One of the problems with developing a good strategy is that there is no clear definition for the strategic framework. Organizations spend a lot of time developing strategies, and it often happens that an organization has its own understanding of a strategy framework that is different from others.
Many strategy fails simply because it is not a viable strategy but a collection of goals and priorities. The problem with goals and priorities is that they do not say what needs to be done, but rather describe what the expected outcome is.
What are the elements of a good strategy?
A strategy consists of many different parts, all of which are important for successful implementation. The important elements of the strategy are summarized in the triangle below. In general, organizations need to have several strategies, one being the strategy of the entire organization, and the others subordinate to it. Usually, the terms corporate strategy and business strategy are used to distinguish between these.
The hallmark of an effective strategy is the presence of a clear path from the vision to the metrics. This must be taken into account especially when drawing up business strategies, in which case the corporate vision and mission should sometimes be adapted to suit the business unit.
Vision and Mission describe the future state and the reason for the existence of the organization. Vision and Mission answer the questions “what” and “why”. For the vision and mission to be elements that support the strategy, they must be credible and motivating.
Strategic choices are very important for all organizations. Unfortunately, they are often not defined, or at least not documented and with the trust that “everyone knows what we are doing”. Strategic choices refer to what an organization does or does not do. They can also make up a definition of the customers worked with or what values are generated.
Only after strategic choices are considered can strategic objectives be defined. Strategic objectives refer to concrete, measurable objectives with a time horizon of more than one budget period. The objective does not say at this stage what needs to be done, but it does give a picture of what the expected end result is.
Strategic objectives should be broken down into short-term objectives, which are often covering the budget period. These short-term objectives provide the necessary concrete information to monitor the implementation of the strategy.
Strategic projects refer to all the measures an organization takes to achieve short-term objectives and, ultimately, strategic objectives. The scale of projects can range from years-long projects to rapid spurts. Continuous improvement is an essential part of an organization’s success, but it rarely shows up in strategy.
Key metrics are key performance indicators selected by the organization. The monitoring of key metrics ensures that the desired results are achieved.
We will handle the main enablers of successful strategy implementation: culture, capabilities, and leadership in future blogs.
Key takeaways for strong strategy and execution:
- Clear path from vision to strategic projects and key metrics.
- Strategic choices are clear and there are only a few.
- Strategic goals are challenging but achievable.
- Staff are involved in the strategy work.
- There are a limited number of strategy projects and there is a clear focus on doing them.
- The progress of the strategy is systematically monitored.
The success of a strategy is visible afterwards. It can be seen in increased competitiveness and a change in behaviour.