Five steps to simple strategy
Vision without action is a dream. Action without vision is a nightmare. It’s your strategy and team that connect the two, turning ideas into a scalable and profitable business.
Yet really well thought through and robust strategy is often lacking in a large number of businesses, deprioritised instead, perhaps, for product innovation (one of multiple pillars in a business) or a focus on day-to-day delivery.
But as Yogi Berra famously said:
“If you don’t know where you are going, you might wind up someplace else.”
Why is this the case?
Well, for anyone who has started or founded a business, you’ll empathise with a) how difficult it can be to transition ideas into a workable business and b) that when things do start moving, time and capital restraints force focus to predominantly be on reactive day to day business issues and deliverables – your eyes are down peddling the bike frantically without the time to survey the horizon, and it’s many twists and turns, ahead of you.
Strategy doesn’t have to be complex or time draining.
The challenge with strategy is that it’s fed and influenced by people. And people, by their nature, are unique. Everyone involved in building strategy (rightly so by the way) will have their opinion on what the right plans are. On what the priorities are and what your end goals should be.
Strategic discussions in all sizes and types of business often end up being long-winded debates, consisting heavily of subjective thinking rather than proper analysis of robust objective data and insights. As a result, it takes a very well-balanced CEO who’s committed to listening, to facilitate discussions and to channel the talk into an actionable plan that everyone is happy to sign up to and take responsibility / accountability for. And balance is a quality that doesn’t come naturally to many CEOs.
In any business time, money and people are incredibly valuable assets. But it’s time that is the one asset that we cannot increase. It’s finite and has to be used wisely. Take too long debating your strategy and vision, you might just miss the boat or run out of cash. Don’t invest enough time into it, you might just end up in the wrong place altogether.
Therefore, the adoption of a simple structure for developing strategy becomes vital in helping you to draw out the right questions, the right answers and the right priorities. And then, critically, achieving alignment to and accountability of the different elements of your plan, so you can be confident that progress will be made.
5-steps to simple strategy.
‘Start with the end in mind’. A simple piece of advice that is the absolute basis of simple strategy.
But the end is not actually the product or service that you’re developing and / or delivering. It’s the problem you’re seeking to solve.
Step 1: Identify and quantify the problem (your ‘why?’)
Every good business exists and lasts because it’s solving a problem for customers. Whether it’s a problem that the customer knows they have or not is up for debate (think Apple’s Ipod), but never the less, today’s problems are tomorrow’s opportunities.
Therefore, without judgement or pre-conceived ideas on the fantastic products or services you’re wishing to develop and deliver, start with clear minds and adopt the position of the customer or consumer. Better still, involve them in some way through research and in review of available qualitative and quantitative data insights. And ensure you are making no subjective assumptions.
You’d be surprised how many businesses fail because they simply, and with good intentions, felt that their solution (their product or service) would be attractive to customers, before realising after huge amounts of effort (and money) that the product market fit was lacking (in fact, 42% of failed start ups cited ‘no market need’ as a key reason for failure).
After studying the problems, frame it into a very clear problem statement that is clearly understandable and relatable, and where helpful, retain one to two key external metrics / KPIs so you can monitor if this ‘problem’ is growing or shrinking in size as you’re pursuing your solution.
This is now the absolute core of your business - when asked ‘what does your business do?’ you should be able to quickly explain the problem you’re fixing (the why).
Step 2: Create a clear vision and purpose (your ‘impact’)
Whether you prefer to call it a ‘vision’ or perhaps a ‘north star’ a vision is there to paint a picture of what the long-term impact of your business will be.
It’s there to inspire your people, to give them real purpose. It’s there to create compatibility with your customer base, investors and partners. But, perhaps most importantly, it’s there to keep you on course and to keep you motivated and driven in good times and in bad.
Your vision statement doesn’t have to be too specific or in any real way measurable. But it should be relatable. It’s your direction of travel, your ultimate destination. When you’ll get there is not important in your vision. It’s not what you’re doing or how either. Instead, it’s the impact your business will have.
While specific deadlines in your vision are not needed, a consideration of the ‘horizon’ is. There is no set rule here, but typically you should be thinking about the 15 to 30-year period. Beyond that is too unpredictable (who knows what the world will look like then?). Less than that risks you not being bold or stretching enough (which in turn might increase the risk of competitors pulling ahead of you).
To illustrate the connection between steps two and five in this process, let’s use the very famous example of John F. Kennedy’s 1962 senate speech about putting a man on the moon. The vision was this:
“We set sail on this new sea because there is new knowledge to be gained, and new rights to be won, and they must be won and used for the progress of all people”.
The vision is broad but the purpose is clear. ‘Space is infinite and we choose to explore it to gain new knowledge’ (and some other stuff over establishing power beyond the earth, but let’s gloss over that for now).
September 12th 1962
“We set sail on this new sea because there is new knowledge to be gained, and new rights to be won, and they must be won and used for the progress of all people. For space science, like nuclear science and all technology, has no conscience of its own. Whether it will become a force for good or ill depends on man, and only if the United States occupies a position of pre-eminence can we help decide whether this new ocean will be a sea of peace or a new terrifying theater of war. I do not say that we should or will go unprotected against the hostile misuse of space any more than we go unprotected against the hostile use of land or sea, but I do say that space can be explored and mastered without feeding the fires of war, without repeating the mistakes that man has made in extending his writ around this globe of ours.
