6 key questions every business strategy should answer

My previous blog post was the last in a series of 6. This post ties them together and provides links back to the original posts.

The series was prompted by the ideas that:

1. Many people struggle to define "strategy" or to agree with each other on the definition. (I've written about my own definitions here.)
2. This confusion hampers the process of developing and executing business strategies unnecessarily.

One solution is to keep going until we all agree on the definitions. But that could take a long time. In fact, we might never get there.

So a more expedient approach is instead to look at the questions that good business strategy tries to answer. If we can answer those questions, then we're in good shape. Whether or not we then choose to label that as "strategy" becomes less important.

I boiled the problem down into 6 questions. For convenience, I gave each a label. These are:

1. Future-oriented: What will you need to do to succeed in the future, and how is that different from what you needed to do to succeed in the past? 
2. Evidence-based: What evidence to you have to support your decisions, and what processes do you have in place for reconfirming or adjusting that on an ongoing basis?
3. Focused: What will you choose to do, and equally importantly, what will you choose not to do or to stop doing?
4. Differentiated: How will you differentiate yourself in the market?
5. Aligned: How will you align all of your people and resources to the achievement of your goals?
6. Results-oriented: How will you know if your strategy is working?

I then wrote 6 blog posts. Each blog post outlines my thoughts on that question and why it is important. These are:

1. Future-oriented: Skate to where the puck is going to be, not where it has been
2. Evidence-based: Everyone is entitled to an opinion, but...
3. Focused: Don't chase two rabbits
4. Differentiated: Choice, trade-offs and differentiation
5. Alignment: What is strategic alignment, and why does it matter?
6. Results-oriented: Focus on the results

Finally, I summed up of the 6 areas with a (mostly) well-known quote to help them land, and created this image of them.

Please do let me know what you think in the comments.

Focus on the results

"However beautiful the strategy, you should occasionally look at the results."

- Winston Churchill

You've developed an evidence-based future-oriented business strategy. It differentiates you in the market. You've got plans in place, focused and aligned all your resources to achieve it. Job done! Right?

Not quite!

Your job is not over yet.

You see, the real world does not play along. Competitors fight back. Suppliers fail to deliver or change their strategies. Customers change their minds. Unexpected technological breakthroughs disrupt your market. All manner of things can, and probably will, disrupt your strategy.

"No plan survives contact with the enemy."

- Moltke the Elder

Mike Tyson makes the same point - perhaps more colourfully:

"Everybody has a plan until they get punched in the mouth."

- Mike Tyson

As you're executing your strategy, you need to continually be asking yourself two things:

1. Has the evidence on which I based my strategy changed? Is it still true? Has new evidence come to light?
2. Is my strategy producing the results I thought it would?

This post focuses on the second of those two questions.

If your strategy is not producing the desired results, don't just keep going!

"Insanity is doing the same thing over and over and expecting different results."

- Albert Einstein

Instead, take a step back and ask:

• Why isn't it producing the results?
• What can I do about it?

This may take you right back to the analysis phase of your strategy development. And that may lead you to a revised strategy. But that's not what we're here to talk about now.

We're here to talk about the results themselves.

Specifically about two problems I frequently see:

1. Focusing on the effort, not the outcome
2. Measuring the data you have

Problem 1: Focusing on the effort, not the outcome

I remember talking through a strategy scorecard with a CEO. He stopped me and asked: "Are you suggesting I measure success in terms of the outcomes achieved rather than the effort my team put in?"

And, of course, that is exactly what I am suggesting.

You may want to consider effort when determining remuneration and promotion. (Probably alongside other factors like demonstration of corporate values, etc.)

But when it comes to strategy execution, the focus should be clearly on outcomes - results.

Results are what attract your customers and keep them coming back. Results are what your shareholders/owners and other stakeholders are after.

Strategy is about achieving results. In the most efficient and effective way.

