Often times creating a corporate strategy is viewed as a tedious and actionless process sucking up hundreds of men-hours. And the bad rep is for a good reason, as the only thing that can be shown for, in most cases, is a memo attached to a PowerPoint presentation. Anyone that has been, even remotely, involved in this can relate.
Creating a corporate strategy needs to be a bit less exhausting and way more actionable. And the problem lays not with the tools we have at our disposal, but with how we approach the process. We are not short on tools nor methods when it comes to creating strategy. What we are missing is mindset and actions that go with that.
Sometime back I wrote a piece on applying a lean manufacturing feedback loop in creating a corporate strategy. This article wishes to be an actionable followup.
But before moving forward you might be wondering why considering a lean manufacturing feedback loop for creating strategy to begin with? In my view it addresses the mindset topic, as it promotes evidence based actions. One can argue that creating a strategy is much like building a product. The client is the company and the value proportion is the goal the strategy is created for (eg: cost cutting, differentiation etc.). Thus short iterations where evidence is gathered are desired over a ‘big bang’ approach.
Approaching strategy with the right mindset is not enough. One needs to understand the actions that need to be taken too. If in the previous article I just mentioned the steps that need to be taken in strategy formulation now I would like to look at the associated actions that go with each stage.
Question to be answered: where is the company today?
Actions to be take: there are many things that can be done to get a feel for where is the company today. These include: mapping out the current product portfolio, audit the company ecosystem’s output, analyze the capabilities (both human and organizational)
Question to be answered: where does the company want to go? and why?
Actions to be take: this is probably the most important questions. As it serves as the basis for the strategy. And at the same time here is where most of the assumptions about the future are made. For this questions to be answered the company needs to formulate a vision and mission statement grounded in business environment evidence. If achieving the desired goals requires innovation the company needs to create an innovation thesis too.
Question to be answered: what does the company need in order to get where it wants to be?
Actions to be take: This one is probably the most complicated question to answer as the effort associated with answering it is quite substantial. Basically this question forces strategy people to think about which capabilities does the company need to achieve the desired outcome. Capability development is a massive task in itself but sometime some of these capabilities can be simply acquired.
Question to be answered: how will the company know it’s on the right track to where it wants to be?
Actions to be take: to quantify whether or not the strategy is promising the company needs to have a good accounting system in place. And by accounting I don’t only refer to the standard accounting system but also to innovation accounting that looks at non-financial KPIs to measure the progress of a new venture. Another way to go about knowing whether or not the company is on the right track is to use OKRs. But OKRs should avoid expressions that don’t push for new achievements (eg. maintain market position, keep doing X etc.). For OKRs to be useful in strategy they need to use expressions that convey measurable and/or tangible end points/states (eg: climb mountain X, eat 5 pies etc.)
Question to be answered: is there anything to be changed or adjusted?
Actions to be take: this is probably the most trivial answer. A simple gap analysis will do the trick of finding out if the initial assumptions about the future were right or not. In case they were maybe it’s time to double down on that strategy. In case they were not once can restart the loop from the plan phase.
While it may look a bit overwhelming, approaching strategy like this actually makes the formulation process easier. While at the same time basing it in evidence rather than pure fantasy. This has the potential of saving endless misdirected SWOT analyses, and lots of alignment meetings. Answering to the five questions through iteration will get you a better strategy, with much less pain and wasted time.