Back to Basics: The Six Elements Of An Effective Strategy
Developing a strategy ready for execution is one of the most difficult tasks facing organizations. Global commerce is no longer reserved for the “titans of industry.” Small to medium sized enterprises are now operating in the global economy and other than resource constraints, the playing field is generally even for anyone with quality services and products. Understanding the basics of an effective strategy is more important than ever.
“Going back to basics strengthens your foundation”
Money, people, and time are finite resources and should be used wisely. When developing a new strategy or enhancing an existing one, leaders must understand there are three value areas that a strategy should address before proceeding.
- Improving Operational Performance
- Improving Customer Service
- Exploiting New Opportunities
Understanding the three value areas enables leaders to establish priorities based on business goals. Additionally, as a new initiative is developed and acted on, the tactical needs must be met while the organization continues moving forward. Long story short, understand your business needs & do not disrupt operations.
The Six Elements Of An Effective Strategy
Element 1 – Continuation Of Policy
Formulating an effective strategy means understanding the landscape you operate in and and those affected by your decisions. Policies are both external and internal.
- External policies are the laws and industry standards your organizations must follow. External policies mandate what an organization must adhere to and can include international, federal, and state laws.
- Internal policies are an organization’s vision and mission. They must be aligned with an organization’s core competencies and value chain. Internal policy should be easily understood by everyone in the organization. A good litmus test is, “can our policy be described in three sentences or less and does it address the way we operate, how we treat our customers, and capture new markets?”
Element 2 – Overcoming Adversarial Competition
Understand those who operate in your market and either directly or indirectly oppose your progress. Leaders need to understand their competition, their internal policies, and value stream. Leaders should be honest when assessing the weaknesses of their own organizations and compare themselves as objectively as possible. Weaving fantasies about the competition or the competencies of your own organization leads to bad decision making. Entrepreneurs of small to medium sized organizations are especially prone to fantasy based thinking. While optimism is a good quality for successful entrepreneurship, it is not the basis for effective strategy formulation.
“If from your strategy you can’t identify anything that you would say no to, it’s probably not a good strategy.”
– Karl Scotland
Element 3 – Account For The Talent Gap
Organizational leaders and tactical managers must understand the skills required so the policy can move forward and succeed. An actionable strategy accounts for the talent gap. Unfortunately, HR departments lack the ability to close the skills gap — either through recruitment & retention efforts or training & development. Leaders must develop a roadmap for developing & recruiting the required skills for strategy execution.
Element 4 – Impetus & Focus
Firm understanding of the corporate culture and the attitudes required of those operating internally of the organization helps leaders gauge how well employees and the tactical management will readily adopt the strategy. Experienced leaders understand culture and attitudes are not specifically ‘defined’ — they evolve over time and accumulate based on whom the organization hires. The following considerations should be made when creating your strategy and roadmap.
- Who are our external customers?
- How well do our employees treat our external customers?
- How well do we treat our employees?
- When we’ve implemented change in the past, does the leadership team “walk the walk” or just walk around with a “big stick?”
- Is company culture a strong consideration when hiring new employees?
- Do we invest enough in training and fostering the growth of our talent?
- How well do we on-board our new hires?
- How well do we evaluate performance and customer satisfaction?
- Do we provide opportunities for growth?
- Do our employees feel empowered to make decisions and take ownership of the issues or are there silos in our organization?
Element 5 – Communicate The Guiding View Into The Future
Everyone wants to understand where their organization is moving and what the organization wants to accomplish. This has a strong influence on the decisions, priorities, and the way work is accomplished from day-to-day. Return to the internal policy established in the first element and re-write it in a way that everyone in the organization can easily understand. Fold in your vision statement in a way that makes sense and adopt it as the organization’s mantra. Consistently communicate the mantra across all mediums. It’ll eventually stick and influence your culture.
“The mantra should describe the way we operate, how we treat our customers, and communicate the guiding view into the future”
Element 6 – Measure
The above elements are all aimed at creating a strategy that can respond quickly to change. Many refer to this as business agility — starting with intention and pivoting over the long-term as internal or external factors require. Leaders should track what was intended, what emerged, and what was realized and adjust their strategy accordingly. The company culture and your talent gap will most likely cause you to lag behind emergent strategies, however, measuring the progress over time is useful because it can help you refine your strategies in the future. The below figure illustrates my point. Each black dot represents an environmental change and the green lines are the emergent strategies (E1, E2, E3). The red line lags behind, this is what is realized.
The outcomes that should be measured are:
- Operational Performance
- Time to Produce
- Cost Savings
- Customer Service
- Time to Delivery
- Value Delivered to Customers
- Customer Satisfaction
- New Opportunities
- Time to Market
- Return on Investment
- Addressing Unserved Needs
Leave your thoughts on strategy in a comment below or if you’d like to have a discussion, please contact me or connect with me on social media!
Photo Credit: Pixabay
- The 5 P Pyramid Model, Assessing Policy, Process, Procedure, People and Personalities in Scrum
- Agile Leaders Understand Customer Service and Culture
- Capgemini Consulting: The Digital Talent Gap – Developing Skills for Today’s Digital Organizations
- Freedman, L. (2013). Strategy: A History. Oxford, New York: Oxford University Press.
- Kourdi, J (2015). Business Strategy: A guide to effective decision-making (3rd ed.). New York City, New York: The Economist in Association with Profile Books Ltd. and PublicAffairs.
- Mintzberg, H., & Waters, J. A. (1985). Of Strategies, Deliberate and Emergent. Strategic Managment Journal, 6(3), 257 – 272.
- Strategy& Research: Our Leading Research on Growth and Strategy