As an entrepreneurial leader, you know that no matter what you do there will be risks and obstacles to overcome; it’s just part of the game. What matters most is how you approach these challenges to give yourself the best chance at success. That’s why I want to share with you our guide for developing your business strategy.
Developing a business strategy is hard
The challenge of developing a business strategy is that the process can be very complex. It’s never a one-and-done exercise and is constantly evolving so it’s best to view strategy development as a journey.
When you imagine what the future of your business looks like, is also when you develop your strategy. You need to clearly identify the reality of your business today and set plans in motion to achieve that vision. Because your business’s reality of today or vision is certain to change over time, this process becomes a moving target repeated regularly.
To use an analogy to illustrate this point; your strategy functions like a roadmap such as Google Maps. It directs your team’s action towards reaching a destination. As you move further from your starting point (a familiar environment) the more uncertain the journey becomes and the more you rely on a guide towards reaching your destination. Now, imagine if you could fly overhead, study the landscape and anticipate the obstacles, and then use that insight to map out a clear path – that’s your strategy.
Because every business is unique, there is no perfect one size fits all definition of business strategy or template that you can use. To help you on your strategy development journey, we’ve outlined 7 common steps which you can use as a reference to guide your process.
Create A Clear Vision Of The Future
Setting your vision requires imagination and the ability to project yourself into an uncertain future. So how do you do that? Combine the trends in your market and your business’s purpose. This will inspire an image of what your future will look like.
You want the vision to inspire people to work for/with the business and act as a guiding light for future decisions. The goal is for the vision to be so clear that anyone in the business can picture themselves working in that future world.
There are a few ways of capturing your vision. The most impactful ones are created in the form of a story using both words and pictures. You’ll need to be able to communicate this vision to employees, clients and suppliers. So choosing a format that best suits that context is an important choice.
The three most popular formats are:
1. Short memorable vision statements.
- Wikipedia: “A world in which every single person is given free access to the sum of all human knowledge.”
- Harley Davidson: “To fulfil dreams through the experiences of motorcycling.”
- Intel: “Utilize the power of Moore’s Law to bring smart, connected devices to every person on earth.”
- Samsung: “To lead the digital convergence movement.”
2. A vivid description of the future.
To be the change you want to see, first, you need to envision the change you want to be. A vivid description is a tool that combines the businesses vision with the desired cultural principles to predict what the world will look like when you succeed. Ultimately, you want this to form a picture in the readers’ imagination.
To create this picture you can describe:
- what a day at work would be like;
- how employees are interacting with each other;
- how employees are interacting with clients;
- what type of clients you’re working with;
- what the impact the business is having on society, etc.
3. Videos or written stories of the future.
Similar to the vivid description, companies often use their vision as part of their culture videos to communicate their intentions and inspire their people to move forward. Below is an example from Bic highlighting their company vision as part of their 75th birthday celebration.
Understand The Reality Of Today
Now you have a clear picture of where you’re going. Then you need to know where you’re starting from and what conditions you’re likely to experience along your journey. To continue on the map analogy, you’ve entered your destination now you need to put in your starting point. If your starting point is inaccurate, it’s very easy to get lost and lose momentum from the offset.
There are a variety of tools that you can use to identify the reality of your business today. We’ve created the below shortlist and overview of some popular tools:
Business Model Canvas - Strategyzer
This tool condenses your business into 9 blocks or lenses to view your business. In clarifying your business model, you’re able to easily spot opportunities to make improvements and see where your critical dependencies are.
This is a classic tool created in the 1970s. The point of this tool is to identify what makes your business tick and highlight what needs to change to realise your full potential.
This is a broad external environment map used to identify elements like industry forces or customer trends. You can use a variety of tools and frameworks to uncover these such as an external trends analysis or market forces analysis.
This tool’s focus is to identify who your business is reliant on and for what. This is usually used in the context of a risk mitigation or the planning phase for implementing your key strategies.
This is a traditional business management tool that looks at the business through four lenses; Financial, Customer, Learning/Growth, and Internal Processes.
Identify Your Key Strategies
By this stage, you’ve created a clear picture of your future and have a great understanding of your current reality. The next step is to figure out how you’re going to get from where you are today to where you want to be in the future.
To begin this stage, you need to decide how far into the future you are going to be planning for. Companies that are stable and experience little volatility or uncertainty usually look to the 3 to 5-year horizon. Companies that are more agile and susceptible to market changes usually look to anchor their thinking in the next year to 18 months or so. Have a conversation with your leadership team to figure out what works best for you.
To help you set your pathway, we’ve found that there are 3 categories of strategic objectives that you can use to reach your vision;
- Increase Revenue
- Reduce Costs
- Mitigate Risks
To help you identify what could work for you, we’ve created a decision tree for each category of objectives which you can use to guide your thinking.
Set Your Strategic Objectives
Next up, you’ll need to start writing strategic objectives for you and your teams to achieve over your chosen time period.
A strategic objective is what you want to do or become over a set period of time. Said another way, it’s a goal that you’re looking to achieve.
You’ll want to make sure that your objectives are describing an inspiring change from your current reality and that they’re easy to understand by using concise, simple language. To inspire people you’ll want the objectives to be ambitious but to encourage your people to follow through on these objectives you’ll need them to be realistic.
For example; Let’s say you’re a well-established software business that is reaching its peak in your current market. One of your key strategies may be to increase revenue by focusing on growth in new market locations. You may set an objective like; “Expand the business into international markets by partnering with credible professional service providers”.
Identify Your Key Measures
At this stage, you’re looking to identify the elements of your objectives that will show whether you’re on track to reach them. We’d recommend setting this in two phases. The first being on selecting the measurement and the second is setting the target.
