4 Steps to Mastering the Building Blocks of Your Business Strategy

Business Strategy is not all bespoke tailored suits, polished Powerpoint decks, exponential line graphs and world domination. Okay, well, only some of the time. After all, the term “Strategy” is derived from the Greek "strategos," which literally means “General of the Army.”

From these military roots, we can say one thing for certain, Napoleon would’ve been damn good at Powerpoint. I can see him now, marching into the boardroom, his army generals standing to attention. “Yes, the battle. So you want to know how we’re going to win with fewer men and limited resources?” and then… magic!

A slew of jaw-dropping slides break down the situation to perfection; the landscape, the enemy, available technology, similar situations from the past, all converging to uncover a flawless vision, accompanied by relentless tactics of rapid mobile battlefield formations that completely take the enemy by surprise. The generals rise in applause, an overwhelming feeling of awe and inspiration coursing through their veins.

The following day they go into battle, full of energy, every member of the team aligned with a sense of clarity of the task at hand. “The Plan” is executed seamlessly and they come out as victors, with only a few generals lost to permanent sick leave.

Napoleon in Today’s World

For starters, the boardroom meeting is a lot less autocratic (I get the feeling that Napoleon wasn’t very open to debate with his fellow generals.) The presentation is going well, but slide three has gone off on a tangent. The generals have questions.

Napoleon, you’ve chosen to go with a “Flanking Manoeuver” strategy, why this as opposed to a “Frontal Attack” strategy? Another general pipes up, “Napoleon, why are you prioritizing this battle? Is this a critical growth strategy?

The Finance general is now looking at capital allocation. “You’re going to need 40,000 additional horses and bayonets to execute this and you only have budget for 20,000. You’re going to have to rethink your strategy.” Napoleon admits internal defeat and goes back to the drawing board.

Differences between Then & Now

1. We face several battles each day
2. We have a lot more data at our disposal
3. The “Generals” have different objectives
4. There is often a disconnect between “The Plan” and Execution 

We face several battles each day

You know the old saying, “Pick your battles.” Whilst a “Plan and shoot” strategy worked back in the days of the French Revolution, in today’s world we’re so busy trying to get things done that finding the time to even have a look at the battlefield can be challenging. (Never mind figuring out which battles to pick.)

The business landscape is changing faster than ever, and keeping pace means that breaking free from the annual planning window is becoming a necessity. So what does this mean? You’re probably tired of hearing the word “Agile” being thrown around in a business context, so I’m going to use the word “Dynamic” instead, (it sounds less full of shit). Your strategic planning process needs to be dynamic.

Most planning processes leave little scope for open strategic conversation outside of the annual planning window, a time where it has become customary for urgent issues to detract from the imperative long-term issues on the strategic agenda.

This means that we need to create an ongoing process where principal decision-makers meet regularly to go through top strategic priorities, analyse the data coming through, re-assess the definition of “Current State” and re-prioritise opportunities.

This routine of continuous engagement & disciplined thought will help you to avoid the pitfalls of one-and-done thinking (which historically doomed the annual strategic plan to the depths of your email archive.) On the contrary, this system will act as an enabler for you to (1) be more responsive to changes in the competitive landscape and (2) allow data to drive decision-making, with initiatives being monitored and adjusted every cycle.

The core of strategic thinking has always been the same. Business people might spruce it up with motivational slogans and buzzwords, but if you have a process that identifies the critical factors impacting your business (your battles), and enables you to devise approaches to overcome them, you’re on the journey to victory.

Step 1: Create a means to pick your battles, act on them, and overcome them.

We have a lot more data at our disposal

This brings me to the data part. Strategic planning of the future will no longer solely rely on the gut-feel of decision-makers, but will be backed by empirical data to support decision-making. Despite this, intuition still remains a key factor in challenging the data (data has its limitations and is subject to several biases), which is encouraged in the regular strategic meetings; as long as the focus of the challenge being made is on improving the quality of the conversation, as opposed to derailing it.

“Big data” is often referred to as the “New oil of the 21st century,” but just as oil is of little use in its natural state, the main challenge lies in efficiently transforming data into something that is meaningful to your decision-making process.

Many initial efforts in reporting development fail because the metrics aren’t aligned with the strategic thinking and processes within your business, so it is essential that your reporting framework and Key Performance Indicators are directly linked to your strategy. This will drive the right type of conversations and help you to avoid the tangential discussions of doom that Napoleon faced in his meeting.

For a solid data framework to come to fruition – we need to start, not with the data, but with asking the right questions. What are the key pillars of our company strategy? What drives our economic engine? What is our “Hedgehog Concept?” i.e., what is the single thing that we can be best in the world at? What are the biggest obstacles that are preventing us from achieving our vision? How can we overcome those obstacles? How can we optimise our strategic outcomes?

