Creating a Corporate Strategy

"The essence of strategy is choosing what not to do."

--Dr. Michael Porter, Harvard Business School

Here's something to think about as a new year gets underway:

Does your business have a corporate strategy, defined as the desired future and a way to make it happen? Is that idea clearly communicated and understood? Do the assumptions on which the system is based fit current reality? 

(C) APMG

And is there congruency between the corporate and business unit strategies? Units need their own design, as do staffs. However, corporate should go first.    

The goal is aligning the corporate, unit, and staff, without which results are substantially lessened. 1 

Getting started with the process can be challenging but having the right people involved is critical to the outcome. With no one way to create a strategy (looking ahead and reasoning back), there are options to consider:

Option A (Predictive Strategy)

Premise:

The world is going to look like this--frame the corporate strategy for that future. 2

• A message, theme, or direction (20%)  
• Implementation (80%)

Option B (Non-predictive strategy)

Premise:

We don't know what the world is going to look like. Therefore we need a strategy or set of methods that can be successful almost irrespective of what the world looks like. 3

• A message, theme, or direction (20%)  
• Implementation (80%)  

Center of the earth

Sometimes corporate strategies are rushed into creation, often bypassing the "core."  

If we begin at the center or with the purpose (why?), there's a better chance the blank spaces get filled in with what makes sense.    

So what's a core idea?

It's a simple articulation of the original purpose or innermost reason for being. It forms the basis of an organization's culture. 

A core idea is central to what you're about. It's not a mission statement; it's what you want to accomplish, a positive goal that can be realized at any time.

Some illustrations:  

o   Taking Wall Street to Main Street--Merrill Lynch
o   Technology married with liberal arts--Apple
o   Developing leaders of character--West Point

The right way to communicate a core is to embody and live it.

No organization should assume current employees or management teams know what's in the core. That means conversations, development programs, and onboarding should include references to an organization's history and a unique sense of purpose.   

A neglected idea

Borrowing from game theory, we consider an overlooked but valuable concept--having a dominant strategy. 

"In general, someone has a dominant strategy when they have one course of action that outperforms all others no matter what competitors do. If someone has such a strategy, their decisions become very simple; they can choose the dominant plan without worrying about a rival's moves.  

Therefore, it is the first thing one should seek." 4

We learn that dominance in the term "dominant strategy" is superiority over another of your potential strategies (make a list), not of your business over a competitor.   

Avoiding common errors

After nearly five decades of observation, experience, and study, we note the following recurring problems facing CEOs when it comes to corporate strategy:

-Not being clear.

-Giving up too soon.  

-Building an easily reversible strategy.  

-Utterances and actions that don't match.

-Failing to have the right people in the right places at the correct times.

(See our 1 April 2017 post, The Struggle with Strategy.)

The speed of light

A year goes by quickly.  

What will you pay attention to over the next 12 months to ensure the business under your watch is moving in the right direction? If it is, how to maintain momentum. If not, how to adapt to regain momentum.  

No matter the analytics, the rare corporate strategy that works at any time is ultimately a series of judgment calls. When it comes to thinking strategically, quoting Thoreau, "It's not what you look at that matters, it's what you see."         



1 Benjamin B. Tregoe and John W. Zimmerman
2 Philippe Silberzahn
3 Ibid
4 Avinash K. Dixit and Barry J. Nalebuff

Strategist.com

©  Bredholt & Co.

What's Your Strategy IQ?

“The essence of strategy is choosing what not to do.”  

--Michael E. Porter

Ever notice how at just the right time the right people providentially come into your life?

So it was in the 1990s, during a study on thinking strategically, that Michel Robert, a co-founder of Decision Processes International, became a valuable resource.

The genesis of affinity is found in his book, "Strategy Pure and Simple."

It was Mike Robert who underscored the benefits of making a more apparent distinction between thinking and planning.  He even put the word "critical" in front of thinking which is sometimes a problem for those who score high on "positivity."  When placed in the context of asking the right questions, critical thinking (purposeful, reflective judgment) is foundational to positive outcomes. 

Mike's teaching derives from the writings of Benjamin Tregoe and John Zimmerman (Top Management Strategy) with real-time illustrations from his consulting practice at DPI. 

Three ideas stand out:

-Strategy as a framework. What do leaders use to guide them in making decisions about the nature and direction of the company? What's needed is a framework or future look to guide the process. This is preferable to an open-end arrangement that's undisciplined and could lead to a momentary attraction.

-Driving force. Select from the major operational components of the business (product, customer service, technology, production, or distribution) one ingredient that can be a driving force, propelling the enterprise into the future. It needs to be something the business does well. If this were theatre think lead actor (profit) and supporting player (marketing).

-Concept of the business.  Most mission statements have little meaning. They tend to be constructed imitations lacking original thought. Statements often reflect the lowest common denominators, a commodity more than a distinct position of strength. The book stresses that in a few sentences, no more than a paragraph, everyone in the organization should be able to describe what the business is and how it plans to be successful in its chosen markets. 

Whatever gives your company a distinct and sustainable advantage over competitors needs to be identified, widely known, and applied consistently to decision-making.

"Positions can't just be established or defended. The company has to keep finding new and unexpected ways to create value," Mike Robert would say.

What's your IQ?

No, not your intelligence quotient although that's important. We're referring to the organization's "strategic quotient." If you want to assess your strategic position, share this brief survey from Mike's book with the leadership team to check for clarity or gaps in strategy and execution:

1. Do you have a well-articulated, clear statement of strategy and business concept?
 
     Yes [  ]   No [  ] 

2. Could you write a one- or two-sentence statement of that strategy/business concept?

     Yes [  ]   No [  ]

3. Do your key subordinates understand that strategy/business concept?

     Yes [  ]   No  [  ]   Somewhat  [  ]

4. Could each of your subordinates write a one- or two-sentence statement of that strategy/business concept without consulting you or each other?

     One person could  [  ]   Some could   [  ]   None could   [  ]

5. Do they use this statement as a guide for the choices they make in pursuing new products, markets, and customers?

     Use frequently  [  ]   Use sometimes  [  ]   Never use  [  ]

6. Is it used as a filter to choose or reject products, markets, and customers?

     Yes  [  ]   Sometimes  [  ]    No  [  ]

7. Have you ever sat down as a management team to try to obtain consensus as to the future direction of your firm?

     Yes  [  ]   No  [  ]

8. Was consensus obtained or are there still different visions of what the organization is trying to become?

     Total consensus  [  ]    Single vision

     Some consensus  [  ]   Single vision

     Little consensus   [  ]    Different visions
      
9. Is the organization moving in a clear direction?

     Yes  [  ]   Not sure  [  ]   No  [  ]

10. Do you have a separate strategic thinking process to determine what you want to become as opposed to how you get there?

     Yes  [  ]  No  [  ]

11.  In a brief paragraph, what is your strategic business concept? 

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(C) Bredholt & Co.