Here is a hypothetical example I am sure you will all recognise. A business decides it wants to increase customer satisfaction or customer retention or some such outcome. Then it decides that, to do so, it needs to install a new CRM or some such initiative. Six months later, success is declared. The new CRM has been installed on schedule and within budget. (It's a hypothetical example!)

In the midst of the celebration which follows no-one remembers to check whether the outcomes were achieved. Did the new CRM result in increase customer satisfaction or retention? Or did it not?

This is such a pervasive problem that some organisations have established a whole new discipline to counter it. This is often known as Benefits Realisation.

Initiatives may start off with the best intentions. But benefits realisation often falls by the wayside before the initiative completes. Overruns clash with tight schedules and budgets to squeeze it out. New priorities are set. Resources are redeployed. The business moves on.

Problem 2: Measuring the data you have

One of the reasons for this is that collecting the data you need can be expensive.

Data must be collected, validated and analysed.

The effort to do so is often not fully understood or valued.

It is somehow easier to justify the effort and expense of installing a new CRM than it is to justify the expense and effort of measuring the outcomes. And if it is justified initially, it is often one of the first things to get descoped or simply forgotten about as the project schedule and budget tightens.

Investing in measuring the outcomes should be given at least as much priority as investing in the steps you take to improve them. If you don't, you will never know if your strategy is really working or not.

Faced with the expense of collecting, validating and analysis new data, many organisations make the mistake of trying to rely on data they already have. After all, most organisations are already awash with data. (Even if it is poorly managed.)

The problem is that most of this data exists for other purposes. Much or it exists for accounting or regulatory purposes. These are important sources of data. But they're probably not going to help you to track the progress of your strategy.

Strategy is about making choices and differentiating your organisation. Your strategy should be unique to your organisation.

Accounting and regulatory standards are not unique to your organisation. The data and measures they require are not unique to your organisation. So they are unlikely to be relevant to your strategy.

If, when setting out a new strategy, you are told you can track its progress using data the organisation already has available, you should smell a rat.

Your strategy determines what the organisation needs to focus on. Why would your organisation have invested in tracking and outcome before it was deemed to be strategically important?

So a new strategy always requires an investment in new metrics. You should consider the cost of developing those metrics to be an integral part of the cost of executing that strategy.

Furthermore, you should define the metrics to be gathered as part of the development of the strategy.

The scientific method requires us to determine the criteria for success before the experiment is run. This prevents people from post-rationalising their choices. The same is true for strategy.

Conclusion

It is my personal opinion that insufficient focus on results is one of the main reasons so few strategies get successfully executed.

(That's why results tracking, using a strategic scorecard, is built into StratNavApp.com.)

Our current bias towards action ("Just do it") mitigates against our investment in the disciplines which underpin success.

If the desired results are not clearly and unambiguously outlined from the start, alignment suffers. Efforts quickly diverge because it is impossible to know which directions are/aren't producing the better results.

Decision makers kid themselves that they're successfully executing the strategy and that it is working. Without any evidence to confirm or disconfirm it, there is little pressure:

• to try harder, 
• to make the tough decisions and trade-offs,
  or, perhaps most importantly,
• to know and accept when they make a mistake and then correct course.

Good luck!

As always, I would welcome your thoughts and questions in the comments below. And if you need any help of a more specific nature, you can contact me here.

The importance of articulation in business strategy development and execution

The question of articulation doesn't get nearly enough attention in business strategy.

Articulation is the ability to express every aspect of your business strategy in a way which is:

1. crystal clear,
2. engaging and
3. encourages aligned action.

It applies to:

• Your strategic analysis: Is it insightful? Does it create those aha! moments for your audience?
• Your strategic goals and initiatives: Are they clear and unambiguous?
• Your results tracking: Can everyone clearly see your strategy succeeding?
• Each step in the process of gathering inputs and developing the strategy, as well as communicating the output.

There are four critical success factors for strategy articulation.

• Communicating clearly and precisely.
• Telling a story.
• Leaving everything else out.
• Being consistent.

