Crafting a Living Strategy
Strategy is a word that is bandied about in the halls of enterprises, governments, and academia globally. It sounds important. So we include it in our resumes and use it as a talking point in meetings. Yet, if pressed, most people either misunderstand what strategy is or think strategy crafting is mysterious and confusing.
Not content with the complexities and intricacies of strategy development, I have thrown in this new term ‘living strategy.’ To define ‘living strategy,’ we first need to understand how to build and execute strategy. Let’s first demystify the concepts of strategy development.
What is strategy?
Strategy is a plan of action or policy designed to achieve a major or overall aim. It is also referred to as a grand design, master plan, game plan, and/or policy. In its simplest form it is simply a plan. If you have run a project, built a solopreneur-ship, or organized a family vacation you did it with a plan.
So what’s the big deal about strategy? Many companies have entire, high paid teams whose entire remit is focused on defining, establishing and adjusting strategy. They drive efforts that engage the organization’s leadership and invest substantial effort into forming and managing the strategy. Why?
Strategy is a plan on steroids. Typically, you tackle strategy development when the stakes are high, often existential, the effort is complex and highly interdependent, and those tasked with executing the strategy are diverse and may rarely or never talk to each other. The effort to build and manage the strategy is paid back in revenue and profit growth, national or coalition initiatives realized, and wars won.
Strategy does not exist in a vacuum! Rather, it exists in a messy world fraught with problems and unexpected changes. In other words, strategy exists in a highly fluid ecosystem. Strategy development requires addressing four key considerations.
If strategy is, in essence, an uber-plan, then the critical first step to strategy crafting is to figure out where we are going. What is the NORTH STAR for which you are devising a strategy?
Defining the Outcome(s)
If your vision is your imaginary future that you are attempting to make real, your outcome or outcomes define the reality that you are trying to create, piece by piece.
- Vision — the ‘why’ that drives your actions.
- Outcome — the ‘what’ you are committed to accomplish to realize the vision.
- Strategy — the ‘how’ you are executing to get to the outcome.
Defining the outcome(s) articulates with some specificity, what you are trying to accomplish. A single outcome may realize a simple vision. However, most strategies operate for long periods, often years, in service of realizing a lofty vision, resulting in multiple and often incremental outcomes. Most business strategies establish annual outcomes on the journey toward the vision. This year we will achieve these outcomes. Next year we will achieve the next set of outcomes.
If you were bequeathed a continent and had a vision of creating a sovereign country with a democracy some of the outcomes you would want to work toward such as creating a culture of peaceful transitions of leadership, structuring the executive, congressional, and legal institutions, with checks and balances, that will help make the democracy durable, and a structure to engage the constituency in a way that makes them feel empowered to choose those in public office. Each of those immense outcomes will take years to resolve. The strategy for delivering on this ambitious vision would be complex and likely to adjust over the years. We will dive deeper into the systemic learning and adjustments aspect later.
Needless to say, it is critical to define the outcomes specifically in a way that requires stretch but be doable. These outcomes will establish the requirements for the strategy. What do I mean by that? If you are in San Francisco and want to travel to New York City and need to select the means [the strategy] for getting there, you are going to need a bit more information. Why are you going to New York? Going to New York for a face to face business meeting with a client requires a very different means than if you were traveling to live there. The business meeting would require a much more simple strategy that likely includes a flight and hotels. Whereas traveling to New York to live would require a much more complex strategy with multiple outcomes including means of travel, housing, and a clear idea of what you want to accomplish professionally and personally.
Getting Clear and Specific
To help clarify the outcomes so to ensure your strategy meets them, you can establish conditions for satisfaction, also called success criteria. Success criteria are the standards or principles that define what needs to be accomplished to satisfy our goals. They should be measurable. Thus, metrics can be introduced to measure our success. If we choose to travel to New York City to live you need to clearly define the goals and their associated success criteria. Let’s say you had an ambitious plan to have specific professional and personal experiences and accomplishments. Your goals and success criteria may look like this:
Note that while the goals can be met in a number of ways, the success criteria general specific and measurable requirements for meeting that goal. If the success criteria are well crafted, you may get clarity on at least some of the performance metrics that you will need to track. These goals and their associated success criteria shape and limit the strategy by which they are accomplished. Hopping a flight with one suitcase and no cash is a fraught and risky strategy to meet the goals and success criteria.
