demystifying business strategy

An overview – demystifying Business Strategy

Most firms struggle with strategy execution. According to research, the figure for failed strategy & change efforts is in the range of 60 percent – 80 percent. A high percentage of strategies are never getting implemented. If one calculates the Return on Investment (ROI) on this, or worse, a “Return on Consulting” (ROC) for highly paid strategy this is probably one of the huge wastage of resources in the current corporate world.

A business strategy is a set of guiding principles, which when communicated and adopted in the firm, generates a desired pattern of decision making. A strategy is therefore about how people throughout the firm will make decisions and allocate resources in order to accomplish key objectives. A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals.

The best business strategist tends to result when leaders combine approaches, with the help of some analysis on how to best leverage their firm’s capabilities while retaining the flexibility to give strategic learning to influence strategy. Accordingly, excellent companies should review and refine their thinking to ensure that realized strategy doesn’t overlook any strategic learning.

It does not take magic or magicians to build or review a strategy. The ingredients are quite simple: an appropriate strategy process, a couple of decent tools, some internal & external insight, leadership, and some good resources. Given these elements, business strategy crafting can begin. The strategy process should equip the people with answers to simple questions…

  1. Where are we going? (Vision with a timeframe)
  2. Why are we going there? (Analysis and rationale)
  3. What are our priorities and goals? (Short-term and longer-term)
  4. How are we going to achieve them? (Strategy and Tactics)
  5. Who is doing what and when? (Execution planning)

If an organization does not have answers to all of these questions, put simply, they don’t have a strategy.

A strategy needs to state the right goals right. This part is already a bit of a challenge, as it takes a thorough understanding of key industry drivers, “hot” markets, future key success factors, revenue-generating models, etc. There are abundant approaches like “outside-in”, “inside-out”, more agile approaches, cycles, and many more. Business frameworks are helpful tools, which are used to analyze business problems and structure of thinking. Several strategy consultants and business analysts usually use these frameworks in order to clearly communicate their recommendations to their clients. There have been numerous scientific articles trying to come up with innovative and helpful frameworks in business, management, and strategy.

  • Hambrick and Fredrickson’s Strategy Diamond
  • Porter’s Five Forces Model
  • Ansoff Matrix
  • Treacy and Wiersema’s Value Disciplines
  • BCG Growth-Share Matrix

Adding vision, mission and a sense of reality, long or short-term goals can be found and formulated based on internal and external considerations, tested for feasibility, and molded into some more sophisticated implementation tool. However, these goals or targets should still not be confused with an implementable strategy framework.

Many firms want to set goals by simply drawing a line on a graph as a continuation from previous years and then looking to historical figures for ‘trends’ and answers as to where the future lies. The numbers are of course important, but it is important to see them for what they are, i.e. ‘keeping score’ and ‘measuring whether you’re winning or not.

Wrapping Up

Numbers and people are often at odds in strategy planning; for example, people are listed as a liability rather than an asset on a balance sheet. However, strategy is fundamentally about focusing and enabling people (staff) to deliver on shared objectives for other people (e.g. customers and stakeholders) – the needs of these people and the culture they work within must take priority to achieve the best results.

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