d go for 3 years term strategy with yearly revisions. It should be suiting very well for almost all industries.
- Strategy revision is not a fail but a requirement
Lets think about the opposite. (It is common for Applied Math guys to prove theorems with opposite statements:-)) You made your 3-5 year strategy. After 6 months a new player suddenly entered market with its new line of products, which changes the market surface. Should you say that “We made it 6 months back and we will lose our faces if we change it..” or will you take it from the normal and adjust the strategy to the current market conditions ? Of course the wisest decision is the second one.
Unfortunately, people think about strategy as untouchable, high level sentences, which hide inside secret formula of purest success. No. It only explains how management sees the way of company to reach the company aspirations & goals, for the time of preparation of the document. As time passes conditions are changing and obviously the vision can become outdated.
THEN, How to deal with Strategy?
Take it simple and straightforward. Iterate a lot but at the end have easy to remember, descriptive sentences describing the answers to the questions of What? and How?.
Now, as I promised at the start of this article I’d like to share with you one of my favorite method of Strategy building. (They’re a plenty of them, so it really depends on which you like). I like Roger Martins approach on this subject, which he shared on HRB at the following site. It is simple, straightforward and easy to follow while execution. I’d like to summary the main 5 questions bellow, over which you can build your strategy successfully:
1 What are the aspirations and goals of company?
2 At which field of competition will the company choose to play or not to play?
3 How company is going to win at selected competition fields?
4 What capabilities are needed in company in order to win in the particular way?
5 What management and operational systems are needed to ensure the capabilities building and maintaining?
I’m sure that if you follow these questions in the order and carefully iterate between 2nd and 3rd questions you will feel how with ease you can map the strategy of your company. And do not forget that it is not a single man show and the best way is to do it with the executives of the company with enough time and comfortable environment. Once you finalize it, share it with everyone in your company and make sure that they know and feel it. Then, you are done!
All the best and good luck!