Here is how you should create a Global Business Strategy for your company?
In order to frame the future of your business, Mckinsey brought this idea of "The three horizons framework"—featured in The Alchemy of Growth provides a structure for companies to assess potential opportunities for growth without neglecting performance in the present.
- The current business scenario - How is the performance of your existing products?
- The immediate future - What business or what should we focus on in the future when our current product reaches the maturity stage?
- The ultimate Future - Considering that the current business or product is no longer valid, what businesses will we focus on?
It's interesting how the framework still holds value with time. When we reach the so called immediate future, That will be your horizon 1. and this whole process continues.
Once you know the target future you want to achieve, You can use the balanced scorecard to identify the objectives and measures to put in place to achieve that future goal.
Balanced scorecard (BSC) will provide you a framework to communicate mission and strategy. Balanced Scorecard translates mission and strategy into objectives and measures organized into the following perspectives:
- Financial - How should you appear to your stakeholders? This would indicate whether the companies strategy, implementation and execution is contributing to the bottom line improvement.
- Customer - How should you appear to your customers? Identify the market and segments your products will be serving and Business Units performance in the target markets. The segment specific factors will represent the factors that will either help the customer stay loyal or to switch to your competitor. This will help the managers articulate the business goals better from the feedback received, which in turn improves your financial returns.
- Internal Business Process - What business processes should we excel in? This will help your company to deliver better value propositions and retain the customers in the target market along with satisfying shareholder expectations. BSC identifies new processes to create customer satisfaction in both product and services industries.
- Learning and Growth - How to sustain ability to change and improve? This will help you identify the infrastructure that will help you to make sure that the learning process continues in the organisation.
There are for factors to be noted in each of these. Objectives, Measures, Targets and Initiatives.
The measures on BSC should be used to articulate the strategy of the business, to communicate the strategy of the business, and to help align individual, departmental and organisational initiatives to achieve a common goal. This should not be used as a controlling system. The four perspectives will allow you to create a balance between short and long term objectives, Desired outcomes and its performance drivers, And between hard and soft objective and subjective measures. A strategy is a set of hypotheses about cause and effect. Every measure selected for a BSC should be an element in a chain of cause and effect relationships that communicates the meaning of the business unit's strategy to the organisation. A good BSC should also have a mix of outcome measures and performance drivers. A BSC should retain a strong emphasis on financial outcomes. Ultimately, causal paths from all the measures on the scorecard should be linked to financial objectives. But, BSC will make sure that the ultimate focus is not on financial outcomes. The scorecard outcomes and performance drivers should measure those factors that create competitive advantage and breakthroughs for any organisation.