Watch the “S” Word

June 29, 2017 © Copyright Glomacs

StrategyStrategy – Many people find strategy complicated, difficult and confusing.

This isn’t because strategic thinking is that difficult, but largely because there are many topics that are described as ‘strategic’ and a large number of special names and abbreviations that trying to make sense of it all can leave you with a headache.

Experience teaches you that there are many similarities in what, at first, might seem to be distinct areas of strategy.  For example, a Strategy Map can seem daunting, but once it has been explained clearly, you realise that anyone who can build a project plan has the skills to construct a strategy map.

A good framework to help start making sense of strategy is the Strategic Management System.  Robert S. Kaplan and David P. Norton are the authors of The Balanced Scorecard (1996), The Strategy-Focused Organisation (2001), Strategy Maps (2004), Alignment (2006) and The Execution Premium: Linking Strategy to Operations for Competitive Advantage (2008).

They created a Strategic Management System that links strategy and operations.  The table below summarises the system:

Strategic Management System

Stage

Key elements

Examples of Tools

1. Develop the Strategy

  • Define mission, vision and values
  • Conduct strategic analysis
  • Formulate strategy
  • PESTEL
  • 5 Forces
  • Value Chain

2. Translate the Strategy

  • Define strategic objectives and themes
  • Select measures and targets
  • Select strategic initiatives

3. Plan Operations

  • Improve key processes
  • Develop sales plan
  • Plan resource capacity
  • Prepare budgets
  • Operating plan
  • Dashboards
  • Budgets
  • P&Ls

Execute processes and initiatives

4. Monitor and learn

  • Hold strategy reviews
  • Hold operational reviews

Performance metrics (KRIs and KPIs)

5. Test and adapt the strategy

  • Conduct profitability analysis
  • Conduct strategy correlation analysis
  • Examine emerging strategies

Performance metrics (CSFs and KRIs)

A management system toolkit Kaplan & Norton. Harvard Business Review Press (2008)

Using this management system you can begin to link some of the strategy methods and tools.  For example:

The first stage in Developing the Strategy prompts powerful questions such as:

  • What business are we in and why?
    • This question focuses on high-level strategy ideas such as mission, vision and values, which are all required before formulating a strategy.
  • What are the key issues we face in our business?
    • Identifying the most important issues drives analysis of the organisations environment and capabilities. The external analysis uses tools such as PESTEL, Michael Porter’s Five Forces and competitor analysis.  Internal analysis leads you to the Value Chain, Core Competencies and the Business Model Canvas
  • How can we best compete?
    • Which customers or markets will we target?
    • What is the value proposition that distinguishes us?
    • What key processes give us competitive advantage?
    • What skills, knowledge and experience do we need?
    • What technology will we need?
    • What are the organisational enablers required for the strategy?

The second stage uses strategy maps to align operations with strategy, and the Balanced Scorecard for strategic measures that can link with dashboards for operational metrics.

Strategic thinking is about seeing the big picture to identify the most important issues then focus all policies and resources on it.  Business planning is a systematic way of translating this resulting strategic focus into operational plans and budgets.

People who have found strategy confusing in the past report that having someone experienced guide you through the strategic thinking process, making connections with the relevant business analysis and planning tools can make a difficult subject seem easy and give them the confidence to utilise strategic thinking effectively in their roles.

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