The Art and Science of Business Strategy
At Strategy Partners, WE BELIEVE
that strategy is the indispensable foundation of a successful business.
We are able to quickly zero in on the weak spots in business plans or
strategies because we have developed proprietary tools and methodologies
like the ones below.
The Logic of Business Strategy Competitive
Advantage top Around this diagram, four goals are listed: differentiation,
growth, profit, and unique capabilities. When a business achieves all
four of these goals, it has achieved that often pursued – but rarely
achieved or maintained – state called competitive advantage.
A business has a competitive advantage when...
(1) Target customers see it as providing superior value
(2) It is able to grow
(3) Its costs are competitive
(4) It produces consistently higher profits
(5) Competitors find it very difficult to replicate its unique capabilities
As a result…
(6) It better attracts and retains investment capital
(7) It better attracts and retains talent
Clockwise loops around this diagram represent the realization of business strategy. The working capital required to implement a strategy (or business plan) is a function of the time it takes to complete a loop.
Look a little deeper at the relationships between the elements in this diagram and these types of dynamics will come into focus:
A carefully defined target market is essential to developing products and services that are better than alternatives
To husband resources and to accelerate learning, it is preferable to initiate many small iterations, rather than a few big iterations
Not being able to scale throughput to meet demand is a common reason for failure
The inability of a business to attract and retain talent directly affects its ability to compete and potential returns
Launching a Business Concept top
When working with established businesses, one of the first questions that we ask is "what are your past successes and failures?" Often there is disagreement among managers – what one manager sees as a failure, another sees as a success.
When working with new ventures, we ask another question, "how will the management team know if their business concept is not working, so that they can change their approach?"
Both questions test the mindset of a business towards achieving strategic traction (i.e., successfully implementing a strategy). When strategies are not expressed in a way that underlying premises can easily be disproved they can be hard to redirect an business away from–despite overall evidence that demonstrates that they are not the winning path to take. The result of these poorly defined strategies is that they hinder learning and often squander resources. The point is that the difference between a good idea and a great idea is that a great strategy is expressed in a way that if it is wrong it can easily be proven wrong.
Developing and Implementing Business Strategy
The diagram above shows this process as applied to creating strategic traction in a business. The left half is about developing promising business strategies and the right half is about disproving them.
The way to express a strategy so that it can be proven wrong is to break it down into collections of explicit if…then statements. We call these statements strategic hypotheses. Each statement specifies a set of conditions that the company intends to create and the expected results.
Elements of a business strategy are prioritized then rolled out in a specific sequence. This is what we term a "strategic initiative portfolio." Priority is given to those actions which are expected to provide the biggest return while also being most pivotal to disproving a strategy overall. The result is an action plan which is most likely to give a business strategic traction, while conserving resources. This approach also improves learning and competitive responsiveness.
The goals of these steps in developing and implementing a business strategy include:
Assess Strategic Situation — to assess the current and future competitive strengths and weaknesses of the business and to elaborate on potential opportunities and threats
Develop Strategic Intent — to specify the strategic logic that will drive the success of the business in four areas: fielding a superior offer to customers, managing growth, maximizing profit and improving/protecting/controlling critical capabilities
Articulate Culture, Values and Behaviors — to specify the fundamental beliefs and values that underpin a business’s approach and to clarify the types of behavior that these core tenants mandate
Define Business Model — to evaluate the ability of a business to scale throughput to meet demand and to set clear priorities among product/markets in terms of which will drive profits and which will drive growth
Clarify Strategic Hypotheses - to make visible the fundamental assumptions that underpin a strategic direction so that they may be tested for validity
Prioritize Strategy Initiative Portfolio - to specify and prioritize those initiatives required to achieve a strategy
Define Strategic Performance Measures — to specify the results that a strategy is expected to achieve, how those results will be recognized and how performance will be communicated and rewarded
Define Functional Strategies — to specify the specific roles that functions will play to support the overall strategic direction of the business
Design Strategy Communication — to communicate the business’s strategy inside and outside of the organization
Monitoring and Updating — to put in place mechanisms to monitor the performance of a strategy and to revise the strategy as required
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