Over the length and breadth of my career in business and business management, I’ve been engaged in and involved with the development of strategies for businesses of all sizes and shapes. When parachuted into a company that is in some sort of difficulty (that’s usually the reason why I’ve been engaged), the one thing that is always presented to me as the ‘root of the problem’ is the absence of, or inappropriateness of ‘the strategy’.
And this is where the interesting and frustrating run-around starts. At the fundamental level, what should a business strategy do, what should it look like, what issues should it address and how should it be developed? The problem is that so much has been written, so many hours of seminars, so many business studies degree modules all devoted to this subject that to an extent, a point of saturation has been reached. Eyes glaze over. Yawns are stifled.
But the fact remains that a business with a clear direction and sense of purpose that comes from a well thought through business strategy will usually outperform a business that is lacking such direction. I am as cynical as anyone, possibly more so, when strategic planning is on the agenda but this arises from a complete misunderstanding of the needs and means of delivery that a business strategy must address – too much talky talky and not enough walky walky as the saying goes.
So here’s my two pennyworth on the subject which I hope makes more simple sense than many articles, books and lectures that I’ve read or attended over the years.
What should a business strategy do?
It should address the state of a business as it is, identify what the stakeholders (owners) of the business want from it, how in broad (strategic) terms this can be achieved and, most importantly, how these strategies can be turned into a clear action plan – the what, when, how, of the plan. I call this last part of the strategic plan the tactics section as I expand upon below. The point that cannot be over-emphasised, is that delivery and ensuring that delivery, is the most vital part of a well engineered strategic plan.
Here comes an acronym; POST – Position, Objective, Strategy, Tactics. And this acronym summarises the methodology I have developed and used with some success over the years. It sets out the structure of a strategic plan that leads through to the most important section – tactics (ie the delivery mechanisms), in a naturally logical manner. I summarise below;
Before any thought can be expended on the details of a plan, a realistic assessment of the state of the business must be reviewed and set down. This need not be overblown with SWOT diagrams (Strengths, Weaknesses, Opportunities, Threats), market analysis, perception plans etc but should identify at the very least; the financial position (we’re broke, we’re secure, we’re going bust etc), the position in the addressed market (dominant position, insignificant, growing, shrinking etc), any structural or staff issues and the salability of the product or service offered. The reason why this is the first section of the plan is that it’s pointless setting out objectives that are plainly unachievable within the limits of the position of the organization as summarised above.
Can be singular or plural – there may be more than one objective, but setting the objectives should be a simple statement of what the stakeholders want. I’ve often been invited in to prepare a company for sale, or more unfortunately, for closure. These are objectives. They state what the stakeholders want and therefore what a strategic plan should aim to achieve. Most companies want to improve the financial position in terms of profit/loss but some may be looking for a simple stable income stream – a cash cow objective, whereas an alternative and common objective may be to achieve a high growth in market share, sales and eventual income – a rising star objective. It is vital to understand and set out what the stakeholders want from the business in the same way that an investment consultant would need to know whether a long term low risk income generating investment is wanted as opposed to a higher risk capital growth investment. So ask the stakeholders (you?) – what do you want to achieve from this business?
The how. How do you achieve the objective(s). Remember that the tactics section will address the means of delivering the strategy so it’s important to set out in this section what the overall plan is. The most common problem to mix up strategy with tactics; the easy distinction is to think in terms of the tactics flowing from the strategy, not the other way round.
Strategic statements are usually single sentence word forms. It should be possible to say to a friend our strategy is to….. as a single sentence.
I use the definition ‘tactics’ because it naturally flows from strategy in an identical manner to military strategy and tactics. In the business sense, it can be more correctly defined as the operational plans that deliver the strategy and therefore the stake-holders objective.
This section is the most important section of the plan since it should aim to set out exactly what organizational, financial, operational, developmental plans will be put in place – and when.
At the very least, the tactics section will have a timing chart that sets out every operational plan in the time domain. Monitoring performance against this plan then becomes much easier by including milestones, achievement measures, reviews etc.
- Make sure that the objective is clear and agreed.
- Keep the strategy simple and avoid market speak.
- Base the objective and strategy on the strengths of the organisation set out in the position section.
- Monitor measure and correct the tactics (operational plans) as you proceed.
I like to use the example of the naval engagement between the British navy and the French/Spanish fleet at Trafalgar. The strength of the Royal Navy was the quality of its gunnery; in terms of fire rate and accuracy. The objective was to destroy the allied fleet for good, the strategy was to quickly get to close quarter and rely on superior gunnery to achieve the objective. The tactics were; every ship will get alongside an allied vessel and maintain close fire until the opponent was destroyed. So the famous ‘Nelson touch’ was to sail as fast as possible straight at the allied fleet without any fancy maneuvering – as simple as that.