A Framework for Strategy Frameworks
Learn to see beyond the marketing package of strategy frameworks — understand how they fit the strategic planning process at your organization.
“Try the XYZ business framework — it’s a new word in strategic planning… Twenty companies from the Fortune 1000 list have been using it for a decade and contribute their success to the framework…”
Sound familiar?
New business frameworks and trendy acronyms appear all the time, and after some tries and failures, we recognize that things are never as they seem to be from the first look…
Let’s learn to look beyond the marketing package of a typical strategy framework to understand what role it can play in the strategic planning process adapted by your organization.
A Framework to Analyze Strategy Frameworks
Here is a framework you can use to understand other business frameworks for strategic planning (sorry, no acronym invented yet):
- Application area of the framework in the strategic planning
- Decomposition method suggested by the framework
- Prioritization method to get the final strategic hypotheses
Additionally:
- For strategy description frameworks: specific vocabulary of the framework
- For strategy execution frameworks: the algorithm for cascading and progress reporting
Application Areas of the Framework
When we talk about strategic planning discipline, we actually talk about three areas:
Area 1:
- Plain English explanation: coming up with ideas.
- Business explanation: strategy analysis and strategy formulation.
Area 2:
- Plain English explanation: putting ideas on paper, making them more specific by defining metrics.
- Business explanation: strategy description.
Area 3:
- Plain English explanation: following the previously defined strategy and tracking progress.
- Business explanation: validating strategic hypotheses through strategy execution.
What is the application area of the framework that you consider? Have a look at the frameworks comparison table for some ideas.
Decomposition Method for Strategy Analysis
A specialty of a strategic planning framework is its approach to decomposition of the business environment.
Let’s see some examples to illustrate the idea of decomposition.
- The acronym-based frameworks suggest decomposition by specific criteria. For example, the PESTEL framework suggests looking at the business environment from the Political, Economic, Social, Technological, Economic, and Legal perspectives.
Matrix frameworks change the presentation form, but in essence suggest the same fixed decomposition criteria. The 2x2 matrix of SWOT analysis is a visually appealing way to present four criteria for decomposition.
- Some frameworks, like Hoshin Kanri, Three Horizons, or Strategic Change Agenda use time perspective as a base for decomposition.
- The risk assessment and scenario planning frameworks use the effect of uncertainty as decomposition criteria
- A framework might look at strategy as a set of inputs/drivers and outputs/expected results. That’s what we do with the four perspectives of the Balanced Scorecard framework.
Some frameworks give just general ideas for decomposition. For example, the OKR framework doesn´t define specific criteria for decomposition, its recommendation is to find “inspirational” goals.
Understanding decomposition criteria is a clue to the successful adoption of the framework.
Prioritization of Strategic Hypotheses
Most of the frameworks focus on the strategy analysis area of strategic planning. We use them to convert the ambitions of the stakeholders into a strategic hypothesis or a high-level goal.
For some frameworks, the final output is evident:
- The findings of the PESTEL analysis can be easily converted into the strategic hypotheses that can be further aligned with existing strategy and decomposed into sub goals.
In some cases, we need to prioritize the resulting hypotheses and pass them throughout a certain filter:
- In SWOT, we match strengths and opportunities, and convert weaknesses and threats into strengths or opportunities.
- In VRIO analysis, we try to filter the results of decomposition to find the most promising capability.
- In Five Forces, we analyze the industry’s driving forces and their impact, formulating strategic hypotheses for the most promising improvement areas.
A typical business framework generates many improvement ideas, and prioritization helps to focus on the most relevant hypotheses.
Compatibility between the Frameworks
Once we understand the application area of the framework, its decomposition method, and outputs, we start seeing the missing pieces in the strategic planning process:
- Strategy definition frameworks generate excellent ideas, but we need some other framework to properly describe and execute those ideas.
- Strategy execution frameworks, like the Balanced Scorecard, OKR, or Hoshin Kanri, are good at strategy description, alignment, and execution but miss the definition part.
A perfect strategic planning process, is a combination of:
- A number of strategy definition framework,
- Few strategy description frameworks, and
- A preferred strategy execution framework.
Let’s take the Balanced Scorecard as an example of a strategy execution framework. It suggests formulating the drivers (Learning and Growth and Internal perspectives) and the outcomes (Customer and Stakeholders perspectives) of the strategy, but we would need some other frameworks to fill those perspectives with relevant hypotheses and goals.
Looking at the comparison table of the frameworks, we can have a general idea about the compatibility between the frameworks:
- Most strategy analysis frameworks can contribute to a strategy description and execution frameworks.
In the case of the Balanced Scorecard, the outputs of:
- PESTEL analysis,
- Strategic Change Agenda, and
- Five Forces
will contribute perfectly to the Balanced Scorecard that plays the role of strategy description and execution framework.
3 Quanta of Strategy Description
The frameworks that specialize in strategy description share common quanta used to describe the strategy:
- Goals — what we want to achieve
- KPIs — how we measure the efforts and results
- Initiatives — our action plans
If you don’t see these terms in the framework’s guidelines, then most likely the authors dressed them up to underline some idea.
- For example, the idea to define the “Key Performance Questions” is a powerful tool to avoid meaningless KPIs, but in essence, the idea of KPQs is about defining the rationale of a business goal properly.
- The OKR framework suggests using quantified “key result” for the objectives. That’s exactly what lagging indicators are about.
Don’t be confused by new terminology. Most likely there are some direct analogies with the three quanta shared among all strategy description frameworks.
Summary: Using a Framework to Understand Business Frameworks
In strategic planning, business frameworks help to convert the ambitions of the stakeholders into strategic hypotheses and high-level goals.
The “framework for strategy frameworks” helps to understand the essence of each of the framework and implement it properly into the strategic planning process.
The key questions of the framework are:
- Application area. What is the application area of the framework — strategy definition, description, execution, or all of them? Where does your organization need an impulse today?
- Decomposition. What kind of decomposition does this framework suggest? By time? By risk? By input/output? By a set of certain criteria?
- Prioritization. How does the framework suggest prioritizing found hypotheses to select the most promising one?
Additionally:
- For strategy description frameworks: how does the vocabulary of the framework match the quanta of strategy (goal, KPI, initiative)?
- For strategy execution frameworks: how are the goals between teams/areas/strategies connected? What is the algorithm for progress reporting?
The outcome of such analysis is a better understanding of the role of the framework in strategic planning process and the type of hypotheses it generates.
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The Strategy Implementation System is an article on Medium where I connect the dots about strategic planning, including its Frameworks component.
