The ability to think strategically is one of the key competencies that organisations look for in their leaders. The opposite style of ‘linear thinking’, when the past is used to predict the future, is now seen as a liability. This is because politics, society, the environment and technology are changing at too fast a rate.
Strategic thinking is now required to design plans that are: flexible, adaptable, innovative, based upon an organisation’s core competencies and their intimate knowledge of customer’s needs.
Such thinking was exemplified by Alan Lafley, former CEO of Procter & Gamble. Under his leadership, P&G’s sales doubled, its profits quadrupled, its market value increased from $50 billion to $160 billion, and its portfolio of billion-dollar brands grew from 10 to 24. Together with Roger Martin, then Dean of the Rotman School Of Management, Lafley explained his dynamic strategic thinking as answering ‘The Five Strategy Questions’. These, he says, can be applied to organisations of any size in the private, public and third sectors.
How would you answer Lafley and Martin’s Five Fundamental Strategy Questions and so think like a great strategist?
Question 1: What is your winning aspiration for your organisation?
- What would it mean to win in your business or sector and preferred future?
- If you are playing to win and not simply compete:
- What should your organization exist to uniquely do?
- What will be the scope of its activities?
- What specific victories would lead to its ideal future?
- Against what specific goals would you measure your progress?
Question 2: Where will you play?
- Because you can’t address every customer’s needs, where specifically will you compete?
- Where can you be the most competitive and get the best possible results?
- Which customer segment?
- Which distribution channel?
- Which product or service?
- Which geography?
- Which stage of production?
- Where do you not want to play? What is successful but no longer strategic?
Question 3: How will you win?
- What is your competitive advantage and superior value proposition?
- Will you compete by making your product/service:
- Less expensive than the competition?
- More attractive/of better quality than the competition?
- By focusing upon a particular customer niche?
- How will you create unique value? How could you deliver it over the long term to create a superior return?
Question 4: What capabilities / core competencies must you have?
- What distinguishing capabilities will your organisation need in order to win?
- What key activities need to be conducted?
- Do they correspond to what you are currently best at or do you need to build them?
- How hard will this combination of capabilities be for your competitors to match?
Question 5: What management systems do you need?
- As your strategy is executed and monitored by people, what processes, systems or technology do you have to:
- Enable and support them?
- Monitor and measure their activities?
- Recognise and reward them?
- How will you measure the success of your strategy?
In conclusion, Lafley said that to design highly effective strategies you need to do three things:
- Make the difficult choices required to win by turning your back on multiple possible courses of action and resist the temptation to keep these options open
- Display boldness, imagination and innovation in your strategic thinking and avoid the trap of focusing simply upon execution and reducing costs
- Not get bogged down in your mission, vision and environmental audits but answer the Five
Strategy Questions and then put all the resources of your organisation behind them.