Strategy formulation process for common people
A common task: Define us a strategy that is profitable and support the board of directors in making the right decision.
A common result: You create an adopted strategy document that will make the board of directors make the right decision.
Mark the word adopted. You want to make this right, right? You want the board of directors to understand that you are capable of getting the numbers right, so that they don’t have to doubt that what they want, the business needs and what the business can afford is a well founded strategy that has the possibility of being well funded. That can only be done if everyone has the understanding that this is a profitable strategy, which is communicated through your nicely formulated strategy document.
But how much is adopted truth and how much is your strong believe in what is the right strategy? It is easy to fall into the trap where you create a strategy to be approved, rather than a strategy that is right. You need to bring courage to the table and tell the board of directors what you believe in and stand up for the point made, no matter what the outcome may be. If you do it any other way, you may end up having an approved strategy that is well funded and theoretically financially sound, but hard to implement successfully since you and several others, after having the strategy disclosed to the management, doesn’t believe in it to 100%. It feels like an adopted strategy… If your team doesn’t believe in the strategy you are going down in a spiral. And believe me, you need your team with you. 100%.
There are many people getting well earned credit for having great models on how to set a strategy and how to implement, communicate and document it. Henry Mintzberg is one of them. You know, Henry with the five P’s? Another favorite of mine is Michael Porter with his definition of competitive advantages and competitive market forces. These are great tools in finding your strategy. But it sometimes gets too much to read and you get even more confused when you try to understand what is expected of you, when you get the assignment to pull together a strategy that will be the base of a decision that forms the future of your company. Very few CEO’s or board of directors are capable or willing of letting you know what is expected of you and in what format they want the strategy to be delivered. They expect you to know that, or at least find that out yourself.
Below I summon my own thoughts on what you need to do to create a document that may be used as a strategy decision document, used by your board to form the future of your company. Each step below may be further described, but I won’t do that here. The basis of my process is:
- Set a template document and start documenting your knowledge, progress and thoughts right away. Keep documenting as you go along!
- Make sure you have the correct and latest versions of Vision, Mission, Targets and Objectives stated by the board and the management. Study them carefully and objectively!
- Read up on important models for strategy development. Important experiences, thoughts and methods can be found here. Pick the things you find useful from several methods and gurus.
- Do background analysis of the business your in. Ask people around you on how they perceive your business.
- Analyse reports from Gartner, Forrester Research and others to get a picture on what they believe is the future. Read loads of blogs and articles.
- Check vicinity business areas on what is happening there. Get influences from areas you aren’t expected to do business in, but may be a connected business area to your own.
- Try to understand where your existing competition is heading.
- Define your existing resources, both within the organization and financially.
- Map your company’s market position in diagrams together with your competitors.
- Define your companies business value and map it in other diagrams together with your competitors
- Do ya’ SWOT thang!! Basic, but very important.
- Risk analysis and mitigation strategies are important parts of argumentation around your strategy proposal.
- Spend endless hours of trying to understand the big picture. Analyse your background findings, research reports and your nicely put together diagrams.
- Save all references and document them.
- Ask your existing and possible customers where they want you to be in the future.
- Ask your existing and possible customers where they find you in the diagrams charted earlier.
- Ask yourself and experienced and intelligent people around you the questions; where do you want to be and how do you want to be perceived by the market and our customer.
- Draw your conclusions and be true to your own believes. Never adopt a strategy to satisfy short sighted decision making. A strategy is supposed to impact long term. Short term adaptation will never benefit your long term business. And you are here to stay, right?
- Don’t forget to document alternatives to your strategy proposal. That is not the same as negotiating with your firm believe in your main proposal. That is securing that the board will have the full picture of the consequences and the options to proposed strategies. And it will guarantee that you have proposed the second best thing if they decide not to go with your main proposal and thereby minimized the risk of wrong decisions being made.
- Create a snappy presentation material that summarizes your document. I won’t go deeper into this part. That is a completely different sport, how to communicate effectively while still short and simple.