Whether you lead a team of a couple of people, a department with 25 people, a division with hundreds of employees, or an organization with thousands of individuals you are going to want to acquire some key skills when it comes to strategy. Having a formal understanding of strategy and how to utilize various methodologies will have a direct impact on the success of your team and organization.
The following are some of the high-level considerations that should be given to strategy planning within your organization.
Strategy: It’s Everyone’s Job
A strategy is typically let by the senior leaders within an organization. Larger companies may even have a senior executive with a role focused on Strategic Management. Others may reserve strategy responsibilities to a Senior Leader who has other responsibilities. Regardless, any organization should work to develop a culture of strategic accountability for all leaders. This commitment and focus should originate with the leader of the organization.
Annual Planning Cycle
It will not matter how competent you or your team members are at the various methods/models of strategy if you do not have a rigid planning process around your strategy activities that considers:
- Frequency: The frequency and rhythm of your strategy planning will be largely dependent on your business cycle. At a minimum, an organization should be reviewing strategy on a quarterly basis. A best practice is to utilize one of these sessions for deeper planning and utilize the other quarters as tune-ups.
- Attendees: It is tempting to invite a lot of people to strategy meetings so that no one feels left out and all departments feel represented. For your quarterly meetings, you will want to avoid this temptation. For your key leadership meetings be mindful of including those individuals who can offer the most value to the process (hint: it is not always the people with the biggest titles). As an organization develops its strategy “muscle” there will be various layers of strategy meetings occurring in the organization that will ensure that all leaders are included in strategy planning and that all voices are able to be heard.
- Duration: Choosing the duration of your meetings will be influenced by your organization’s culture, budget, and business challenges. A minimum of 5-10 days for planning days throughout the year (40-80 hours) equates to less than 5% of your leader’s time spent on one of the most important activities they could be engaged in. The 7 P’s of leadership planning “Prior Proper Planning Prevents P..s Poor Performance” derived from a British Army adage applies equally well to a company’s approach to their strategy planning efforts.
- Ubiquity: Strategy planning and discussions should be ubiquitous in your organization. This means that you should be able to find strategy discussions occurring in weekly staff meetings, as part of yearly goal setting, and as part of yearly reviews. In addition, the best companies communicate broadly and deeply strategic plans and the organizations progress against these goals.
- Point Person: Depending on the size of the organization you may have a person who is in charge of strategy as their whole job, or strategy may be a portion of someone’s job. Regardless, you will want one person who has the responsibility for leading the annual planning cycle. This person will communicate the organization’s approach to all leaders and employees. This person will also be responsible for outlining a strong agenda with input received from key members of the leadership. They will also be responsible for facilitating interactive strategy planning meetings.
Strategy Methods and Models
Hundreds of books and resources are available on various methods and models that are utilized in strategic planning. The list that follows is a sample of methods and models that should be considered for utilization by an organization. It is recommended that a broad mix of individuals (departments and levels) be a consultant when utilizing any of these methods or models.
- SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats): This method is the most familiar to leaders as it is commonly used and most easily understood. On an annual basis, companies should be reviewing their business, the competitors in their industry and the landscape in which they operate to evaluate their and their competitors
- Strengths: What sets you apart from your competition and how should you be using this to your strategic advantage
- Weaknesses: What areas are you not strong in and how or should you address these as a strategic issue
- Opportunities: What possibilities exist for you to capitalize on with the right investment of time and resources
- Threats: What are glaring issues that you must address immediately
- VRIO Analysis (Value, Rare, Inimitable, Organized): This model can help an organization better understand where it derives its unique characteristics from and how various capabilities can be utilized in the strategic efforts of positioning the company against the competition
- Value: How can you utilize any of your resources or capabilities as a competitive advantage
- Rare: What resources or capabilities do you have that are rare and which give you a competitive edge (patents, physical resources, or unique capabilities should be reviewed)
- Inimitable: What do you have that is difficult to replicate
- Organized: This is where a company identifies resources or capabilities that it can invest in to give it a competitive advantage
- Porters’ Five Forces: Is a tool used for understanding the forces that shape competition within an industry. It can be useful in guiding strategy adjustments to suit the competitive environment. Porter’s Five Forces was developed by Harvard Business Scholl professor Michael Porter. The five areas that are reviewed by companies to analyze an industry’s attractiveness are:
- Rivalry Amount Competitors: Do competitors “play nice” or is it cutthroat
- The threat of New Entrants: What barriers exist to keep out new competitors or what should you be working on to make it hard to do business in your space
- The threat of Substitutes: A substitute is not always as a similar-looking business model. Taxi companies did not anticipate that customers would be so eager to try Uber, Lyft, and other ride-sharing platforms
- Bargaining Power of Customers/Consumers: Access to information has given customers and consumers new leverage in dealing with you, how do you leverage this in your strategic decisions
- Bargaining Power of Suppliers: How do you strategically approach your relationships with suppliers
- PESTEL Analysis (Political, Economic, Social, Technological, Environmental, Legal): A PESTEL analysis helps an organization think about what may be occurring in the various spheres of influence which will impact the strategy of an organization.
