Creating a new strategy is no easy task. You want to make the right choices, engage your organisation and go through a creative and inspiring process. A good strategy challenges and energises.
There might be no other topic with more misconceptions. What is a good strategy? Is it a vision of the future, a concrete plan for next year or a selection of products and markets? We see strategy as a combination of a clear future positioning and a concrete plan to get there.
A clear future positioning entails an understanding of:
- what makes your company unique and differentiates it from competitors
- markets, products and customers, and
- how (both economic and social) value is created
A concrete plan involves a clear understanding of:
- strategic choices and resources to realize the positioning, and
- the sequence and coherence between strategic choices.
Create a good strategy.
Jester Strategy developed a unique approach to create a good strategy: the Strategy CUBE. It consists of six different steps that ensure that you get to a differentiating and actionable strategy.
1. Design brief
Strategic challenges
In the initial step, you determine the strategic challenges of the organisation. We strongly advocate for problem-driven work. A good strategy provides answers to current issues facing the organisation. To formulate effective strategic challenges, analyses can be helpful, but in our experience, a (group) discussion with the board and management is crucial. The leadership of the organisation typically has a clear understanding of strategic challenges: the issues that are either threatening or promising for the organisation.
Design criteria
Design criteria delineate your strategy. They determine the scope of examination, the possibilities, and when a new strategy is considered successful. For example, design criteria clarify whether there are specific expectations in terms of financial, social, or environmental performance. The design criteria serve as parameters against which the end result is evaluated. We often involve the Board of Commissioners in formulating design criteria, as they represent the interests of all stakeholders, and it is beneficial to know their expectations early in the strategy development process.
2. Outside-in analysis
Insight into opportunities and threats
Through an outside-in analysis, you gain a clear understanding of the external context in which your company operates. This involves examining trends, changes, and surprises. We also consider your immediate surroundings, such as customers, competitors, and the macro-environment.
Immediate environment
By the immediate environment of the organisation, we refer to the playing field in which the organisation operates. This field includes customers, competitors, partners, and suppliers, all of whom have a direct influence on the organisation. Valuable analyses include a competitor analysis and a stakeholder analysis. An analysis of the organisation’s immediate environment reveals concrete opportunities, threats, and strategic options.
Macro-environment
An analysis of the macro-environment examines influential developments in the broader context in which the organisation operates. This involves considering political, economic, societal, technological, ecological, or demographic factors. Questions addressed may include the impact of a war, the emergence of new technological standards, the future societal landscape, or the consequences of an aging workforce. When there are significant uncertainties in the environment, future scenarios become highly useful. They paint pictures of how the future might unfold.
3. Inside-out analysis
Strengths and vulnerabilities
Inside-out analyses examine the organisation from within, helping to gain a clear understanding of the organisation’s strengths and vulnerabilities. This is crucial in finding answers to strategic challenges. Strengths provide a solid foundation for building strategic options, but vulnerabilities may eliminate certain strategic choices.
Business model
A key analysis is that of the organisation’s business model—how the organisation creates value for customers and stakeholders. We use the business model canvas for this purpose. This proven model allows a sharp examination of the organisation’s distinctive capabilities and how it can further differentiate itself.
Portfolio
While the business model reveals added value, this value is manifested in products and services. Conducting a portfolio analysis helps determine which products, markets, and customer segments hold significant potential and which directions may be less promising for the future.
4. Strategic options
Creative solutions for organisational challenges
Strategic options provide the answers to the challenges facing the organisation. Identifying strategic options goes hand in hand with outside-in and inside-out analyses. Solid analyses offer inspiration for generating solutions. At the same time, contemplating strategic solutions leads to a new need for information and analyses. Investigations are required to determine the feasibility of a strategic option. In other words, it involves an iterative process of thinking, researching, brainstorming, and so forth.
Logical thinking and creativity
Discovering distinctive strategic options is a blend of logical thinking and creativity. It’s essential to build on strengths, vulnerabilities, opportunities, and threats identified in the analysis phase. However, it’s also crucial to use intuition, instinct, and creativity to create distinctiveness and uniqueness, differentiating yourself from competitors and meeting customer needs. To encourage creative thinking, it’s important in this phase to organise inspiring and well-prepared group sessions.
5. Strategic choices
Making choices based on design criteria
In step 5 of the CUBE, choices are made, and a strategy is developed based on these choices. To arrive at decisions, you use the design criteria from step 1. The key is to make a balanced set of choices in this phase of the CUBE, providing an effective response to strategic challenges and aligning with the design criteria.
Strategy
Once a balanced set of choices is in place, it’s essential to articulate the strategy coherently. The strategy always clarifies how the organisation will differentiate itself from competitors and meet customer needs in the future. The focus on markets, customer segments, and products should be clear, with a vivid understanding of value creation.
Vision
We develop the strategic vision after crystallizing the strategy. The vision specifies the direction the organization chooses for the planning period. The vision essentially serves as an intelligent summary of the underlying strategic choices. A well-crafted vision provides direction, inspires, and is directly traceable to underlying decisions. We do not advocate determining a vision at the start of a strategy project. At that point, there is simply insufficient information to base a vision on, and the likelihood of creating a vision that is unfocused, unrealistic, or disconnected from the content is high.
6. Strategic planning
From the big picture to concrete plans
In the final step of the CUBE, the emphasis is on making the strategy concrete and tangible—actual planning. Strategic planning is a crucial step that often receives insufficient attention. Organisations frequently put a lot of effort into developing a new vision but fall short in the concrete elaboration of strategic choices.
Objectives and guiding principles
To make the vision sufficiently concrete, it’s essential to translate it into both strategic objectives and guiding principles. Strategic objectives indicate how the organization measures success, often quantified in terms of market share, innovation, or growth at the end of the planning period. Guiding principles are the translation of the vision into employees’ actions, serving as guidelines for behavior.
Performance indicators
In the execution of the strategy, performance indicators signal whether you’re on the right track and progressing fast enough. They enable learning from results. We distinguish indicators for results and effort. Result indicators guide toward the desired outcome of the strategic choice, while effort indicators articulate how the organisation intends to achieve the result.
Strategic actions
Strategic actions provide a concrete description of how the organisation’s management envisions the execution at the time of developing the strategy. Timing and ownership specify when strategic actions are best executed and which individual or department is responsible for their implementation. Elaborating a strategy to the level of actions and owners positively influences implementation ease and the ability to learn from results over time. The more specific a strategy is, the easier it is to determine why a result was or wasn’t achieved—was it due to the choices themselves, the effort, and so on.
Ready for the future
We proudly present our new book ‘Klaar voor de toekomst. Ontwerp een effectieve strategie in 6 stappen’. Want to learn more about our unique strategy-formulation method, the CUBE? Order your copy at managementboek.nl of bol.com.
