How To Develop Your Strategy in 4 easy Steps
I’m regularly astounded by the lack of process of many businesses when evaluating and developing good strategy.
I see businesses focusing their attention on the inside of their business, on their goals, leaving them little time to focus on the outside world, and their strategy.
This month I’ve reflected on the importance of looking outside, at your stakeholders – identifying who they are, understanding what you want from them, and knowing what they want from you.
Graham Kenny, my friend and colleague, wrote an article for The Harvard Business Review some years ago, which provided a simple step-by-step process to ensure you build a smart strategy aimed at achieving your business goals, and a competitive advantage.
A List of Goals is Not a Strategy
How many times have you sat with your management team or employees to develop your company, or department strategy only to find that you end up with a great list of generalised goals or objectives that include such things as:
- % sales growth,
- % profitability increase,
- Become more competitive in existing markets,
- Expand into new markets and regions.
There is nothing wrong with the list itself, in fact it’s a great list of what you might call goals, or key performance indicators (KPI’s) – however it’s certainly not a strategy, and won’t help you to ensure the long-term survival or prosperity of your organisation.
Rather than focusing on a narrow set of KPI’s and developing solutions that feed those metrics, stand back and take a broader, more holistic view of the competitive arena and organisational situation.
1. Identify which stakeholders you depend on for success.
Set time aside to identify the stakeholders (customers, suppliers, employees, shareholders etc) who are key to the long-term survival and success of your company. Without them, you have no organisation. So ensuring you satisfy them is crucial to your continued success.
2. Recognise what you want from your stakeholders.
Rather than launching straight into what you need to do for stakeholders such as customers, employees, suppliers etc, it’s important to stop and consider first what you want from these stakeholders. Remember as an executive, board member or CEO, your obligation is to act in the best interests of your company.
By understanding what you want, you will be able to identify more easily your objectives. Ie if you’re looking for sales and revenue growth, then that is going to come from your customers, where as productivity and innovation, or customer service will come from your employees etc.
This process will allow you to design meaningful strategies to get what you need from each stakeholder group.
3. Recognise what your stakeholders want from you.
When managers and their teams go too quickly into problem solving mode, they make assumptions about what their stakeholders want. As a result they end up with products and services that don’t sell.
If you want to achieve a competitive advantage, you must understand those things that your stakeholders want from you – and excel at them. Which leads me to the final point.
4. Deliver the things that your stakeholders want – differently.
In order to create a competitive advantage, you will need to excel at delivering what your stakeholders want from you, AND do so in a way that is different from your competitors. Once you know what you will do differently, and why it is of value to your stakeholder you can clearly define your strategy and build your brand around it.
Some ways to determine your point of difference:
- Evaluate your competition and rate yourself and your direct competitors based on operational efficiency (price), product leadership and customer intimacy.
- Identify areas where your competition is vulnerable and determine whether you can focus on those vulnerable areas.
- Identify your key strengths and how they can be enhanced.
- Evaluate what you want to be ‘known for’ in the future and design a long-term strategy to achieve it.
Reference: A List of Goals is Not a Strategy by Graham Kenny, published in the Harvard Business Review, November 19, 2014.