Hey friends 👋,
The strategy concept can sometimes appear complex and overwhelming in the dynamic and ever-changing business world.
However, beneath the layers of intricacy lies a fundamental truth: strategy is simpler than you think.
In this article, we will explore the essence of strategy, a 7-step process to design a strategy and how to articulate your strategy.
Let’s dive in!
💡 What is Strategy?
Strategy is one of the most misused and misunderstood words in business.
Often the word ‘strategy’ is used to describe a specific approach like “let’s write a strategic plan” or sometimes more high-level, as in “What’s our strategy for growing market share?”
Michael Porter (the legendary Harvard business academic) defined strategy as “Strategy is about making choices, tradeoffs; it’s about deliberately choosing to be different.”
And Roger Martin defines strategy as ‘strategy is not a long planning document, it is a set of interrelated and powerful choices.’
In the harsh reality of business, making choices about what to do and what not to do means making intentional tradeoffs.
Let me explain using an example of an existing hotel. If we were designing a strategy for young business travellers, the tradeoffs might look like this:
- Centrally located with more compact rooms Vs situated on the outskirts with larger rooms
- Self-check-in, check-out Vs a concierge experience
- 24/7 snack bar Vs restaurant with limited hours
The most significant tension I have seen with strategy sits in the tradeoffs space. And it’s the tradeoffs that force the tough decisions on where to allocate resources and how we will make decisions.
🧠 The 7- step Process to Design a Winning Strategy
Designing a winning strategy can be simple and concise. By following this structured process, you can simplify the strategy development and decision-making process. Here’s a breakdown of the seven critical steps involved:
Step 1: Identify the core problem with your current strategy. What choices need to be fixed? What’s getting in the way of achieving your business aspirations?
Staying with our hotel example, perhaps the existing problem was: the hotel needed a more compelling value proposition for young business travellers.
Step 2: Reframe the problem. Once the problem is identified, reframe a strategic question to use as a launchpad to generate ideas.
Our hotel example might reframe the problem: How might we sustainably win with young business travellers by profitably meeting their unique needs?
Step 3: Ideate potential options. Brainstorm several potential possibilities that serve as strategic options and choices to answer your question compellingly.
Using our hotel example, we could create a separate offer exclusively for young travellers. Keep the facilities, but offer a different experience within the hotel.
Pro tip: Always include ‘the status quo’ or ‘doing nothing’ as an option to use as a comparison and talking point when evaluating choices.
Step 4: What would have to be true? In this step, establish the specific conditions that would make each possibility a successful strategy. Repeat this process for each potential option.
One condition for our hotel might be that the existing target market would be satisfied with younger travellers receiving a different experience.
Step 5: Identify barriers: Identify the most concerning or uncertain conditions (what would have to be true). These conditions require testing before choosing a strategy.
For example, you might identify that smaller rooms require more cleaning and, therefore, more staffing, so you will need to test if this is viable.
Step 6: Experiment to learn. Engage in research, conduct tests, and create iterative prototypes to determine the validity of the barriers or conditions.
For example, you might perform rough ‘back of the envelope’ costing as an initial test to see if the cleaning staff costs are viable. Then progress to more detailed costings.
Step 7: Choose. Based on the insights gathered, make an informed choice regarding the most promising strategy. Select the option for which the most compelling argument can be made.
For example, The decision might be that running two offerings in parallel is not a good idea, and a whole new brand and facility targeting younger travellers is the most compelling option.
Pro tip: Gaining consensus means that the strategy team have robustly discussed all options and will support the choice and take action towards it.
🚀 Articulating Your Choices and Strategy
The process helps to guide you while the Choice Cascade helps you to articulate your strategy at the critical choices of strategy.
The five critical choices are:
1) What is the winning aspiration? What does the winning aspiration look like for your organisation? What are you trying to accomplish together?
2) Where to Play? The five ‘where to play’ components should be worked through individually to determine which playing fields you will compete in. They are:
Geography: Which countries or regions will you try and win?
Customers – What is the profile of the customers you will try to win with? What are the segments, such as behaviours or demographics?
Channels: Which distribution channels will you leverage to win?
Offer: What products and services will win with each customer profile?
Stages of Production: What value chain components do you produce yourself?
3) How to Win? What is your value proposition? Will this be either low-cost or value differentiated? Here you are answering, ‘What is your competitive advantage to sustainably attract and retain customers?
4) What Capabilities? What are the critical activities (customer service, manufacturing, content creation) needed for your competitive advantage?
5) What Management Systems? What is the infrastructure that you will need to execute your winning strategy? The systems may include processes, norms, metrics and culture.
For our hotel example, the strategy could be:
Winning aspiration: To be the preferred hotel option for young business travellers and capture 20% of the market.
Where to Play:
Geography – Coastal cities with two million-plus people located in North America.
Customers – Young business travellers who prefer easy transport access and exploring the city during their free time.
Channels – LinkedIn, MBA Programmes, Chamber of Commerce, Google Ads
Offer – Centrally located with more compact rooms, self-check-in, 24/7 snack bar
Stages of Production – Hotel
How to Win: We help busy young business travellers experience the city by combining a low-cost, centrally located hotel with desirable benefits like soundproof rooms, a 24/7 snack bar, self-check-in and check-out.
Capabilities: Staff, sourcing of snack bar products, relationships with professional organisations and local attractions …
Management Systems: Digital customer feedback, automated ordering systems, tracking duration of stay, repeat visitors and referrals…
Want more? Here is another article on designing a winning strategy. And one on the importance of emergence.
⚡️ The Short of It
Strategy is fundamentally about choosing what to do and what not to do, which means that tradeoffs are always necessary.
Work through the five critical choices to articulate your strategy using the seven-step design process.
Here are 3 bonus tools and resources I believe you’ll find helpful as well:
- 🎧 Thinking of becoming a solopreneur? In his podcast, Gabe Marusca interviews digital nomads to uncover the realities of business life on the road.
- ✅ Free innovation resources from yours truly.
- 🤯 Thinking of your next holiday? This is one Museum on my must visit list – The Museum of Failure.
That’s all for today friends! 👋
Feel free to reply to this email if you have any questions or newsletter requests.
Thanks for reading and I’ll catch you next week.
Keep future-state thinking,
Vaughan
Credits to Strategyzer and Roger Martin
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