What is real impact strategy?
If I can give executives and entrepreneurs only one piece of advice, it would be the following. In your strategy development and communication, focus on only three points. First, answer the question of what the heck is going on? Second, make sure that you and your team discuss real choices. Third, align all your actions with overcoming the most significant hurdles your organization faces.
Let me explain in more detail. The most important part of your strategy is addressing “what the heck is going on?”. Too many firms invest an abundance of resources in strategic analysis and engage with consultants to present them with market analytics and trend reports. The key here is not to get lost in the analysis but to put all the pieces together. Your diagnosis interprets how all the collected facts and figures fit together. According to the famous quote, predictions are always difficult, especially the ones concerning the future. However, answering the question of “what the heck is going on” is not a prediction but a narrative. The strategy team needs to define the current external and internal context, the opportunities and risks, how much the organization can ride the waves of disruption and where the company can create disruption. If you don’t have a convincing answer to “what the heck is going on?” you don’t have a strategy.
My second point addresses the risk that your executive team or board’s choices are not ”real” choices. Too often, three alternative courses of action are presented and discussed, disguising the simple truth that only one alternative makes sense. The two other alternatives are variants of the first or mere strawmen or decoys. This is very dangerous. As a board member, I want to understand which decisions are really painful to make. In other words: if a decision does not hurt, it is not a strategic decision. Strategic choices must include some trade-offs and always come with a risk and reward profile.
Finally, making the right decisions does not guarantee success. The decisions must be put into action, and those actions must be aligned. Thousands of books have been written about strategy execution, so I want to highlight just two thoughts here. Make sure that your activities not just execute your defined strategy but build up strategic resources and capabilities for the long-term future. The strict separation between strategy design and strategy execution is a sustainable way to lead an organization. Finally, when you define and perform your activities, never lose sight of an essential question: “What the heck is going on?”
I add two more questions: The fourth asks, “Why are we doing what we are doing?”. This question relates to the purpose or mission of your organization. And the final question addresses the dynamic nature of strategy: “How do we get from here to there?”
In this compendium, I summarize valuable strategy tools and frameworks. Some are classics, such as the Five Forces industry analysis by Michael Porter (1980), and some reflect new developments in the field of strategy. A good example is the UN Sustainable Development Goals (SDG) and the Materiality Index by SASB.
While these tools are valuable, their application does not guarantee that you have a winning strategy or a strategy at all. To design and executive a winning strategy, you need to ask the right questions and answer them within a coherent narrative. I have put the tools into five broad baskets, each basket related to one of the questions I discussed above.
What the heck is going on?
Which decisions hurt?
How do we align our actions?
How do we get from here to there?
Why are we doing what we are doing?
If you can answer these five questions for your organization, you have a strategy. If your answers are better than the competitors’ answers, you have a competitive advantage.
