Volumes have been written about strategy, full of fuzzy words: initiatives, critical success factors, objectives, mission, balanced scorecards, control systems, value propositions. Each can be part of a sound method. Together, they can bury management in process and dilute what should be a sharp strategy. So what should a leadership team stay grounded in?
The core principle
The core of a strategic plan is simply this: how do you play your hand with the cards you’re dealt? Strategy, at its simplest, is allocating resources, but a good strategy is one your particular organization can execute well in the environment it operates in. A lot goes into that, right down to the values and beliefs of the leadership. When the details pile up, it helps to come back to resource allocation. Forming a good strategy is part art and part science, and both serve the same end: the most efficient use of what you have.
The science
At a high level, the science consists of three things: a SWOT analysis, time horizons and perspectives.
- SWOT. Match the organization’s internal strengths and weaknesses to the opportunities and threats in its environment. Brutally honest analysis is what makes this work. The discipline lies in building a framework that avoids analysis paralysis, and in using sound analytical techniques that keep personal bias and untested assumptions out of the data.
- Time horizons. Consider the short, mid and long term. A company that focuses only on near-term results is still making a long-term strategy, just without thinking about it.
- Perspectives. Look at the plan from the financial, corporate, customer and employee points of view. A growth strategy might mean sharpening the value proposition the sales team uses, but from a corporate perspective it could also mean acquiring competitors.
The art
Skip the football analogies and think about music. Almost anyone can pick up an instrument and play a couple of good notes, even by accident. As people learn to read music and proper technique, they often lose the feel of actually making music, so teachers tell them to forget what they have learned and just play.
Strategy is similar. It is not about rigid methodology and word-smithing. It is about being in tune with the psychology of your customers and employees, letting your mind synthesize everything you know, and trusting your judgment to form a vision of what could be. The challenge, and the fun, is distilling the information to a few key themes and matching the internal and external picture for the highest probability of success. Too much formality can stifle the robust debate and creativity a good plan needs. You know you have a hit when the strategy is exactly what your customer wanted, or even better, what they didn’t yet know they wanted.
From strategy to an integrated plan
A strategy only matters if the whole organization executes it. Over the years I have built the approach above into an integrated strategic plan that links strategy to daily work. In practice it has a few connected parts:
- A strategic map. Maintain the core (values, the right people, what the team can be best at, and the metric that drives the economic model) while stimulating progress by confronting the brutal facts. Every proposed move faces one test: does it create a sustainable competitive advantage?
- A dashboard. A one-page monthly view of the handful of numbers that matter, highlighting where leadership needs to pay attention now.
- Department KPIs. Health diagnostics for each function, with owners and targets.
- Key initiatives. A short list of cross-functional changes, each defined in SMART terms with an owner and a timeline.
- Cascading communication. A rhythm of quarterly strategy sessions, monthly operating reviews, regular project meetings and weekly department huddles, so the plan reaches every level and ideas flow back up rather than down from an ivory tower.
- Engineered roles. Each role has a scorecard whose metrics, behaviors and incentives tie back to the plan, supported by a skills inventory.
- Monthly accountability. Targets and actuals sit side by side, so the team reviews performance to plan, sees deviations early and adjusts.
Formulate the strategy with real input from the leaders who will carry it out. People support what they help build.
This is the methodology behind Oak Stream’s consulting and transaction-readiness work and the value-creation plans we bring to the companies we acquire.