Questions are in-fact not enough. Your Strategic Planning and Data teams should drive you to follow a hypothesis-led approach, pushing you to contextualise questions into both a “Problem,” and your “Best guess” to the answer of that problem. This not only helps the Data Analyst to understand how to manage the detail of the data behind the question(s), but most importantly gives them context. With context, the Analyst is given the power to identify other significant factors that may influence outcomes, and can integrate these additional variables into their data modelling.

Using the concept of being hypothesis-driven, your strategic planning process will evolve into a continuously looping ideas generation committee, where you

1. Observe “Current-state” challenges based on the metrics you are tracking
2. Generate ideas / hypotheses to overcome the challenges
3. Test the hypotheses using data
4. Prove or disprove the hypotheses
5. Designate an accountable Party to implement the recommended solution
6. Track and measure your portfolio of initiatives

This disciplined approach drives a sense of momentum into your strategic planning process, encouraging you to work towards your “Flywheel Effect.” (The Flywheel effect, developed by Jim Collins, is a concept that describes that there is no miracle moment that happens in the process of building a great company, but rather a process that resembles relentlessly pushing on a giant flywheel, building momentum until a point of breakthrough)

Once you’ve developed a data strategy that works, create a pragmatic way to prioritize ideas. Keep things manageable, and focus on the things that will have the biggest impact or give you the quickest wins.

Those organizations that fully commit to big data and invest in the necessary IT infrastructure needed to collect and analyse large data sets, are more likely to accelerate their momentum and gain the competitive edge.

Step 2: Create a disciplined, data-driven approach to strategic planning (and focus on the Big Things / Quick Wins)

The “Generals” have different objectives

Before the rise of Big Data, corporate information was traditionally stored in the department that it came from, creating “Data silos.” Silos not only hinder internal communication but also create a culture where analysis is done independently. This can result in conflicting “My analysis vs your analysis” scenarios and create an incentive for confirmation bias, where data is cherry-picked to confirm the point of view of the particular department.

Eliminating data silos makes data more accessible across the organization, allowing each department to work more collaboratively to formulate strategies that are more aligned to the over-arching vision of the organization.

Moreover, once silos are broken down, big data analytics can bring different data-sets together in new ways. This, in combination with analysis being performed by an objective party such as your strategic planning or data science teams, will result in deeper insights and allow for the recognition of company-wide trade-offs among various financial objectives. This turns the conversation to the objectives of the organization as a whole, rather than the objectives of each department.

Step 3: Eliminate data silos and assign an objective party to analyse company-wide financial trade-offs

There is often a disconnect between the Plan & Execution

At the end of the day, strategy is all about the actions you take. It’s easy to talk the talk, but it’s important that you create a framework that enables your team to walk the walk. Over 70% of strategic plans fail due to poor execution, so how do we combat this? Points five and six in the continuous strategy loop are key to getting execution right.

After coming to a decision in one of your regular strategy meetings, clearly articulate the next steps and designate an accountable party (preferably an individual) to run with the implementation. Part and parcel of this is that full executive support is needed.

The “Implementor” can’t do this alone. It’s their job to bring their team along on the journey, and, with the support of the executive committee, to openly discuss the strategies and their significance. These are the people who will ultimately execute the plan, so it’s important that they are aligned with your vision and understand how they can personally make an impact. (Be more like Napoleon and unify your troops!)

If your employees are emotionally engaged, the chances of successful execution increase exponentially. Moreover, your employees will be more open to sharing information from the front line if they feel they can make a difference, establishing a bottom-up feedback loop.

An assumption for this entire framework to work effectively is that each “Implementor” has access to the resources needed for execution; but often this is not the case. This is where dynamic thinking can be stopped dead in its tracks, with no available funds, and a budget that is potentially out of sync with what is happening in the marketplace.

Generating a means to resource liquidity can be very tricky, but one potential solution is to create a 90% based budget, with 10% available for reallocation when needed. However you choose to do it, it’s important to find a flexible means of managing the allocation of your financial resources.

Once you’ve designated an “Implementor,” they have sufficient resources, and everyone is onboard with the plan; the final step is to measure and track the initiative. A relevant success metric should be agreed to in the same preceding strategy meeting, with the metric being added to your strategic reporting framework. Metrics should then be reviewed on an ongoing basis to monitor progress on strategic objectives.

Step 4: Designate accountability, unify your troops and measure your progress.

Bottom Line

The main difference between this framework and others is that it creates a continuous process where your strategy is both transparent & measured; and when the business isn’t performing optimally, it doesn’t pretend things are fine. Instead, shortcomings reflect in your reporting framework and act as a red flag mechanism.

As you “Confront the brutal facts,” the process triggers a hypothesis-led deep dive into the issue, which will in turn bring data-driven recommendations to the table for implementation at the next scheduled review.

In this way, shifting from an annual planning window to a continuous strategy process will make your business more dynamic and, (with your troops armed and ready for battle), will drive you towards a more sustainable future through the practice of disciplined thought and action.