“Know thyself” – Strategy development for businesses

The corporate strategy of smaller businesses is re-developed in the entrepreneur’s mind alone. Success in bigger organizations, on the other hand, comes from the combined efforts of many people. In order to ascertain that these people work cohesively towards the same goal comprehensive strategic plans are necessary. This involves preparing detailed action plans and entails well-developed control systems.

Some businesses function well with utilizing the same strategy over many years. Others operate in markets where they continually must reassess and recalibrate their strategy in order to adapt to continuously changing internal and external factors. Technological advances, increased globalization and changes in the global environment forces companies to shorten their strategy cycles.

Developing a business strategy is challenging. Acceptance from the organization is crucial to succeed with its intended objectives. To do so requires management’s attention and presence in order to ensure commitment from the whole organization. Not only in the development of the strategy, but also during the implementation of the strategic plan.

Market situation

Most companies today compete in global markets. New players frequently enter with innovative and creative products and services challenging established industry standards. Success is no longer correlated with size and having an established position in the market place.

Some companies apply a classical approach inspired by, among others, Porters five forces and SWOT analysis in their strategic planning. This approach can work well for industries with a larger degree of predictability, and hence strategic plans with longer time horizons can make sense.

These days however we see that strategies are more rapidly getting “outdated”. To counter corporations nowadays apply more adaptive and visionary strategy approaches. These are amongst other characterized by shorter strategy cycles and more flexible organizations.

The strategy process also needs a strategy

Managers often see time as a scarce resource and then start immediately to build the strategic plan. One negative consequence from this could be that the strategy will not be a good fit to the business. Furthermore, it can prevent a sustainable and well-anchored implementation of the strategy. It can also lead to key internal and external factors being overlooked.

Some dimensions are important and should act as a foundation of any strategy process. We will elaborate on this in the further.

Status Quo

In order to say something about where you want to go and how to get there, you must first know where you are. The outset of any strategy process should be diagnosis of today’s status. This requires a thorough examination of the business concept and the current strategy, and analysis of strengths and weaknesses. Further studies should evaluate the opportunities and threats of the industry at large and the business itself. This preliminary analysis outlines what the future might bring, and leads to an initial working hypothesis for the strategic plan.

It is better that these are not merely “top down” assessments, but that they involve relevant people from different functions within the organization. Not only does this contribute to more reflective and exhaustive reviews, but it will also make it easier implement the strategic plan later on.

Is the self-image correct?

As an enrichment to the internal investigations, the company should consult their surroundings. Input from customers, suppliers or others of importance to the performance of the business is useful to determine whether one’s own perception is consistent with others’ impression.

Gap analysis compiles internal and external evaluations. If there are significant differences between these, one should re-evaluate the preliminary working hypothesis.

Discussion forums with optimal headroom

The aim of the strategy process is that employees and management together define relevant targets and ways to reach them. Consensus around the most crucial areas are necessary to ensure that the organization as a whole takes ownership of the strategic decisions and changes that will be undertaken.

Strategy processes seeks to answer many central questions, e.g.:

  1. What do we want to achieve?
  2. What new products or services can we offer?
  3. Where do we compete? Are there new and attractive markets?
  4. What are our competitive advantages, how will we win?
  5. Which resources/capacities do we need?
  6. What management system and organizational structure do we need?

As Figure 1 illustrates, strategy processes are open ended, dynamic and continuous processes. We must therefore return to these questions occasionally.

Figure 1 – Strategy process

When choosing to divert key personnel from important day-to-day activities to involve them in strategic discussions, it is important to ensure optimal headroom in the discussions. That means both ensuring that all significant viewpoints are considered, but at the same time facilitate for sufficient progression.

Careful considerations are required when selecting attendees for group discussions. The disadvantage of including too many is that it will be difficult to set limits for the discussions. It will be challenging to reach consensus if everyone should have a say in matters. On the other hand, too few participants or too narrow participation could mean that essential areas are omitted. It could also mean less organizational support when it is time for implementation.

Furthermore, it is important to consider where in the organization real power is found and not merely include people with a position of power. When the final strategy implementation commences it is important that employees with real influence support the plans and potential changes. To achieve the strategy’s objectives require broad support from within the organization. Involvement of relevant contributors early on will increase the likelihood of this.

Solid foundation

The company’s strategy will be depended on many factors such as values, resources, culture, competence and structure. These dimensions are mapped on the diagnostic stage and it is necessary to have an active relationship with these when developing the corporate strategy.

“Culture eats strategy for breakfast”, it is claimed. It is important to be aware of how culture facilitates or hinders strategic goals and organizational change. If an organization for example has grown big and bureaucratic, it can cause obstacles if the vision of the business is to deliver innovative solutions.

Employees having the right skillset is important to achieve targets. Businesses with a strong focus on digital and innovative solutions must for example ascertain that they have resources with appropriate and adequate ICT skills to underpin this strategy.

Action plans and accountability

Based on the diagnosis of the company and its outlook, some focus areas will emerge with specific targets. Each target is then broken into clearly defined strategic initiatives that collectively form the strategic action plan.

It is important to have clear definitions of individual roles, tasks and responsibilities. Clear deadlines is important to ensure that the strategy is rolled out at a pace that the organization can handle. Responsibilities can have reciprocal and sequential dependencies. This again increases the importance of clear responsibilities and clear deadlines. Tactical considerations related to the timeline is crucial to succeed. It is important to implement the right changes at the right time. If employees see that the changes are beneficial, it creates a better basis for further willingness to change. It ensures momentum in the organization and keeps motivation up.

“In order to say something about where you want to go and how to get there, you must first know where you are”

Communication

Strategy can be perceived to be abstract in the form of visions and ambitions. At the same time, some employees may be demotivated by changes necessitated from the new strategy. A well-developed and well thought through communication strategy is important to counteract any negative effects and reduce uncertainty in the organization.

The communication plan is developed in parallel with the strategic plans. However, it is important that the main logic of the new strategy is set in stone before communicating changes internally and externally. Otherwise, one runs the risk of appearing wobbly.

Control

Prerequisite for success is continuous and close monitoring of progression. Progression or lack thereof is reported to a steering group on a regular basis.

Fitting Key Performance Indicators (KPIs) is defined to measure and ensure necessary progression. Significant delays, or significant changes to external or internal conditions, should lead to adjustments of the current plans.

Our approach

It is challenging to re-develop sustainable business strategies. Which approach suits us? What degree of involvement do we need to ensure support from the organization? How do we manage the implementation?

Often management is not critical enough of existing strategies and plans. Available time is often a scarce resource, and it will often come down to a choice between focussing on day-to-day operations or long-term strategy planning.

Mimir Consulting assists businesses as a sparring partner. Our broad background and experience from many industries will benefit our customers. We combine our understanding of “best practices”, with our independent role and our dedicated availability to assist our clients in their strategy development.

We assist companies with strategic studies, facilitation of workshops, developing strategic plans, management systems, assist in implementation etc.

We work closely with management to ensure that we together have sufficient information about the company and its industry. Customized strategy processes is crucial and through continuous cooperation, we ensure simultaneously to pass on competence so the company can continue to work effectively and purposefully with its strategy development going forward.

When two becomes one - how to execute post merger integrations