Strategy doesn't need to be complicated.
Check out this definitive guide to strategy to help you make smarter choices and get clear on your big picture.
IS STRATEGY PART OF YOUR JOB?
If you're a leader, consultant or advisor, chances are that you are involved in strategy projects - either organisational strategy, business plans, projects, programmes or strategic initiatives.
Despite that, strategy is poorly understood. In a sea of jargon and buzzwords, it's easy to feel like strategy is complicated - but it doesn't need to be that way.
In this guide, learn the basics of strategy - what it means, why it matters, how to make one and what you can do to make it real.
Read through, or jump to a section below.
- What is strategy?
- Why you need a strategy
- How to create a strategy
- How to turn strategy into action
- Developing your strategic skills
1. WHAT IS STRATEGY?
Somewhere along the way, we let the buzzwords take over. Senior leaders and CEOs are walking around talking about objectives, missions, visions, purpose, strategies, approaches, principles, values, action plans and initiatives – it’s enough to give anyone a headache.
Don’t try googling “strategy definition” either. It’s a nightmare. The truth is, strategy is simple.
Strategy is how we choose to achieve our goals.
There's a few important things about that definition.
Strategy is about goals
We only need a strategy when there's something we want to change. We set a goal, or goals, that defines the intended outcome of our strategy, and then we decide how to make those goals a reality. Unless you know why you're taking action, you are unlikely to make focused progress on what you need to do to get there.
Your goals should be aspirational, outcomes-focused and not quickly or easily achieved. These will often be referred to as a purpose, vision, mission statement or big-picture objective. Regardless of the term you used, they should be focused on the change you want to make in the world, rather than the way you will do it.
Strategy is about choices
When we think about all the different ways we can reach our goals, it's easy to become overwhelmed. If our goal is to be market leader in our category, for example, we should consider the best way to achieve that.
At it's simplest, most businesses compete on one of the following high-level approaches:
- Differentiation - offering a new or innovative service or product, or doing things in a different way to your competitors
- Price - delivering the most affordable option on the market
- Quality - delivering the best features on the market.
Drilled down to another level, we have further options, such as:
- Reach - achieving size, scale and market share that dominates the market
- Depth - nurturing long and deep relationships with key clients
- Niche - cornering a particular corner of the market with deep domain expertise.
The same is true for public sector strategy, which usually aims to achieve a public good. If that goal is better health outcomes, for example, an agency might choose to narrow down to one of the following strategic approaches:
- Education - working with educators and the community to make better lifestyle choices
- Direct delivery - providing front-line health assistance to afflicted individuals and families
- Partnerships - supporting the work of specialist groups in business and the community
- Targeting - allocating the bulk of resources to specific high-need groups.
Strategy asks us to weigh up the different options available and make a decision about which approach is most likely to deliver the best results for our particular situation, skills and capabilities - to exclude other possible choices. It is rarely a lack of ideas that taints our strategies, but rather a lack of focus.
Strategy is about how
Many people confuse strategy with plans - which are detailed operational prescriptions. Plans contain descriptions of the actions we're going to take, what they will cost, how long they will take, and who will be responsible.
Plans provide prescriptions, but strategy, on the other hand, provides direction. It outlines why we want to change, and the approach we will take to make that happen. Put simply strategy is not what we decide, but rather how we will get there.
While plans list projects, budgets, actions and initiatives, strategies define goals, priorities and chosen approaches. While a plan might outline the steps we'll take to improve our website, the overarching strategy might instead identify that we are prioritising increased brand recognition. A website is one option to deliver on that approach but we have other options that might also comprise a portfolio of possibilities, such as nurturing word-of-mouth referrals, sponsorship or media engagement.
At the strategic level, it's important not to get distracted by the potential details around execution, before we're clear on what our most important priorities should be. Otherwise, we risk overwhelming ourselves with action that aren't well aligned to our big picture.
2. WHY YOU NEED A STRATEGY
Many successful businesses, teams and organisations do just fine without a strategy. They treat their business planning as a tick-box exercise and spend little time worried about the why and how of the work they do.
That's just fine - but it's not the smartest way to go about things.
Organisations that have a strategy tend to do a better job of:
- Achieving long-term success
- Maximising revenue potential
- Building a strong brand identity
- Maintaining engaged staff
- Saving time in meetings
- Making good decisions.
Not only that, strategy has other operational advantages that make your workplace a more fulfilling place to work.
Strategy maximises luck
Businesses that don't have a strategy are relying on luck, coincidence and good fortune.You might stumble on success, but you'll do better to have a clear path forward. With a strategy, you can seize lucky opportunities and shape them to suit your direction, rather than being reactively led by your surroundings.
Strategy drives focus
Because strategy involves the elimination of choices, we have more clarity about what we will do. That means every-day decisions about what to do, who to hire, what to invest in and which projects to prioritise become simpler and we reduce the risk of people duplicating or cancelling out each other's efforts.
Strategy opens our eyes
Strategic planning asks us to take a close look at our capabilities, strengths and weaknesses, making it hard to ignore potential problems or competitive blind spots. A good decision process means we're better informed and more self-aware.
Strategy motivates people
Our teams love coming to work and being part of something bigger. A clear sense of purpose, defined mission and clear priorities gives your people something to work towards and improves productivity and engagement.
Strategy helps us keep track
When we know what we're trying to achieve, it becomes easier to check whether we're on track or not. Without a clear path, it becomes more difficult to assess whether we're making progress, or simply busy.
3. HOW TO CREATE A STRATEGY
There's lots of ways to go about developing a strategy, and what you do will depend on the size and scope of your team.
