How to develop your strategy

I often come across companies that make strategy much harder than it needs to be. For some, the problem is that they focus too much on the latest strategy tools: SWOT analysis, customer analysis, competitor analysis, financial modelling, etc. Other people struggle because they think it’s all about the broad, conceptual, big picture stuff but their head is very much in the day to day tactics. Whilst some think that strategy is what happens when we think about changing direction.

In reality strategy is at some level about all those things, and you can’t do a satisfactory job with your analysis alone, or your big picture alone, or your changes alone. You have to work on all of them.

That’s easier than it sounds. The approach I use is to create strategy through simply answering five interlinked questions. The questions (in this order) are as follows:

  1. What are your broad Aspirations for your company and the Goals against which progress can be measured?
  2. Across the potential market available, Where will you choose to Play and not play?
  3. In your chosen place to play, How will you choose to Win against the competitors there?
  4. What Resources are necessary to build and maintain to win in your chosen manner?
  5. What  Systems are necessary to build and maintain your key competencies?

The key is to have five answers that are consistent with one another and actually reinforce one another. For example, Aspirations & Goals to be a great international player and a Where to Play response that is domestic are not well matched.

So where do you start? Most companies start at the top with some kind of vision exercise that drives participants around the bend. The reason it drives them crazy is that it is extremely difficult to create a meaningful vision in the absence of some idea Where to Play and How to Win. That is why those conversations tend to go around in circles with nobody actually agreeing on anything. Any vision will do when you don’t have a thought through Where to Play or How to Win.

That said, if you think entirely about Where to Play and How to Win without consideration of Aspirations & Goals, you may end up with a strategy that is effective for its intended goal but isn’t something you would actually want.

This means that creating a strategy, is an iterative process— think a little bit about Aspirations & Goals, then a little bit about Where to Play and How to Win, then back to Aspirations & Goals to check and modify, then down to Resources and Systems to check whether it is really doable, then back up again to modify accordingly.

While it may sound a bit scary, iterating like this actually makes strategy easier. It will save you from endless visioning exercises, misdirected SWOT analysis, and lots of uninformed big thinking. Crafting your strategy in relatively small and concrete chunks and honing the answers to the five questions through iteration will get you a better strategy, with much less pain and wasted time.

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