Green Flags of Strategy

In my work, I regularly encounter businesses that believe they have a great strategy. They may have set long-term financial targets or other lofty goals. Some have inspiring visions for the impact they will make. Some have a curated list of project plans that will lead them to success. Some set OKRs and track metrics that will show when they have met their objectives. But often they are missing key elements.

Great strategies require multiple elements working together. Let’s explore the green flags that signal a robust and effective strategy—one that has the elements needed to deliver success.

A great strategy:

??1. Motivates People: Inspire Action and Energy

Your strategy gives you, your employees, partners, and customers energy to work toward something important to achieve.

Define something worth doing. Make that your mission. Create a vision that inspires working on that mission. Add values as guiding principles to help navigate the path. Understand that these are primarily to help guide and energize people. Positioning is the start to defining strategy, but not an end in itself.

??2. Is Different: Chart a Unique Path

Your strategy guides you to a place that is worthwhile when you arrive there by uniquely creating value.

Michael Porter famously proposed the essence of strategy lies in choosing a unique and valuable position rooted in activities that are difficult to imitate. The book Blue Ocean argues that creating and capturing uncontested market space rather than competing head-to-head is critical. Relative to current offerings, decide what you will start and stop doing and what to emphasize and deemphasize to create a new market where demand is high, and competition is low to null.

??3. Rides Waves: Diagnose Trends and Challenges

Your strategy has a diagnosis of key trends and challenges in your relevant business context with a hypothesis of what can propel you toward success or that you must crash through for success.

Diagnosis of business context is the start of strategy work. It creates an understanding of what is happening that is relevant to success. It allows for formulating ideas and hypotheses about specific things that can help or hinder your success. And importantly, it must find the causes that, when addressed, will lead to success. What trends propel you forward? Which hinder progress if not solved? What causes them? Which can you make progress on today? Five forces, SWoT, and customer feedback are some tools that assist with this diagnosis. But good, actionable hypotheses are needed for riding waves to great success.

??4. Solves Problems: Tackle the Hard Stuff

Your strategy solves what makes success hard to achieve.

Work on the most important thing you can solve that moves towards your inspiring vision. Strategy is about solving the hard problem, issue, challenge, or opportunity uncovered in the diagnosis. It needs to implement policies and actions that move toward resolving them in ways directed by the best hypothesis for the underlying cause. Track and resolve other issues as they arise.

??5. Uses Power: Leverage Your Advantage

Your strategy creates leverage using some advantage and continues to develop that advantage.

Discover and use strengths that create asymmetries from a distinct competitive advantage that can propel success and endure over time. Examples include unique skills or reputation your people or brand possess; being first with unique approaches or intellectual property; access to networks or relationships; or owning resources like data or raw materials.

??6. Creates Focus: Choose a Few Critical Priorities

Your strategy focuses on only a few critical policies and/or actions that deliver the greatest impact.

A great strategy involves making trade-offs among activities to find the few key actions that should be executed. One CEO I worked with had a list of 17 strategic priorities. I was able to have him deprioritize only 3. They failed to find traction and were sold out of PE in an acquisition that failed to recoup investment. Steve Jobs, by contrast, allowed only three priorities to be discussed in strategy meetings at Apple and required choosing one by the end.

??7. Stays Coherent: Align Across Policies, Plans, and Actions

Your strategy outlines aligned, coherent policies and actions that work together to solve the problem.

Great strategies solve the and manage fit across all company activities over a sustained period. At their core, strategies are coherent action plans. Sequence actions appropriately. Recognize proper timing and avoid actions that are not aligned, cause friction with each other, or don't address the real problem uncovered in diagnosis. Don't do things that fight each other or are self-contradictory. For example, I've seen companies that want to pursue both growth and profit simultaneously which are usually at odds. Ensure your near-term actions support longer-term Themes.

??8. Generates Cash: Ensure Longevity

Your strategy generates long-term value and has the cash needed to be fully executed or is well financed.

Cash flow is the pulse of any business. Ensure you have a plan with the financial viability to not bleed out on the path to success. Find ways to preserve cash flow especially as you grow. Or have a fundable business model with actions to raise needed cash. Have an end state that creates strong value for everyone in your business ecosystem.

??9. Continuously Adapts: Improve as You Go

Your strategy is flexible with regular checkpoints and interim goals to adapt for what is and is not working.

Test and adjust regularly to ensure that the hypothetical waves you ride are moving you toward success. Milestones, goals, and metrics do not define strategy in themselves, but they enable routine tracking of progress toward important outcomes defined by the strategy's coherent actions. Execute a meeting rhythm that creates time to continuously adjust with both incremental and disruptive improvements.

??10. Aligns Interests: Work as a Team

Your strategy is supported by leadership and key contributors who first prioritize overall business outcomes.

Strategies fail when any individuals or departments prioritizes their success over that of the overall business. In the words of Patrick Lencioni, team success requires Trust, Healthy Debate, Commitment, Accountability, and Service to the overall vision and mission of the business. Ensure your strategy is created to overcome his 5 disfunctions. Use A.C.T. to ensure alignment across the business.

How does your strategy compare against the 10 green flags listed here? How can you improve your strategy to have more green flags? Let me know if I can help plant more strategy green flags.

Stay humble and adventurous!