Getting ready to tackle strategy

You’ve been given the task to develop a strategy for a key company initiative or perhaps to lead the organization’s next strategic plan. You begin to build a team and gather information on similar efforts from the past, and you start to engage the primary stakeholders. Without doubt, these are all important activities and you are headed in the right direction. As I’ve written elsewhere, creating good strategy is not easy. The better informed the strategy is, the more likely it is to represent the company and its long-term goals. With this in mind, I encourage leaders to make sure that they have the below five items ready as they begin the process. It may take some work and I don’t recommend making this a barrier to getting started, but I do believe that each is critical to developing a strong strategy or strategic plan.

1. Really understand the company’s current situation

It’s pretty tough to prepare a path for the future or know whether you’re on the right track, if you don’t have a good sense of where you are today. This understanding will also help you define the implementation and change effort once you have concluded on your plan. I believe many firms overestimate their internal operations and current market position as it always easier and much more positive to believe that things are going well and the future is rosy. Now I’m not suggesting that the leadership should run an enterprise as though there are dark clouds above and ahead, but a very objective and current view of your operation is critical. In fact, I believe this is where so many companies fail. It’s not so much that they don’t have impressive strategies, but rather that the future plans are based on an exceptionally poor understanding of their current state and the risks that the company truly faces.

2. Have a deep appreciation for the landscape in which the company operates

It is not enough to have a good grasp for the health of your company’s operations as understanding the macro issues that affect your business is also critical. Having a strong perspective of what your direct competitors are doing or planning to do might – and probably should – have a major impact on your firm’s plans. Possessing a deeper knowledge of the companies in your supply chain and the markets in which they operate will give you a better sense of how you might need to accommodate shifts in their business, perhaps by moving towards greater verticalization or re-visiting your supplier community. Taking a look at adjacent markets may provide hints at what your own organization may wish to consider in its growth or even defensive plans. Governments and various industry bodies are constantly looking at ways to protect citizens and the health of the economy through new regulations so a closer examination at what is on the horizon in this area is important. Of course, having a thorough view of shifts in business models in your sector along with a strong understanding of how new digitally-enabled market entrants might bring disruption is something the team needs to consider before moving forward. Good strategy simply cannot be created in isolation.

3. Make sure the company has a meaningful vision, mission and guiding principles

I think many leaders treat vision and mission statements as ‘fluff’. The truth is that these statements – if created with a sense of sincerity by the leadership – can serve as a strong foundation for all stakeholders. A vision is aspirational and is supported by a company’s mission which sets out what it plans to do to support the achievement of the vision. Values or guiding principles represent the key beliefs of the organization, how it will conduct itself, what it will do and won’t do in managing its business while completing its mission.  As strategies are created throughout the organization, they can be easily tested against these important elements, that should represent the very core of what the firm stands for and how it needs to operate.

4. Ensure there are clear goals and priorities

Strategy is a means to an end, a path to achieving goals. As the old adage goes, ‘if you don’t know where you’re going, how can you expect to get there.’ At the highest level, goals need to be created to achieve a company’s mission. But goals are also required to achieve ambitions that are held by different functions and lines of business, generally that are aligned to achieve the broader vision of an organization. Goals are important, and most organizations find themselves with many goals, probably too many to successfully plan and execute simultaneously. While difficult, it is important that organizations find a way to prioritize these goals as that will help focus the creation of strategies. Do not fall into the trap of ‘we have to do them all’ as that will usually result in failure.

5. Lay out practical constraints

Constraints might seem like a negative word in the context of strategy formation, but companies need to be realistic about what they can and cannot do, what they can and cannot get, and so on. Though seemingly positive on the outset, it doesn’t help when the creators of strategy say things like ‘we can do anything’ or something akin to this. I’m not suggesting that leaders should not be creative, or define stretch goals, or challenge the status quo. In fact, there is a very fine line between working towards the ‘art of the possible’ and the definition of limitations that will help the possible become reality. Funding and access to human resources to support a particular strategy are two constraints that programs and initiatives need to deal with every day. While there are always ways of securing more people and money, they usually involve a shift in priorities, or perhaps the revisiting of company goals or maybe even its vision/mission/guiding principles at the highest level. The connection among these elements of a company is inextricably complex.

As you begin the process of creating your plan, remember that strategy is not usually about stating the obvious but rather associated with making difficult decisions and understanding the trade-offs as there is seldom one right answer or path. As I have discussed in other strategy related articles, a leader that suggests that the firm ‘must increase its revenue’ is not defining a strategy but rather a very high-level goal that is in need of a plan. If an end strategy seemed obvious and didn’t require any tough decisions or trade-offs, it probably isn’t a very good approach or even a strategy at all.

Finally, develop your strategy with execution in mind. The five pieces of information that you gather beforehand will ensure that whatever you arrive at will support the goals of your stakeholders while considering the realities of the company’s current state and external opportunities and threats. What they will not do is provide a test for the actual achievability of your plans so be certain that you look at the approach and check that you don’t fail before you start.

Armed with the above, leaders have a real shot at creating successful strategies that are informed, aligned and executable.

About the author: David Tom is Managing Director at the Inthink Group and has crafted and executed many strategic plans both as a business leader and management consultant. In this article David explores five prerequisites that leaders should consider before embarking on the complex task of strategy creation.

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