Crafting Strategy

A well-thought-out and logical strategy will enable your group to accomplish its objectives and contribute to the larger organization s competitive edge. A strategy defines what your organization will do and, critically, what it won t do.

The fundamental strategic questions concern customers, capital, capabilities, and commitments. Use the following list to quickly sketch out your unit s strategy.

• Customers. Which set of existing customers will we continue to serve? Which markets are we going to exit? What new markets are we going to enter, and when are we going to do it?

• Capital. Of the businesses we will remain in, which will we invest in and which will we draw cash from? What additional capital is likely to be required and when? Where will it come from?

• Capabilities. What are we good at and not good at? What existing organizational capabilities (for example, a strong new-product development organization) can we leverage? Which do we need to build up? Which do we need to create or acquire?

• Commitments. What critical resource commitment decisions do we need to make? When? What difficult-to-reverse past commitments do we have to live with or try to unwind?

It is beyond the scope of this book to delve deeply into business strategy, but excellent resources are available to help you answer these questions. (See the suggestions in the Recommended Reading section at the end of the book.) Our focus here is on assessing strategy by looking at its coherence , adequacy, and implementation.

Assessing Coherence

Does a logic underlie the market segment choices, products, technologies, plans, and goals that compose the strategy? Assessing whether the elements of a strategy fit together calls for looking at the logic behind it to ensure that it makes sense overall. Have the people who developed the strategy thought through all its ramifications and the practical aspects of implementing it?

How do you evaluate a strategy s logic? Start by looking at documents that describe your group s strategy, such as strategic plans and mission statements. Then disassemble the strategy into its components ”markets, products, technologies, functional plans, and goals. Ask yourself: Do the various dimensions of the strategy support one another? Is there a logical thread connecting these various parts ? To be more specific, is there an obvious connection between market analysis and the group s objectives? Does the product-development budget jibe with the capital investments projected in the operations part of the strategy? Are plans in place to prepare salespeople for new products in the pipeline?

If the strategy makes sense overall, you will spot such connections easily.

Assessing Adequacy

Is the strategy sufficient for what the group needs to do in the next two to three years ? Will the strategy help your group support the larger organization s goals? Your group s strategy may be well thought through and logically integrated. But is it also adequate? That is, will it empower the group to carry out what it needs to do to succeed ”and to help the larger organization succeed ”in the next two to three years?

To assess adequacy, use these three approaches:

1. Ask some probing questions. Does your boss believe the strategy will provide enough return on the effort your group will expend to implement it? Are there plans in place to secure, develop, and preserve resources with which to carry out the strategy? Are profit and other targets high enough to keep the group on the right track? Is enough money earmarked for capital investment? For research?

2. Use the well-known SWOT method: Analyze the strengths, weaknesses, opportunities, and threats associated with the strategy. ^[2] Here s an example of each:

   • A strategy strength: Flexibility to develop and launch new products in response to rapid changes in customer preferences

   • A strategy weakness: Overreliance on a few aging products

   • A strategy opportunity: A new market that your group might serve by extending an existing brand

   • A strategy threat: A competitor that is entering a core market with a superior new technology

3. Probe the history of the strategy s creation. Find out who drove the strategy development process. Did they rush the process? Drag it out? If the former, they might not have thought through all the ramifications. If the latter, it might represent a lowest -common-denominator compromise that emerged from a political battle. Any mistakes during the development process could compromise the strategy s adequacy.

Assessing Implementation

Has the strategy been implemented energetically? If not, why not? Next, look at how your group s strategy is being implemented ”what people are doing, not what they are saying. Doing so will help you pinpoint whether problems stem from inadequacies in strategy formulation or strategy implementation . Ask yourself these kinds of questions:

• Are the performance metrics specified in the strategy used to make day-to-day decisions?

• Are the performance aspects that management actually uses consistent with the strategy s emphasis? What goals does the organization seem to be pursuing?

• If the strategy requires teamwork and cross-functional integration, are people acting as teams and collaborating across functions?

• If the strategy requires new employee skills, is a training-and-development infrastructure in place to develop those skills?

Your answers to these kinds of questions will tell you whether to push for changes in your group s stated strategy or in its implementation of the strategy.

^[2] The SWOT framework was originally described in the late 1960s by Edmund P. Learned, C. Roland Christiansen, Kenneth Andrews, and William D. Guth in Business Policy: Text and Cases (Homewood, IL: Irwin, 1969).