Communicating clearly and precisely

This should go without saying. But we've all been on the receiving end of communications which are jam-packed with jargon and waffle, repetitive redundancies, which go on for ever without ever seeming to reach a conclusion or make a point and leave you wondering what the communicator meant or what you are supposed to do about it. (Yes, that sentence is deliberately poorly written.)

Make sure your strategy is not guilty of this.

Articulation starts with grammar and spelling. It proceeds to sentence, paragraph and document structure.

I often use a tool called hemingwayapp.com to help me ensure my writing is up to standard. If you've not yet tried it, I suggest you give it a go.

Of course, there are other tools you can use. And I am sure they're just as good. If you have a favourite, why not share it with the rest of us in the comments?

It's not just about words and sentences. You can also use charts, tables and graphics. And its just as important that these are clear and well constructed.

"If you can't explain it to a six year old, you don't understand it yourself."

- Albert Einstein

Telling a story

People have been telling each other stories since the discovery of fire. It's baked into the way we communicate. It's part of how we make sense of the world.

You strategy should tell a story. It should have a beginning, middle and end. It should lead your audience on a journey from where you are now to where you want to be.

It should engage them on a personal level. It should tap into their fears and aspirations. Articulation should take the logic of your strategy and connect it to the emotions of your audience.

People are sense-making beings. We're programmed to make sense of the world. And we do it with stories. So if the story of your strategy doesn't make sense or contains gaps, people will simply fill in the blanks. They will make up the story in a way that makes sense to them. It won't always be what was intended. But it will become their understanding of the strategy.

Leaving everything else out

Why does James Bond never eat, sleep or brush his teeth? Of course, he does. But that gets left out of the film. It's not relevant. And it would bore the audience instead of engaging them.

Is your strategy packed with irrelevant detail? It may make you look clever. But is it detracting from your strategy?

Or have you refined it down to its essence? Just enough to tell the story and achieve the effect you're after. And no more.

At the end of many assignments I end up with a deck or document I call "the cutting room floor". It contains all the analysis and ideas that, whilst valid, didn't make it into the final strategy. They're not wrong, or bad. They may even have been important at during the process of developing the strategy. They're just not essential to the current articulation.

Being consistent

You've probably invested a lot of time and effort in coming up with your strategy.

So don't expect your audience to fully understand what you're saying in the first telling. They also need time to get to grips with it.

That takes repetition over time. And repetition requires consistency.

At school we may have been taught to vary what we say so that we don't bore our audience. We're taught to use similes and synonyms and flowery language. To mix things up.

But in business we need to be more concise and consistent.

I you say the same thing in two different ways, your audience will spend all their time trying to understand if you mean the same thing. Sometimes, they'll get it wrong and think the meaning is different when that wasn't intended. Either way it is distracting their attention away from your core message.

I know many people who think function is more important than form. That if your strategy is sound, it shouldn't matter how you articulate it. But the truth is, it does. So you might was well get good at articulating strategy.

A good consultant is like a good golf caddy

Someone recently told me that a good business strategy consultant is like a good golf caddy.

They knows the course well. They have played it themselves and/or caddied many other players around it before. They know the course conditions. They know the best lines and where all the traps are.

They haves a complete set of clubs in the bag. They knows which ones to use when. They can apply this knowledge on the course. And they can adjust it to the specific capabilities of the player they're caddying.

As a result, they can advise the player on every aspect of the game. They can act as a sounding board as the player things through each sot. And in doing so, they can help the player to play their best round.

But it remains the case that it is the player - and only the player - who must play each shot.

It's the same with a good business strategy consultant.

They know the theory of business strategy. They're familiar with the case studies. But more importantly, they've been through the process of developing and executing business strategy many times before.

They have experiences of different businesses, perhaps even different industries. They've developed and executed business strategy through different phases of the economic cycle.

They have experience of what works and what does not work. They've made and seen many mistakes, and learned how to avoid them.

They have, at their disposal a rich toolkit of frameworks and tools for developing and executing business strategy. They have practical experience of having used them. And, of course, the know when and when not to use each one.

