Shannen

8 Steps to Strategy Development – Part Two

Date

In Part One, I introduced business strategy development and the first half of the process. In taking a detailed current state, diagnosing your company’s actual challenges, and generating a variety of pathways to success, you’ll be in a great position to finish the process with the remaining four steps below.

Step 5 – How do you choose the best strategy?

Choosing the best strategy requires analysis and evaluation.

this is a matrix table listing each strategy option down the left-hand side and then, across the top, has columns for resources needed, risk level and impact, revenues, and time needed.

Include all your possible strategies from Step 4 into a matrix that defines resources required, risk level, and time (time to implement, time to recoup investments, whether now is the right time in the market). Score them accordingly.

Effective strategies must:

  • be consistent with your company objectives,
  • maximize strengths and minimize weaknesses, and
  • be realistic to achieve.

If any of your possible strategies don’t meet these requirements, cross them off the list. More about this step can be discovered in Richard Rumelt’s book Good Strategy Bad Strategy.

After scoring and analyzing the results of your matrix, choose the most viable and quantitatively profitable strategy.

Step 6 – How do you roll out your chosen strategy?

Implementation is naturally considered throughout your strategy development process and now it’s time for more detailed design and engagement with staff. Buy-in is critical to successful execution so get your teams involved early in what roll-out could look like, including daylighting interdependencies and roadblocks. Empower your teams to come up with the best ways to implement the strategy as this will help ensure your staff are clear about the what, who, how – and why. Motivation and commitment are critical success factors to executing your strategy.

there are seven bubbles linked together to demonstrate the interconnectedness of needs. The bubbles are labelled strategy, structure, systems, style, staff, skills, and shared values.

Your specific roll-out will be tied to the strategy you and your executive team chose but will likely include staffing considerations, resource investments, process changes, communications plans and marketing plans. Beware! Planning can turn into a black hole if not controlled properly – don’t let perfect become the enemy of good. Develop and execute a solid plan and course-correct as you go.

When rolling out a strategy, everything about your company has to work together. #McKinsey‘s 7S Model outlines this constellation of interconnected elements to align as part of your strategic implementation:

There must be consistency among all these elements in order for you to effectively execute your strategy. If, for example, your systems (your workflows, technical infrastructure and decision-making processes) are long and complicated but your go-to-market strategy is to be lean and innovative (ie: fast-follow), you will have problems executing and competing.

Similarly, if your staff don’t have the right skills or aren’t trained properly, you won’t be able to execute your strategy successfully.

For more detailed information on McKinsey’s 7S Model, check out the Corporate Finance Institute’s overview here.

Step 7 – How often should you evaluate your strategy?

Having included your staff in step 6 will help make your strategy a company-wide commitment that can then be collaboratively incorporated into team goals, individual performance plans and Key Performance Indicators (KPIs). At a minimum, your KPIs should reflect four core areas:

  1. Financial – sales, cash flow, operating income, etc
  2. Customer – net promoter score, % of new vs returning customers, on-time delivery, etc
  3. Internal processes – processing times, unit cost, yield, error rates, etc
  4. Learning and growth – employee engagement, retention rate, career progression, etc

When your teams understand what they need to do differently, why and how they should do it, and have the resources to do so, you are well on your way to executing your strategy. By ensuring these main pieces, you’ll increase #employeeengagement and empower staff to find increasingly better ways to do things. At regular manager check-in meetings, encourage collaborative, two-way communication in order to increase these positive outcomes.

Step 8 – How and when do you course correct?

Strategies must be implemented, assessed, and re-assessed. They must change because the marketplace, the environment in which you operate, and your people will change.

Evaluate your progress quarterly and as the marketplace shifts. Internal visibility and transparency are essential to accurately measuring progress against your stated goals so be sure you have a culture of trust and openness with your staff.

If you don’t meet your stated goals right away, don’t necessarily go back to the drawing board! Evaluate your #strategicplan and KPIs to ensure they’re realistic, timely, and measuring the right elements. Review McKinsey’s 7S model above to determine whether there are misalignments in your organization that need addressing. Have you resourced your strategy appropriately? Are your staff all ‘rowing the boat’ in the same direction? What are your competitors doing?

On the flip side, you may exceed expectations – in which case you still want to understand exactly where and how you’re creating value so you can capture more of it.

If things aren’t working the way you expected, evaluate and course-correct in a thoughtful and intentional way. Be cautious about throwing more resources at a problem – listen to your staff and to the data so you can make hard and smart decisions.

Lastly, repeat the eight step process about every three years.

Conclusion

Creating strategy in today’s VUCA (vague, uncertain, complex and ambiguous) world is daunting, and it’s tempting to execute now and evaluate later. However, taking the time to truly understand your current state, your competitors, and how/why you create and destroy value will put you on a much better path to executing a strong, coherent strategy. You’ll rest easier knowing you’re building a winning business and you’ll enjoy two positive, unintended outcomes: the gift of simplicity and the clarity to get things done.

More
articles