When selecting your measurement you can use metrics from the following categories:
- Inputs are measures of the aspects that you can control. These are great to use when there are variables that you don’t know or understand yet. For example; Interview eight customers to uncover their pain points.
- Outputs are the results of your inputs. These are set targets that you’d like to reach as a result of your input activity. For example; Increase revenue to X.
- Outcomes are the impact of your inputs and outputs. These are easily understood as a change in the current performance using a before and after mechanism. For example; Increase our social media reach by 50%.
Facilitators tip for setting measurables for objectives with high uncertainty. So, set input measurables for the things that you can control and describe the principles for how you plan on achieving success.
For example, let’s us the above-mentioned objective “Expand the business into international markets by partnering with credible professional service providers”. We should then create an input measure like “Interview five local professional service partners to uncover their pain points when selling our offering.”
1) Use our validating methodology to vet the accuracy of insights.
2) Choose professional service partners that range from recently working with us to long-standing partners.
3) Use the results of the interviews to update this key measure to an output or outcome measure.
Convert Objectives Into Cascaded Action Plans
If you don’t get down to the to-do list detail, things won’t get done. You have to slow down, get into the details and answer the “now what” question.
You should always set your action plans to answer the “who does what by when with how much” set of questions. Although these questions are relatively simple, they do require discipline to follow through and execute at high standards.
Put it on paper
You’ll want to create a document that aligns people to the goals of the project by clarifying the following elements:
- Purpose – Why are we doing this work? How does it move us towards our strategic goals as a business?
- Outcomes – What will be different after we have delivered the work? What are the measures that matter? Can we measure and directly affect them?
- Outputs – What artefacts need to be created or improved to realise the outcomes we need?
- Inputs – For those artefacts to be valued and successful, what do they need to be informed by?
- Scope – How broad is our area of focus? How deep do we go? Where do we stop? What can we directly control or influence vs only observe?
- Givens – What will we take as a stated fact or fixed constant/situation not open to review as part of this work?
- Participants – For this to be successful, who needs to be involved? Who is the ‘Owner’, ‘Buyer’ and ‘Sponsor’? Who are the contributing stakeholders? Are delivery partners involved?
- Milestones – What are the phases of work that the project will include? What are the achievements needed to show that you’ve reached the milestones?
- Timelines – What inputs or outputs or milestones will be delivered by when?
- Budgets – How much time and money are we going to spend on achieving these outcomes?
- Considerations – What else do we need to be aware of?
Once you’ve documented these action plans, you’ll need to set up kick-off meetings with the various project teams. You’re trying to frame the action plan in a way that creates crystal clear clarity in the expectations of the project and the role that each person plays.
A quick note on people allocation:
Your action plans are a great way of getting high-potential people more engaged within the business. So, try to find out who would be interested in running certain types of projects. Then see how you can develop their talent by including them in these projects. If you’re running a performance management system, you’ll want to plug their project responsibilities into it and capture feedback from the project team.
A quick note on project or initiative management:
There are different schools of thought when it comes to executing initiatives. The Project Management Institute is a great resource to explore this subject further. We’ve found that each company has their own way of doing it and it usually involves some form of project management software like monday.com or Jira.
Communicate It To Everyone
It’s important to realise that communicating your strategy is not a one-and-done speech or centralised document that gets shared. There are layers to communicating the strategy to empower people to execute the plan.
This usually takes the form of a one-page overview of the business strategy. There are fantastic templates out there that you can use. The importance is to communicate where you’re going and how you’re getting there in a simple, easy-to-understand manner. This document usually consists of core cultural principles like vision, mission, values, etc. as well as objectives and key results.
This is a longer-form version of the business strategy. It’s a document that describes the business’s vision of the future, the current reality, the objectives, key measures and overviews of the action plans to achieve the bigger picture plan. Some companies like to get this professionally designed and delivered (physically & digitally) to key staff members. The important point is that people know where the business is going and how they can help the business get there.
The human brain is wired to remember stories. It’s how we used to pass information down from generation to generation and why we love reading books or watching movies. Leaders can use their storytelling skills to boost motivation and gain buy-in to generate more momentum towards achieving the business’s goals. You can do this by showcasing why you’ve set this objective through the lens of the person you’re serving. For example;
Review, Realign And Refresh Your teams
Remember setting your strategy is a journey, it’s never a one-and-done exercise and is constantly evolving. This is because your business’s reality of today or vision is certain to change over time which makes this process a moving target repeated regularly. To compound this effect, as humans we tend to lose track or focus on our goals after a 90-day period.
This means that it’s usually best to review and update your strategic plan every quarter. You don’t need to rework the full-year plan or long-range intention each quarter. However, you’ll want to align on what happened over the past quarter before thinking of what to do over the next quarter to achieve your annual objectives.
What About Purpose, Mission And Values In Business Strategy?
We wholeheartedly believe in these principles and concepts but see these as the foundation of a business’s culture. Peter Drucker said it best when he said:
Strategy development and culture development are two different processes that function interdependently. Your business purpose, mission and values are core cultural elements. You should always incorporate them into your business strategy documents and communicate them frequently. Yet, you should also develop them independently of each other.
Why? Your culture focuses more on motivations, behaviours and shared learnings. These drive your business forward. On the other hand, your strategy focuses more so on the direction your business is headed. If strategy and culture were components of a passenger car, your strategy would be your GPS and steering wheel whereas your culture would be your engine.
While uncertainty is an inevitable part of life, many entrepreneurial leaders may not be prepared to meet it head-on. A successful business strategy can help you combat the unknown by setting a clear vision for your future, understanding where you are now and aligning your people with a plan that will get you there. With these 8 steps and strategic tools, you’ll be well-equipped to lead your team to achieve your vision.