Part I reviewed the definitions of strategy offered by Alfred D. Chandler Jr., Kenneth R. Andrews, Michael E. Porter, Thomas J. Peters and Robert H. Waterman Jr., Richard N. Foster, Andrew S. Grove, and Henry Mintzberg, who are generally thought to be (among) the preeminent strategists of the last 50 years. It then indicated why each, on its own, was not sufficient. Part II looked at the definitions provided by Richard Whittington, Gordon Walker, and Robert Wittman and Matthias P. Reuter and derived not only some generic approaches to strategy, but many of the essential elements that a strategy needs to have — which allowed for the derivation of a working definition of business strategy. This was a good start, but it didn’t yield much insight as to how an organization goes about getting it. Thus, Part III discussed a few of the “strategy guides” and “strategy frameworks” that were out there and concluded that most were either specialist frameworks that could only be applied in certain circumstances (like the Blue Ocean Strategy Framework, the McKinsey 7-S Strategy Framework, and Value Stream Mapping) or simply lists of critical issues and requirements that must be addressed in the formulation of the strategy.
This post — which attempts to circumvent the needless complexity surrounding strategy formulation frameworks when the basics are pretty straight forward — is going to present a simple, generic, framework for strategy formulation that anyone can use to get started. Like the working definition of strategy, it might not be perfect, but as with the working definition of strategy, there is not a better one that’s as generically useful and as easy to understand. Basically, “strategy” is not some pie-in-the-sky PowerPoint production that can only be produced by a 50K+ a day consulting firm. It’s something that anyone with a decent mind for business and a decent understanding of their operations and market can do. And it doesn’t have to be fantastic either … good strategies can get consistently good results, which brings stability — which is probably the most important thing in turbulent markets. (Everyone in an organization has a lifetime to get rich. Forgetting that is what gets businesses into trouble.)
So what does the framework look like? Simple. It looks like this:
It starts with a Vision that is created by the organizational leaders based upon a solid understanding of their business, their market, and potential opportunities.
Once the (initial) Vision is decided upon, a Gap Analysis is conducted to determine the gap between where the organization is and needs to be. This Gap Analysis is based upon an understanding of where the organization currently is and what is needed to execute the vision.
Once the Gap Analysis is completed, an Execution Plan is derived by the stakeholders that will take the organization from where it is to where it needs to be. The execution plan outlines the current organizational capabilities that will be applied, new capabilities that will need to be added, and outside capabilities that will be utilized. When (a draft) of the plan is completed, it is analyzed against the Gap Analysis to see if it will close the gap within a target time frame with a reasonable probability. If the Gap Analysis is adequately addressed, the vision and execution plan become the organizational strategy. If the Gap Analysis is not adequately addressed, the remaining gap is computed and the plan is re-worked, or, if it is decided that the gap probably can’t be closed, the revised Gap Analysis is sent to the C-suite who can adjust the Vision accordingly.
The only other component is Research — of which the organization has to do lots. The organization needs to know where it is now, what capabilities it has, what resources it has to work with, what it’s doing, what it could be doing, what additional capabilities or resources it will need to do something else, etc. Note that this is where the other, more specialized, frameworks become useful. Where is the organization now? (MACS (Market-Activated Corporate Strategy Framework) Where is the market likely going? (Scenario Planning) Can the market be redefined? (Blue Ocean Strategy Framework) How will the market reactions change to a change in strategy? (Porter’s Five Force Analysis) How will IT help with execution? (McKinsey 7-S Strategy Framework) Can the execution plan be leaned? (Value Stream Mapping)
The effort is done when the strategy addresses the working definition and answers the six questions everyone was taught to ask in elementary school — the who, what, when, where, why, and how. In other words, when:
- the VISION specifies what the organization is going to do (be the high-value provider), where the organization is going to do it (in North America, Europe, and Australasia), and implicitly answers the why (because buyers do not have a high value choice) and
- the EXECUTION PLAN specifies who (engineering, marketing, sales) will be doing what (designing a new product, launching the campaign, visiting key retailers), when (this quarter, next quarter, next year), and how they will be doing it (utilizing an expert design firm’s services, capitalizing on new media, holding in-person displays).
That’s it. While it might require a lot of work (and a whole lot of research), new methodologies to enable and inspire collaboration (such as the QuEST framework specified in Nilofer’s The New How), and quite a bit of patience (as a fair amount of iteration will be required until the organization gets the process down and understands what sort of research it will need to conduct in advance of each step), there’s no magic involved. Strategy is within everyone’s grasp.