What is strategy? If you ask 10 different leaders, you will most likely get 10 different answers.
Most leaders use the term easily and freely.
Most leaders assume that the term “strategy” is universally understood and that everyone is using the word in the same way as they are intending it to be understood.
A lot of leaders assume that business strategy is similar to game strategy. Sadly, your tactical approach to playing Monopoly is not a good foundation for positioning your team or organization for success.
A lot of leaders are often confused about what a strategy is. A lot of leaders confuse strategy with objectives and goals. A lot of leaders internally struggle with creating and crafting solid strategy.
Let’s demystify strategy.
A good “strategy” addresses your organization’s positioning with regards to the (strategic) factors that are important and relevant to each of your key stakeholder groups. For example, Costco’s strategy for its members probably involves “providing the best value for bulk products.”
Strategic factors are those things that your organization needs to get right in order to succeed with your key stakeholders, which may include customers, suppliers, employees, owners, board members, shareholders or anyone that depends on your organization’s success.
An “objective” is the thing that you are trying to achieve. It is the marker of success for your organization.
An “action” is a tangible thing that people do in their everyday business life and that gets them closer to their objective being achieved.
Actions and objectives tend to be closer to what most leaders and team members act on and see each day. Thus, action and objectives are what leaders interpret strategy to be. Unfortunately, focusing on what one needs to do is not focusing on strategy.
Strategy occurs at the organizational level. You need a comprehensive view of the inputs, outputs, actors and competitive landscape of the organization in order to create a solid strategy. Your organization is a part of an ecosystem that consists of interactions with your key stakeholders. Each organization has its own level of complexity, based on industry constraints, and has different key stakeholder groups; each with potentially differing characteristics.
Strategy is abstract. However, it will help get everyone in your organization on the same page and aligned on the what you do, why you are different and how you create value.
Given that your organization is a systems of systems within a system of systems, the process of creating strategy is an exercise in systems design.
Systems design is the application of systems theory to organizational development.
Every system has its own set of defined boundaries, has an environment that it exists in and that it impacts, and has an identifiable structure, mission and operating model.
The aim of systems theory is to methodically discover a system’s dynamics, constraints, conditions and clarifying principles, i.e. its purpose, metrics, methods, tools, etc., which can then be applied to constituent systems, and for each of the organization’s sub-divisions in order to achieve optimal equifinality.
Equifinality is the principle that, in open systems, a given end state can be reached by many potential means.
The process of creating strategy is entirely about producing positions on your organization’s strategic factors that can create value for your organization’s key stakeholder groups.
When the leaders of your organization go to a retreat to create your strategy, use the following game plan to maximize your chances of crafting good strategy:
- Determine your key stakeholders.
- Identify the strategic factors for each key stakeholder, i.e. what they want from you.
- Document your organization’s relative position, compared to the rest of your industry, for each strategic factor.
- Determine what your organization wants from your key stakeholder groups for each strategic factor, i.e. determine your strategic objectives.
For example, if your team views “price” as a strategic factor for each customer, then a sample strategy may be “We guarantee the lowest price. If a customer finds a lower price, we will match it.”
It is important to remember that your discussion on the key stakeholder groups must be guided by customer research.
After performing your strategy creation process, you have to start the coalition building, fit analysis and change management needed to ensure that employee relations, customer relations, supplier relations and other groups are aligned.
Putting Strategy To Work
From the strategy creation process, you have discussed what each key stakeholder group wants from your organization (strategic factors) and what your organization wants from its key stakeholders (strategic objectives).
To ensure that your strategy is implemented, you have to translate your strategy, and its related objectives, into project and/or program-level actions.
For example, if you know that your customers want effective performance on the strategic factors of price and customer service, then you have to define programs and projects that promote your strategy on these factors for everyday activities of your team members.
Too many leadership teams fail to approach strategic planning from a systems design mindset.
This is normally because leaders tackle the task of strategy creation from their own functional viewpoint. Thus, they default to “action” when they are aiming to think about “strategy.”
Employing a stakeholder approach to strategy encourages leaders to elevate their thought processes to the organization level.
Strategy is living and dynamic. It must be regularly re-evaluated and updated to reflect the changing dimensions of the world around us all.
Go forth and create better strategy.
- “7 Ways To Improving Your CX Strategy”
- “5 Steps To Being An Effective Change Agent”
- “Changing Our Perception of the Word Strategy”
- “Your Strategic Plans Probably Aren’t Strategic, or Even Plans”
- “Dialing Up the Volume on Strategic Innovation”
Tyrone Grandison is part of the GovLoop Featured Contributor program, where we feature articles by government voices from all across the country (and world!). To see more Featured Contributor posts, click here.