To create a great strategy, you need the following ingredients:
- Strategy team
- Strategy space
- Strategy conversation
- Strategy document
- Strategy iteration
Whether you're a one-person enterprise or a complex organisation, strategy should be a team sport.
It's hard to test your own thinking and spot gaps when you're too close to it. So if you're creating a strategy for your freelance effort or personal projects, make sure to include a close friend or trusted advisor.
If you're a larger team or organisation, make sure to include a diverse range of inputs from people who understand your business, your context and your options.
Perspective is a critical element of all strategy processes. It's hard to make good decisions and see the big picture when you're too close to the work, so finding space - physically, mentally and in time - to do this work is important. Strategy needs space.
To create the right space, pay careful attention to:
- Why you are meeting - know the purpose of your conversation
- What your desired outcomes are
- Who needs to be there - Key decision-makers who will need to own and implement your strategic plan should be involved
- How to set up for success - Set clear expectations for all participants ahead of time, agree key stages and milestones and choose a spacious, well-lit venue.
The most important thing to remember is that strategy is not a document, it's a conversation. Your strategy should clarify your intentions at a point in time, and be regularly referred to as you move forward towards your goals.
In Nail Your Strategic Plan, we recommend having three critical conversations to develop your strategy.
Conversation One: Build understanding
If people don’t know why – they don’t care how! Taking the time to build a shared understanding before barrelling into your planning brings both perspective and engagement.
When we build a shared understanding of our context, we create an important frame that will guide the rest of our strategic planning process.
Three questions to answer in your first conversation:
- Why do we exist?
- Where are we now?
- Where do we want to be?
Conversation Two: Shape choices
You can do anything – but not everything. In this conversation, you will make sense of the information you’ve produced in your first conversation, so you can focus on what matters most. You'll use that focus to work out what you will stop doing or not do, as well as what you will do more of.
By the end of this conversation, you will have real clarity about where you’re going to focus your energy and attention, and what that means for your team or organisation.
Three questions to answer in your second conversation:
- What matters most?
- What does success look like?
- What do our focus areas mean?
Conversation Three: Make decisions
Meetings that matter drive people to action. Too many strategy conversations end in the room, and fail to change behaviour. Your third conversation is critical for securing commitment to your desired approach. Here, you will make clear decisions about what you're doing next and how you will respond as conditions shift.
Three questions to answer in your third conversation:
- What comes next?
- Who is responsible?
- How will we respond to change?
The strategy document is the most recognised element of a strategy development process, and is often the goal. While important, your document is only useful insofar as it clearly represents the outcome of your strategy conversation and inspires regular attention to its contents.
For that reason, it's important to make your document brief, clear and visible.
Keep it brief
One to three pages is ideal. Five is the maximum.
Use Plain English
Jargon is difficult to connect to and undermines the credibility of your document. Reflect the language that people used in their planning conversations.
Simple is best
Don’t panic about design – aim for simplicity and clarity over aesthetics.
One page to rule them all
Ensure your first page stands alone with the most important information: what you’re trying to do, and how you’re going to do it.
Once your document is complete, it's tempting to think the job is done - but in fact, it's just beginning. Strategy is a long game that needs lots of short-term attention. Once the ink is dry, the challenging work begins - implementing, iterating and evaluating progress.
While you still have momentum and everyone is excited about your new direction, build in your iteration plan now. For most places, that will look like regular progress updates, as well as scheduled reviews. When strategy stays front of mind, we're much more likely to keep on track.
4. TURN STRATEGY INTO ACTION
Unfortunately, most strategy processes go silent shortly after they've been completed. It's not because we don't care, but because the everyday work, tasks and emails overwhelm us. Before we know it, we've fallen behind on important milestones and we can't remember the strategic priorities we identified.
This is where planning comes into its own. At every planning or progress meeting, strategy should be a compulsory invitee. Making it visible is a great start, which is why strategy posters are such a common feature of most office walls.
But to really stick to your strategy throughout the year, you'll need to do more than that. Look for as many ways as possible to weave your strategic intentions into your every day work. Simple tips include things like:
- Including objectives in your reports, agendas and memos
- Referring regularly to strategy in team meetings and internal communications
- Posting your strategy to your website
- Including your strategic goals in all of your planning conversations as a test or lens to shape the choices you make about operations and implementation.
5. STRATEGIC SKILLS
Strategy is the future of work. The most in-demand skills of the future workforce, according to the World Economic Forum are all strategic - problem-solving, creativity, sense-making and analysis. Despite that, we fail to teach strategy skills as part of traditional management and leadership education.
Being strategic is not an inherent skill, however - you can learn to look at problems differently and strengthen your strategy muscle with intention and practice.
- Flexibility - your ability to respond to change. By actively cultivating your internal and external awareness and staying flexible to your surroundings, you will be able to take more strategic action as the world changes around you.
- Decisions - your ability to make clear decisions. By focusing on how you decide, rather than what you choose, you will consistently make more effective choices. Learn the hallmarks of a good decision process to be a more strategic person.
- Systems - your ability to see how things fit together. When you can transcend the everyday to understand the different parts and processes involved in your organisational system, you will be able to craft interventions that have more cross-border impact.
- Performance - your ability to get things done. When you can focus your time, energy and attention carefully, delegate appropriately and manage risk, you make more progress on your most important goals.
- Influence - your ability to reach others. When you can build trust and relationships with others, you significantly increase your capacity to deliver change. Practice your skills in engaging others on a strategy journey and watch your success skyrocket.
If you're not sure how strategic you are now, or which skills you should focus on first, take this handy 3-minute quiz. You'll receive a strategic skills assessment, as well as a free cheat-sheet with some handy tips about what you can do to boost your strategy capability.