- Political: What is happening in the environments of the geographies which a company operates in or the industries a company participates and how this impacts short-term and long-term strategy of the organization. Who in your organization is watching policy changes closely in the markets and industries in which you are involved?
- Economic: Factors from currency exchange rates to labor wage differentials that can drive where the business is conducted. How much disposable income your customers have should be known and it should be understood how they spend this disposable income.
- Social: How does the thinking of individuals and groups influence a company’s approach to their products or services (e.g. growing concerns around “green” efforts) and how do shifting demographics of your customer base influence your organization.
- Technological: Companies must continually be learning about how changes in technology will impact their business, in how they design products and position services Artificial Intelligence should be understood by all companies as its impact will be far-reaching on how products are designed, services are provided and employees impacted.
- Environmental: All companies have an impact on the environment at large. You will want to think strategically about how your product or service engages with the environment and the tactical efforts you take that will both impact your top line, have a corresponding impact to your bottom line, and create a perception in your customer and employee’s minds.
- Legal: The legal landscape may have an impact on how a company strategically positions itself based on policies surrounding things like labor laws, health, and safety, free trade, etc.
- TECOP Analysis (Technical, Environmental, Commercial, Operational, Political): A TECOP analysis provides a mix of looking internally at some key capabilities and externally at key influencers to a company’s success to understand risks that need to be understood and addressed.
- Technical: What is happening with technology that can impact your product or services and those of your competitors
- Environmental: All companies have an impact on the environment at large. You will want to think strategically about how your product or service engages with the environment and the tactical efforts you take that will both impact your top line, have a corresponding impact to your bottom line, and create a perception in your customer and employee’s minds.
- Commercial: Sometimes this is referred to as cultural. This is about understanding your demographics (internal and external) and the attitudes and behaviors of those you impact
- Operational: Also known as Organizational, these are your structures, guidelines, policies, procedures, etc. that will impact your strategic choices
- Political: What is happening in the environments of the geographies which a company operates in or the industries a company participates and how this impacts short-term and long-term strategy of the organization. Who in your organization is watching policy changes closely in the markets and industries in which you are involved?
- VUCA Analysis (Volatility, Uncertainty, Complexity, Ambiguity): A VUCA Analysis requires a company to think abstractly and broadly to consider out-of-the-box factors which may impact them in the future
- Volatility: Factors change quickly and identifying what should be monitored and analyzed regularly will help your strategic planning
- Uncertainty: Having the ability to assess risks and model accordingly will help in choosing the right strategic path
- Complexity: Understanding how the strategic plans execute on will interact with the broader business and social climate
- Ambiguity: While data is critical to setting any strategy you will never have all the information you would like
Strategy Skills
A strategy is a learned skill. Companies often overlook the benefit that can be derived by investing in strategy skill development for their key leadership. It is important to invest time in each of the following to build a culture of strategy within your leadership ranks
- Training: Formal training efforts should be in place for key members of your leadership team (both existing and upcoming leaders). This training can be anything from strategy webinars to full-day training sessions, to actual accreditation.
- Associations: It should be broadly communicated the value of membership in associations associated with strategy (such as ASP – Association for Strategic Planning and SMS – Strategic Management Society) Membership in disciplines directly associated to a person’s area of discipline also provide a means in which to stay familiar with key trends and concepts that will impact a company’s strategy).
- Books: It is beneficial to recommend reading on a strategy to your key leaders. . Some of the top titles that will get your leaders thinking differently and more strategically:
- Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs by John Doerr
- Deep Dive: The Proven Method for Building Strategy, Focusing Your Resources, and Taking Smart Action by Rich Harwath
- Elevate: The Three Disciplines of Advanced Strategic Thinking by Rich Horwath
- American Icon: Alan Mulally and the Fight to Save Ford Motor Company by Bryce G. Hoffman
- The Attackers Advantage: Turning Uncertainty into Breakthrough Opportunities by Ram Charan
- Good to Great: Why Some Companies Make the Leap…And Others Don’t by Jim Collins
- Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne
Improving your Strategy Planning is a multi-year effort that once fully deployed will transform your organization and the results you achieve.
About The Author
