Do you have a winning strategy?

Volume 21 Letter 12

I think we can all agree, 2021 has been a crazy year. Global issues like sustainability, Covid 19, and economic uncertainty all make crafting a winning strategy in 2022 an imperative. However, what masquerades for “a strategy” in most businesses still tends to be no more than a collection of aspirational statements and fluffy bullet points. No wonder a survey found that 65% of execs felt they had a losing strategy. Before going too deep in 2022 let’s answer: What is a strategy? Isn’t good management a good strategy? (Hint – No!!) How does a “strategy” fit into a strategic plan? And finally, who needs to develop a strategy?

What is a strategy? A strategy is an integral part of a strategic plan. It always allocates scarce resources (time and money) and always aligns those resources with market opportunities. Strategy is not necessarily synonymous with good management. Good management is necessary to efficiently coax the most out of allocated resources, but the problem is that good managers tend to be too internally focused and short sighted to be good strategists. Luckily, there is training available and tools to help them break out of a short-term mindset.

A strategy is always part of a strategic plan so you can’t develop a strategy without developing a strategic plan. You can’t have one without the other. There are six steps — Six Pillars — to developing a winning strategic plan. Each step is called a “pillar” because it provides the foundation for the next pillar to stand upon. A strategic plan, and therefore the future of your business, is only as strong as its weakest link and if any pillar is done poorly, the strategy will collapse.

Strategy is Pillar 3 of the Strategic Plan. It is only completed once you’ve diligently done the situational analysis, (Pillar 1) examining the ‘here and now’ and aligning sustainable competitive advantages with market opportunities and then (Pillar 2) identified which of those opportunities will be seized, setting short- and long-term goals. In other words, setting the Vision and Objectives. Now you begin the work of strategy. The objectives set out in Pillar 2 tell “what” the enterprise intends to accomplish. The strategy in Pillar 3 tells “how” this will be accomplished. A strategy must be assigned to each objective laid out in Pillar 2. There are three parts to a strategy:

  • Portfolio strategy: Identifies the products or services on which the company will focus and those on which it won’t. If your business or division only has one product or service, you can skip this step. However, if your one product has more than one version (30mg and 60mg for example) you must decide how much emphasis to put on each.
  • Segmentation strategy: Identifies which customers the business will focus on and those that it won’t.
  • Positioning strategy: Is the message the enterprise will communicate to customers to ensure they understand the value of the business’s offer.

While the order of Portfolio strategy and Segmentation strategy is a matter of choice, Positioning can only be completed once the segmentation and portfolio strategies are nailed. A complete strategy clearly defines these three and has an appendix to justify why choices were made.

After the strategies have been determined the remainder of the Strategic Plan can be put in place including tactics (Pillar4), execution (Pillar 5), and monitoring (Pillar 6) where the strategy, tactics and execution are continually monitored and adjusted as new information comes in.

So who needs to develop a strategy? In 2022, every team (from senior management to each sales team) that has discretionary resources to allocate needs a strategy (and, necessarily, a strategic plan). Carefully observe the graphic below and focus on the red arrows. For global executives the Objectives are set by the board of directors. Now observe that as part of their strategy they set the objectives for Regional teams. However, they don’t set the strategy for the regional team! Each team must develop their own strategy. This is important if you want the strategy executed. Notice how the strategy at various business levels link across an organization. Strategic plans are always presented to the management layer above to ensure plans are adequately funded and aligned to meet our stated objectives.

It’s not too late to develop a winning strategy for 2022.

1. 2018 survey conducted by Strategy & PwC’s strategy consulting
2. Find a copy of the Six Pillars strategic planning process here.

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