Thursday, April 21, 2016

Can you Say What Your Strategy Is

I learned from this article about the importance of the objective, scope, and advantage of business in a simple statement. Crafting a Strategy Statement is all about Clarity. David J. Collis and Michael G. Rukstad ask “Can you summarize your company’s strategy in 35 words or less? If so, would your colleagues put it the same way?” The key question here is how clear your business strategy is.

The article offers this perspective on an unclear strategy: In an astonishing number of organizations, executives, frontline employees, and all those in between are frustrated because no clear strategy exists for the company or its lines of business. Without a clear strategy, workers and managers are not clear on which opportunities to pursue and which to pass over. And without clear direction they do not know whether growth is more important than profits. Mixed signals are frustrating and lead to poor results.

Objective is the part of a strategy statement that most companies have defined, but often not well. Most times they confuse their mission with their strategic objective. A strategic objective should be the "single precise objective that will drive the business over the next five years or so," say the authors. It should be specific, measurable and include a time frame. A mission statement is not useful as a strategic goal that drives the business forward. In fact, your competitor could share the same mission statement with your company. However, it is unlikely that they will share the same strategic objective.

Scope includes three aspects: customer or offering, geographic location, and vertical integration. These three dimensions are not necessarily equal. The scope does not tell you how to achieve your goals, but it should specify where the firm or business will not go.

Advantage is the most important part of a strategy statement. It clarifies what makes your company distinctive from its competitors. It should have two parts: A statement of the customer value proposition or why your customer should buy your product or service; and a description of the company's unique attributes that allow it to deliver on its customer value proposition.

In my experience, I was working in the Japanese government. The national government did not have a clear strategy before. However, recently all ministries try to make their missions and visions clear. It enables ministries to review their performance easily and improve them more effectively and efficiently.

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