When the road to a useful and coherent strategy can seem long and winding, that is because it is is long and sinuous. It seems like an unmanageable project and many managers don't know where to start. But basically it's simple. To come up with a useful strategy, you need to answer five questions. Neither more nor less.
The five questions are:
Unfortunately, answering the questions is not quite as simple as it seems. Strategy development is far from a linear process, so expect backtracking, mistakes, corrections, and constant development. If you don't experience it, then you're probably doing it wrong.
Based on Lars Bo Hansen's book "Strategy that works" (2013), we have prepared this guide to help you answer the strategist's five most important questions.
To be able to answer the question, you must consider the company's level of ambition – in the long run. And decide when a goal is "good" or applicable in relation to your organization. That is that you must establish some criteria against which you can later measure your potential strategies. Good ambitions clearly define when you have won as a company.
Ambition level
Consider, in relation to your company, competitors, skills and knowledge, which criteria your company can be measured against that make sense. Are you e.g. in an industry where size is rewarded, market dominance will be a reasonable parameter. Perhaps it makes sense that the company is spreading geographically, then this can be a parameter against which you must measure the "applicability" of your strategies in the future.
Concrete objectives
Once the parameters have been determined, you must decide what the ambitions should be. If your ambitions are within turnover, you must set a concrete objective for what the turnover should be or how much it should grow.
Now you have to choose which specific products, services, customers, channels, markets, functions, processes etc. will be used to achieve the ambitions you set out in the previous step.
Perhaps you have identified new segments, customers who can buy more or products that can be developed? At this stage, you need to assess which of these options (if any) you want to pursue.
Consider in relation to all strategies which products, customers, channels, markets, functions and processes are included. What does each combination of these look like relative to each strategy?
THREE BASIC TYPES OF STRATEGIES
- Growth. Through the expansion of own sales channels, new markets, markets that are close to one's current one or entering a completely new business area.
- Retreat. Through divestment or merger.
- Stability. Take a strategic break to give the company peace of mind or continue according to the existing strategy.
Now you have to decide how you want to differentiate yourself from your competitors. This means that you must select some parameters where your company will do things in a different way from the competitors and clearly state why the customer should choose you.
Remember to select some parameters that have value for your customers. If ISO certification does not interest your customers, then it is not worth pursuing (at least not as a differentiating parameter).
You can e.g. differentiate yourself on:
Your differentiation parameters should be:
- Unique
– Difficult to copy
– Presuppose great and persistent effort
– Depending on the customers' criteria
– Create and deliver value
– Build on skills you have or can get
– Take as a starting point ambitions and scope.
According to Lars Bo Hansen, the implementation of a strategy depends on "how well the strategy is announced and communicated - both before during and after the development process" (Lars Bo Hansen, Strategy that works (2013)). Danish workplaces are characterized by the fact that the employees rather work for the company than for the top management, combined with a healthy skepticism in relation to management and authorities. Therefore, you must involve the company's middle managers early in the strategy development. Lars Bo Hansen recommends using a "change map" to both plan and visualize the implementation.
A change map is a kind of map of the change that visually conveys on a single page which measures the change contains and in which order they are optimally implemented.
Example of change card:
Share the map with the organization so that everyone gets an overview of the process and can later follow how well (or poorly) the plan is being followed. In this way, the map can function as an agreement between management and main stakeholders, which commits and at the same time promotes the dialogue about the strategy. Make sure not to write all measures in the map, but prioritize strictly so that the map "just" shows just enough to make the strategy's implementation process clear.
Now you should have a well-defined ambition (question 1), a handful or more options for scope (question 2) and ditto differentiators (question 3?) as well as an overview of how the strategy is to be implemented (question 4). The next step is to ensure that the strategy you choose to proceed with is connected to the company's starting point in relation to e.g. customers, culture and competitors.
To assess whether the chosen strategy is good – whether it is connected – Lars Bo Hansen suggests that you consider it in relation to the following five topics:
Is the strategy specific enough? Have you saved on the campfire speakers?
Source: Lars Bo Hansen Strategy that works (2013)
Assessing the logic of the strategy is difficult and will always be a very abstract and speculative process. But an important process nonetheless. Therefore, force yourselves to discuss whether there is a connection between the various elements.
Remember: A good strategy cannot be drawn in an automaton. It requires thorough preparation. Before you start with the above four questions, it is e.g. important that you know your company's strong and weak sides, yours culture, internal and external stakeholders, strategic skills, and understands that communicate effectively about the strategy for your company.
Source: Lars Bo Hansen: Strategy that works (2013)
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