There is no strife, no prejudice, no national conflict in outer space as yet. Its hazards are hostile to us all. Its conquest deserves the best of all mankind, and its opportunity for peaceful cooperation may never come again. But why, some say, the Moon? Why choose this as our goal? And they may well ask, why climb the highest mountain? Why, 35 years ago, fly the Atlantic? Why does Rice play Texas?
We choose to go to the Moon. We choose to go to the Moon... We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win, and the others, too.”
Step 3: Set your first mission (your ‘what?’) & single performance metric
Your mission, or BHAG if you’re a Jim Collins fan, is an iteration of your business. It’s a waypoint on your journey towards your vision. You will likely revise your mission numerous times during the period of your current vision (e.g., expansion or diversification).
Again, there are no set rules on time but, typically, you’ll be looking at a one-to-five-year horizon.
While your vision is there to inspire dreams and positive thoughts of the future, your mission is there to inspire and drive action. As a result, it needs to be SMART (specific, measurable, achievable, relevant, time-bound).
Continuing with JFK’s speech, the mission was:
“We choose to go to the moon in this decade … because that goal will serve to organise and measure the best of our energies and skills, because that challenge is one we’re willing to accept, one we are unwilling to postpone, and one we intend to win.”
That mission proved to be over a nine-year horizon, but it focused the incredible minds (and money) of NASA onto a clear waypoint in the long-term goal for space exploration.
In a business, where it’s all about defined outcomes (notably profit but increasingly impact in other areas such as the environment), this is the stage that it is vital to adopt a single performance metric. A single measure that will act both as a barometer against which you can check your business is on track and trending in the right direction, but also one in which you can test the likely impact of any strategic decision.
To be really impactful, a single performance metric should be a ratio as opposed to an absolute. For example, a simple yet vital metric might be ‘profit per employee’ or ‘profit per customer transaction’. Or if your business is pre profit / revenue, perhaps something like ‘new users per day’ or ‘valuation per employee’.
While there are other measures of impact for a business, such as environmental impact, innovation or opportunities for people, a fundamental need for a business is to make a profit and become self sufficient. After all, only with financial self sufficiency can the business make a lasting impact in non financial areas such as planet and people (B-corp requirements). Therefore it usually makes sense for this single performance metric to be a financial one, though it ultimately has to be right for you business.
Once settled upon, this measure should be set in concrete and monitored regularly. When you’re knee deep in delivery and having to take rapid decisions on things like hiring, investments or the prioritisation of tasks, it might just be the thing that keeps you on the right path.
With a clear mission and a single performance metric, the hard work then begins.
Step 4: Identify and target your strategic imperatives (your long-term ‘hows?’)
Quite often a company’s strategy is left as a vision and mission statement. But even a clear mission can be lost when minds focus back onto the day to day.
It’s important to consider here that a mission is a business wide objective. As we discussed in the article on RACI (read here), if more than one person is accountable, no-one is accountable. So, which ‘one person’ is accountable for the delivery of a mission? The CEO? The founder? The Chairperson?
If pressed into an answer, it’s ultimately the CEO. However, the mission is too big for one person alone. It has to be broken down into more digestible pieces. Pieces that can be allocated out to various accountable people as multiple strands of strategic focus.
And that’s what strategic imperatives are. They’re the bite-sized chunks that allow you to digest the massive elephant which is your mission (and, ultimately, your vision).
To identify your strategic imperatives, there are two simple questions that you need to ask yourselves when looking at your mission:
1. What is absolutely vital to build / deliver / do in order to achieve our mission?
2. What will make us fail?
It’s easy to get carried away here, absorbing yourselves in minutiae of detail and over-exaggerating the critical nature of every component of the business. Try to avoid that. Focus on the really big, chunky items. Product. Money. Talent. Brand. Partners. Users / Customer growth. Licenses. Etc, etc.
The aim is to settle on two to six critical ‘strategic imperatives’ or ‘ultimate objectives’ that must be fully SMART and that, collectively, serve to break down the mission into clearly quantifiable, understandable and deliverable goals. Goals that, if achieved in full, will assure that your mission will be accomplished. But even if just one fails, will result in failure. They are make or break.
Once developed, ensure you complete a RACI matrix assigning senior level accountability to each one, and ensure any applicable metrics / KPIs are tracked and reviewed regularly to provide any early warning on things slipping.
In the example of NASA’s mission, the building of a landing craft capable of taking two astronauts to the moon’s surface and then reuniting them with their spacecraft would have served as a critical imperative.
Step 5: Implement OKRs (your near-term ‘hows?’)
Finally, now the thinking, debating, analysing and deciding has been completed, it’s time for the doing. It’s time to methodically prioritise and execute the goals that will work you towards your mission.
And there’s no better way of connecting strategy to delivery than implementing a robust OKR process.
Have a read this article on implementing OKRs for more information.
At beating hearts we work with numerous small, medium and large businesses to help them to design and lock down their strategy, with feedback consistently saying that the support of an independent facilitator was vital in keeping them on track and on pace. To find our more, get in touch.