And so like a caddy with a player, they are able to advise a business owner or executive; or just to act as a sounding board. To enable them to achieve their best results.

How do you know when it is time to give up?

In the Q&A after a presentation I did to the Federation of Small Businesses a few weeks ago, someone asked me: if I’ve tried a new strategy and it doesn’t seem to be working yet, how do I know when to stick with it and when to give up?

It’s a great question. We live in a world where too many people want instant results. Sadly, I think many businesses give up on great strategies too early. Yet others persist for too long with strategies which are clearly not working.

So here is my answer.

First of all, I must assume that the strategy you are applying is based on a sound analysis, and that that sound analysis resulted in a good strategic hypothesis.

(See also:

• Everyone is entitled to an opinion, but...
• Using online research to build an evidence base
• 7 top tips for strategy analysis

for more tips on this.)

By ‘strategic hypothesis’ I mean something along the lines of: if we do A, B and C, we will get X, Y and Z.

If your strategy isn’t based on something like that, then you have a different problem. I won’t be addressing that here.

But what if you’ve done that? What if you're doing A, B and C, but you’re not getting X, Y and Z? What do you do?

The first thing to do is go back and check your analysis and logic.

• Are you still convinced by it?
• Did you miss something?
• Has something changed?

The world changes. And so do we. We learn. We develop new understandings of ourselves, our businesses and our environment. And so our strategies should remain under constant review and subject to change if required.

If that doesn’t shed any light, then the next step is to actively try to disprove your strategic hypothesis.

• Can you find someone who thinks you’re wrong? Ask them to try and convince you.
• Think about what evidence you'd need to convince yourself you were wrong. Then set out to find that evidence.

We’re natural optimists. And we’re very good and finding and interpreting data that confirms what we already believe (or just hope) to be true. By flipping things around and trying to disconfirm things, we build a much deeper understanding.

Then, if your logic still holds up, and if you’re unable to disprove your hypothesis, you should persist with your strategy a while longer. If not, it’s time to go back to the drawing board and try again.

Please feel free to get in touch if you need any help with any of the above in your business.

Image by Steve Buissinne from Pixabay

What is strategic alignment, and why does it matter?

“Building a visionary company requires 1% vision and 99% alignment.”

- Jim Collins & Jerry Porras

I love this image of the rowers.

The leader who looks forward and directs without doing any of the actual work.

And the crew puts in 100% effort in harmony. Trusting, disciplined, persistent, drilled, committed. Lovely.

But we all know organisations just don’t work like that.

People talk about:

• “just do it”
• ”the most important thing is to do something”
• "analysis leads to paralysis".

But the real problem is getting everyone to ‘just do’ the same thing.

As a starting alignment requires clarity as to what everyone is aligning too. And that thing ought to be your business strategy!

Effort diffuses quickly

I once worked with an organisation that had only 130 employees but was running 100 projects! Everyone was very busy. Their days were filled with progress updates and prioritisation workshops. But nothing ever seemed to get done.

Alignment is about what you do, who does it, when you do it and how you do it.

And, as is usually the case with business strategy, it is also about what shouldn't get done and how much of what kind of involvement different people should and shouldn't have.

Alignment requires focus. Clarity about what's in and what's not.

People will fill in the blanks

A lot of strategies fail because it is just not clear to people what they should actually do to support it. 

They’re just vaguely worded statements of ambition.

And when that happens, habit takes over. And people inevitably go back to doing whatever it was they were doing before the new strategy was launched. Because that feels comfortable.

Or worse still, they just invent their own strategies.

Alignment requires a clear call to action.

Discipline

Sometimes alignment fails because the strategy is at fault. But other times it fails because people just won’t align.

I remember a senior manager getting very excited as he told me about a great new idea he had and how he was mobilising his team around prioritising it.

But, I pointed out, this idea did not relate in any way to the 4 strategic priorities which his board had had agreed with the organisation only the month before. And in fact, when I asked him, he admitted he’d been so busy with this shiny new initiative that he had barely had time to think about those 4 strategic priorities, let alone do anything about them.