Assessing the Situation
As mentioned above, strategy does not happen in a vacuum. It is designed to maximize the likelihood of accomplishing specific goals in the least risky way, or at least recognizing and managing the most likely and damaging risks. How do we know what those risks are? Strategies are executed within a set of circumstances, or ecosystem if you will. For ambitious, complex, multiyear strategies, those circumstances will change. New risks and opportunities will emerge. The durable strategy must be able to sustain adjustments to deal with these changes. To build a durable strategy requires analyzing the ecosystem to understand what you are dealing with as you execute.
Assessing the situation is no small task. The corporate market assessment industry was valued at $12.32B in 20021 including stalwarts like Gartner and Forrester who provide market and industry analysis, and strategy development/integration partners such as Boston Consulting Group, McKinsey and Bain. These players provide sophisticated analyses of market and industry position and trends, that strongly enhance strategy development. Academia and these companies have developed many general and industry/market specific tools for these sorts of assessments. Worry not though. We will keep this assessment discussion straightforward by using a simple to understand yet extremely powerful tool — SWOT Analysis (short for strengths, weaknesses, opportunities, threats). The SWOT analysis was developed by Albert Humphrey in the 1960s as a way of assessing that ecosystem mentioned above.
The SWOT analysis organizes your thoughts around both external opportunities and threats while also considering your internal strengths and weaknesses. The concept is simple enough that anyone can sit down and draw up a list for each item on their own. However, the strength of any ecosystem assessment is in the efficacy of the sources of information captured, how well that captured intelligence conforms with your effort, and how that intelligence is synthesized and key points are extracted. Beyond the experts mentioned above, intelligence sources may include internal product, service, and technology experts, client/user feedback, market studies, academic studies and experts, internal performance, resourcing, and financial data, emerging socioeconomic, regulatory, and technological trends. Thus the willingness of organizations to heavily underwrite strategic assessment.
Establishing the Building Blocks
Now that you have established your outcomes and assessed the ecosystem, you are ready to lay in the building blocks of your strategy. These building blocks are the efforts to achieve your big goals. When defining and delivering strategic programs, we call these building blocks workstreams. For the example above the strategic work streams include:
While the above structure is relatively simple, you can imagine that, if you apply the same analysis to creating a democratic government, the strategic work streams would be incredibly complex.
Assessing Your Wherewithal
The last big question to answer is a two-parter.
- Do I have the resources — enough people, the right people, enough money, enough time — to take on the strategy?
- What do I do when things change?
Once you’ve defined the big blocks you know, by and large, what you will need to do to achieve your outcomes. Now you need to breakdown and assess each workstream at a level of detail that allows you to forecast the level of resource investment, expertise requirements, funding needs, and time it will take to complete. As this reality takes form you may be surprised either in a good or bad way. Regardless, surprises mean adjustments to the strategy. To move quickly you need to know what your priorities are.
To manage complex objectives and work streams we use portfolio management to prioritize each big effort, forecasting the resources required for that priority, and categorizing them for rapid decision making as things evolve. A typical business portfolio structure might:
- Capture investment for each effort.
- Prioritize them based on their value to the overall effort. In business, value is typically measured in projected revenue increases, cost reductions, profit margin, and contribution [incremental profit based on incremental revenue].
- Bucket them into obvious categories such as keeping the lights on [operational efforts to keep the business running], improving/optimizing what we have, and new bets.
This assessment should be done up front to ensure that the strategy is viable and that you can pivot rapidly as changes emerge.
Ensuring a Living Strategy Learning Process
To ensure that your strategy is robust, your strategy development process should be a learning process. To put it another way, strategy development is iterative. Most certainly, your ecosystem assessment may have you rethink your goals. Establishing your work streams may likewise teach you something about how you can most effectively structure your goals. Doing your tactical investment assessments and valuing your goals via portfolio management may cause you to more highly prioritize some efforts while de prioritizing others. Execution of the strategy and completing retrospectives on completed work will drive strategy tweaks as well. Consider the following learning guide.
Finally, big changes will occur. New leaders may take you in a different direction. The economic climate will inform your appetite to invest. Social and customer trends will shift. New technologies will have you rethink your approach — hello ChatGPT.
What are the Takeaways?
We generate a strategy when your vision is ambitious, goals are difficult to achieve, the stakes are high, the effort to get there is complex, and the people you need to get there are diverse and potentially wide spread.
Once you have defined the outcomes you establish the big blocks you’ll need to accomplish to get there. Then you validate that you have the wherewithal with a cost and resource forecast.
Once your in gear executing on your strategy, you continue to refresh and update by asking the question listed above and then adjusting accordingly. If you crafted a robust strategy, done your assessment due diligence, and manage execution via portfolio management and an appropriate cadence of reviews, you are likely to see success despite the flux.
Find more articles from Sarah at: www.operations-architect.com.