Every organisation needs a strategy, if it’s to meet its potential. Good luck and keeping your fingers crossed won’t work indefinitely. But what’s a strategy, and how do you develop one?
What is a strategy?
Strategy is a description of how your organisation will “win”, or prevail, given the circumstances it finds itself in. Unlike a vision (a description of the future you’re trying to create) or a mission (the purpose of your organisation), a strategy describes the activities which must be achieved in order to seize opportunities and overcome challenges.
The most obvious benefit of a strategy is to help you to align your organisation. Without it, people will be pulling in different directions, wasting time and resources and often cancelling out each others’ efforts. Concerted, coherent effort can produce results greater than the sum of its parts – and the best strategies are often elegant in their clarity and simplicity.
The second, more subtle benefit is to confuse your competition. Being more agile than your opponent can confuse and unsettle them – if you’ve executed three steps in the time it’s taken them to respond to your first move, you can leave them disorientated. A great current example of this is the Trump presidential campaign – while Team Clinton was busy reacting to the constant, controversial churn of events, they consistently failed to address the core concerns of Trump’s constituency. Whether your values are aligned with Trump’s or not, the effectiveness of his strategy cannot be denied.
For a young business, a strategy sets an initial direction. Once things start to mature it helps the organisation to cope with change – because what worked yesterday won’t work tomorrow; what worked when you were 40 people won’t work when you’re 100 people; what worked when your markets were new won’t work now they’re crowded with competition; and what worked when you had one product won’t work when you have ten.
There are many models, techniques and processes to help you to “do” strategy – and as your circumstances become more complex, these can become very sophisticated. This can be intimidating, and can cause you to procrastinate. Don’t. Getting started, then improving as you go will allow you to learn what works, and teach your organisation to think and behave strategically – essentially, developing the muscle through exercise.
How do I develop one?
Strategies are developed using a process of diagnosis, analysis, decision-making and planning, followed by execution.
The diagnosis is a description of the circumstances of an organisation – the opportunities and threats it faces; the strengths and weaknesses it has.
The analysis makes sense of this information – essentially, letting us use it to infer what might happen in the future using a variety of different approaches: what our experience tells us; the interpretation of culture and biases – and attempts to spot the gaps between what’s likely to happen and what we wish to happen.
Decision-making involves generating a variety of different potential objectives, and attempting to select the most important to pursue. All organisations have a huge range of things that they could do – many of them sensible, profitable choices. Select those options which will put the business in the strongest possible position, and deliberately choose not to pursue others, no matter how attractive.
Planning identifies the activities required to deliver the objectives, then allocating resources (primarily people and money) to execute them. At this stage, sequencing and interdependencies become important.
Execution is the “doing” phase, together with the management processes required to keep things on track, and to cope when change occurs.
This description implies that these steps are performed one after the other, and indeed the first few times around, that’s exactly what occurs. In time, the healthiest, most adaptive organisations develop the ability to perform the diagnosis and analysis stages continuously – constantly taking in new information from the environment and using it to test the assumptions and models which underpin decisions. This drives agility – this is proactive responsiveness as distinct from being reactive.
Similarly, the interaction between the decision-making and planning phases will also need to be iterative – detailed planning may demonstrate that some objectives aren’t feasible with the resources available – it might also generate options which hadn’t previously been considered.
Strategy is a huge field, but I recommend two books to get started. The first is Good Strategy, Bad Strategy by Richard Rumelt. This is a profound yet digestible description of strategy from a leader in the field. The second is Patterns of Strategy, a new book by Patrick Hoverstadt and Lucy Loh of Fractal Consulting. Despite the huge amount of effort which is put into developing and delivering strategies, 90% of them still fail. Patterns of Strategy proposes an exciting new way of thinking about strategy in an increasing complex and interdependent world.