Was he too scared to implement the agreed strategy in case he failed? Did he lack the required balance between thought and action? Or was he just too easily distracted?

Either way, he lacked the discipline - the follow-through - required to execute the strategy.

Another senior manager in similar situation told me outright that she didn’t care that her plan didn’t align with the organisation’s strategy; it’s what she want to do for her career.

What’s more she didn’t think that the executive team were committed enough to their own strategy to do anything to stop her from just pushing ahead. And it turned out, in that case, that she was absolutely right.

Start with a solid foundation

One of the best ways to increase alignment is to base your strategy on a solid evidence base. (See Everyone is entitled to an opinion, but...)

The more you rely on opinions, instead of on evidence, the more you have to accept that everyone has a different opinion, and the less likely it is that you’ll ever get them into alignment.

It’s amazing how much more constructive conversations become when you stop talking about who’s right and who's wrong, and start talking about what evidence you have and what it means.

So, as business strategists, we should constantly ask: How will you align all of your people and resources to the achievement of your goals?

Choice, trade-offs and differentiation

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”

- Michael Porter

In my previous post, I talked about the importance of focus. See Don't chase two rabbits.

Focus requires making choices. For example, the choice to do one thing rather than another. Or to do one thing before another.

Of course, the actual choices you make are incredibly important.

Chase the other rabbit

Going back to our rabbits - if you choose to chase the same rabbit everyone else is chasing, you’re much less likely to catch it.

So, chase the other one.

If you have to chase the same one, don’t follow the pack. Find a different way to chase and trap it.

Business strategy is not about being trying to be a little better. It’s about trying to be different. And in being different, being 10X better.

No one wants another Amazon or another Google or another Apple. Or even just another strategy consultant. Because we already have all of that.

-est and -er words can be the enemy of good strategy

Every time your strategy includes a word that ends in -est (biggest, best, fastest, etc.) (or even -er: bigger, better, faster), or anything similar, stop. Take a step back and think of Wayne Gretsky (see Skate to where the puck is going to be, not where it has been). He wasn't the biggest or the fastest or the strongest player. He was just in a different place.

Competing on price or features rarely ends well. It just starts a price or features war. To truly differentiate on price, I think the research says that you need to be at least half the prevailing price, maybe more. A similar statement could be made about features.

I remember working with a company that was losing market share. I asked them what they’d tried. They’d reduced prices. How did that go? It worked great for a few weeks until all their competitors followed suit. And then they were back to square one but with narrower margin. So then what? Well, then they added some product features. That also worked for a while until their competitors copied that too. Now they were back to square one but with a more expensive product still at a reduced price. Eventually we were able to find a completely different aspect of the business to focus on, and the business recovered the ground it had lost and then some.

Don't just be better. Be different.

Trade-offs

Trade-offs provide a great way to deter your competitors from simply copying you.

When Southwest Airlines launched the world's first low cost airline, they deliberately chose not to do certain things. They didn't offer in-flight meals or allocated seats. They only flew point-to-point and to secondary airports. And they only used one type of airplane.

As a result, they were significantly cheaper. And for those people who did not care for the things Southwest didn't offer, they were perfect.

Their competitors could have copied them, of course. But that would have meant stopping doing those things also. And that could have lost them a lot of their existing loyal customers. The trade-off was too great for them. So they left Southwest Airlines alone.

Similarly, Ikea choose not to assemble or deliver the furniture they sold. And they chose large well-stocked stores with plenty of onsite parking. Again, this appealed to many customers. But the trade-off for traditional furniture stores was too large.

Unique and valuable

Where does that leave you?

In very simple terms, business strategy is about choosing to focus on only that which:

• is different
  and
• your (target) customers value
  but
• can't already get anywhere else
  and
• which you are uniquely well placed to deliver.

If you can tick those 4 boxes, then you're in a strategically good space!

And so, as business strategists, we should constantly be asking: How will you differentiate yourself in the market in a way that enables you to create and capture value?