Developing a strategy is important, but it is even more important to spend time and effort explaining the drivers, what the goal looks like and, most importantly, what everyone needs to do (and not do) to get there.
Want to know how we help our clients develop an executable strategy and successfully move from strategy to action?
We start the strategy work when the business objectives are formulated. Here is an overview of the strategy work: We divide the work into three phases; analysis, formulation and implementation.
Anchor's process for developing and implementing a strategy
Jointly describing where the company stands, what customer needs you see and trends from the market and competitors is incredibly useful. It gives everyone the same basic understanding of what the reality out there is.
Those of you in management often have different pictures of what the current situation looks like within the company. Take time to get together, preferably with the help of uncolored outside experts to discuss your business. Think about what you are good at and what you should not do yourself, what competitive advantages you have. Feel free to do some form of SWOT analysis.
Let's take an example of a fictional medtech company:
They are very good at research and developing new implants that work very well. However, manufacturing and distribution are not going so well. Several of their competitors are in the opposite position, they can manufacture and distribute efficiently but cannot develop new products.
Define your company's customer segments and their needs. Follow up with how your company's offerings (products and services) meet them. Think about what the real need is - avoid looking only at what they buy or use today. A new innovative product or service can disrupt a market, as smart phones did in the 90s.
Try to define your place in the market. Analyze how the market is evolving over time and how customers, competitors, suppliers and authorities are likely to act in the future.
For our inventive medtech company, the analysis shows that the population is getting older and will demand other types of implants in the future. New surgical techniques mean more opportunities to successfully perform implants. There are not many competitors in implants and the market is growing strongly year after year. The biggest hurdle is regulatory approvals.
With the insights into the company's strengths, weaknesses and opportunities, the next step is to formulate a strategy and create a vision. It should show how the company will be driven forward. The strategy should be easy to understand, clear in how it makes the company successful and show what to focus on. Don't forget to explain what to stop doing and why. We often work with a mission statement in combination with the strategy that shows how the company will get there. The strategy usually extends 3-5 years into the future.
The mission statement and strategy should be as clear and concrete as possible. They should have business objectives set for the different parts of the business. The objectives may be challenging, but must be realistic within the timeframe of the strategy.
For our fictional example, it can be expressed as follows:
Goal: "For the entire company, we aim to increase sales to three billion while maintaining profits by 2025. To ensure continued growth, we need to develop more innovative implants and get existing implants approved for new markets."
Strategy: "To reach the 2025 target, the number of employees needs to be increased significantly, the manufacturing cost reduced by 25% and investments made in a number of areas, mainly research and compliance. We will only use subcontracting, which means that our factory will be phased out and the number of partners will increase. Increased digitalisation is necessary to manage research, compliance and logistics in a safer and less resource-intensive way. To drive this change effectively, we are setting up a coordinating project office."
A common error in strategy work is that it becomes scattered and difficult to follow up. The purpose of the strategic focus areas is to formulate a handful of areas that are understandable and central to achieving the goal.
Work out the focus areas based on the drivers and the vision. Ensure that each focus area has a measurable target that is regularly monitored.
For our fictional company, we formulate the following strategic focus areas:
A strategic scenario describes one of several alternative ways to achieve a goal. In strategy work at larger companies, we sometimes develop one or two alternative strategic scenarios that can be prepared in case conditions change during the life of the strategy, for example if a recession does not abate as expected.
Please read our previous article "Why do you need your management team to understand how your business works?" for more information on how we work with scenarios.
The strategic action plan (or roadmap) is a breakdown of the strategy that shows what needs to be done and when it should be completed in broad terms. It is a good communication tool and can show in a pedagogical way how the company will move towards the target image.
The action plan covers the same time horizon as the strategy. The level of detail is highest at the beginning and decreases towards the end of the plan. It is often a waste of time to try to plan in detail far into the future as conditions can change.
Involve as many people as possible from the company in the development of the action plan, as this creates buy-in and commitment.
Start by reviewing your current project portfolio, i.e. the projects (or programs for larger companies) that are already ongoing and planned. Sort all projects into your strategic focus areas to see which ones overlap or are missing. Add cross-cutting initiatives or projects with objectives, budget and owners for areas missing from the current project portfolio. Purge the project portfolio even if it is painful - if a project is not helping to achieve the vision, it should be closed.
This is the action plan for our example company:
Increase your chances of success by establishing a stable change mechanism and culture in your company. Leadership and an intelligent project office are important elements to put in place early on, especially in companies that are growing rapidly and changing their organization. The project office is continuously responsible for the project methodology, synchronization and follow-up against the target image.
Continuously monitor the success of each project and its dependencies on other projects, otherwise the whole will not be executed according to the goal. Be prepared to support critical projects that slip so that the whole is connected.
Planning is a process that is not complete until everyone affected has understood their role. Communication is facilitated by the fact that more employees have been involved in the discussions on the target image and strategy.
Set aside time to involve as many people as possible. Try to find ambassadors who are spread out in different parts of the company. Help the ambassadors find ways to communicate so that their colleagues see and understand the value of the changes. Make sure there is time to explain to everyone the choices they have made, the benefits of the strategy and how your department will be affected in the short and long term in their daily work.
Give line operations time for transition. Communicate continuously with ambassadors and managers to ensure that all "old" customer segments and products are phased out. Update incentives to reward the right focus, i.e. those who remove old that is no longer aligned with strategy and build new that is aligned with strategy.
A good strategy and action plan becomes a steering tool for the company that leads the business towards the set goal, while a poor strategy without an anchored action plan soon falls into oblivion.
Don't let go of your projects and line activities! They must lead towards the strategic objectives, otherwise your company will not be able to execute the strategy.
Continuously measure the objectives of your strategic focus areas! Monitor both the changes and the line work according to the action plan.
Evaluate, update and communicate the strategy and action plan on an ongoing basis, preferably annually ahead of the budget process.
It can be difficult to see the big picture, people often think in terms of individual departments and not the whole picture and patterns. It can also be difficult to see and solve problem areas.
The problems are often caused by internal rifts based on fear of conflict, anxiety about change or poor leadership. Using an external party to mediate and explain the value of the whole reduces the risk of the action plan becoming 'infected' by the problems.
Get help from an external party who is used to leading change, communicating the strategy and implementing it in daily work. Read our upcoming article and video "Change management - the key to successful change" to find out more about how to succeed with your action plan.
Read also our previous articles for senior managers:
At Anchor, we are experts in supporting your efforts to improve strategies, market offerings, business processes and IT support.
We are happy to help you analyze your current situation, formulate a strategy and help implement it.
