Make sure you ask the right question
I believe it was Albert Einstein who said: “If I had an hour to solve a problem and my life depended on the solution, I would spend the first 55 minutes determining the proper question to ask, for once I know the proper question, I could solve the problem in less than five minutes.” In my opinion this applies to strategy setting – spending time on identifying the right question is ‘time well spent’. The Oxford Dictionary defines strategy as ‘a plan that is intended to achieve a particular purpose’. When defining your company’s strategy you should start by asking what the company’s ‘particular purpose’ or long term overall aim is, and then how you can achieve it? In order to answer those questions, there typically is an abundance of lower level questions – key is to ask the right ones.
Apply a proven framework to structure the thought process
There are many strategy frameworks, some plain and simple, some extremely complex. Utilizing a proven framework ensures you will ‘cover all bases’, thus not forgetting anything essential. Within our practice we use our 9 Levers of Value framework. Firstly, you need to understand and align on the ambition and financial model. What are the desired financial outcomes? What is management’s investment and risk appetite, and for what timespan? Then, in order to realize the financial ambition, you need a business model and a supporting operating model.
The business model defines ‘where a company plays’. The business model levers are the markets in which you are active, the propositions and brands you have and the customers you serve and channels you utilize to serve those customers. The operating model answers the question of ‘how’ the value for the customer is realized.
Although the importance of each lever differs per industry and company, all levers should be considered and ‘in sync’ – regardless of whether the company is pursuing a significant change in their enterprise-wide strategy, or is searching for revenue growth opportunities, or wants to focus on their operating strategy and reduce costs.
The strategic plan should be agile
Numerous factors influence the success of a company. Customer preferences can quickly shift, new breakthrough technologies can rapidly be adapted, industries can mature at a different pace, and costs of material and labor can be predicted only to a certain extent. Since it is not a matter of ‘if’ but rather ‘when’ significant changes occur, being able to adapt the strategic plan accordingly is essential to adequately manage risks.
Ensure your strategy is pragmatic
A robust strategy will firstly help management to establish a shared view of a company’s long-term overall aim and of how this is to be achieved. When a strategy is pragmatic and implementable, it is easy to communicate it – not only to employees, but also to external stakeholders and investors, because “it just makes sense”. An example of making a strategy more pragmatic are ‘must-win-battles’ which can be seen as key supporting pillars for reaching the long term overall aim.
As a strategy consultant I aspire to assist clients with the above challenges through our global network, frameworks, benchmarks and best practices and more personally through my facilitation, communication, inquisitiveness and active sharing of relevant insights from previous experiences. This must, of course, be combined with a healthy dose of common sense – so that, even if one’s head is up in the clouds, one’s feet must still be planted firmly on the ground.
And when you think you are finished, return to your initial question, because who claimed that was the right one to begin with?