Developing Strategy

Strategy is used to solve big problems and develop road maps for achieving goals. The basic goal of a strategy for an entrepreneur is developing a good business plan- the basic elements of which are:

  • The vision – where you see the business in x years,
  • Your baseline – an analysis of where you are today,
  • Your goal – what will the business look like when you arrive,
  • The gap between where you are (baseline) and what you want (goal); and a good understanding of that gap, and-
  • A budget for achieving the goal that makes sense month by month and also at year-end.

Here’s a presentation which describes the 5 basic components of a business strategy. We think it gives a pretty good basic overview:

Entrepreneurs: Take action right away:

Especially for Social Entrepreneurs:

More tools and resources for business strategy

Three strategy models covered below are:

  • Group Partners Structured Visual Thinking (4D visual approach)
  • Robert Kaplan and Michael Norton’s Strategy Mapping and Balanced Scorecard
  • Michael Porter’s Five Forces of competitive strategy/SWOT analysis

Structured Visual Thinking

Group Partners have a unique visual method of supporting big changes or solving problems within organisations. Their philosophy, Structured Visual Thinking, is supported by an approach called 4D which: “bring[s] a visual dimension to brainstorming, strategy sessions, planning functions and innovation in every aspect of the business” since they feel that humans solve problems better visually. Visit their website for the fascinating case study of how this works in practice: “How can we rethink Nigeria’s electoral system?”.

According to the 4D approach, the stages that need to be gone through to make organisational change happen are:

  • Discovery: This involves getting the answers to ‘exam questions’ from all the key stakeholders in the organisation. For example, “What are your business goals and objectives? Who are the main stakeholders who see these assets and may be contributing to our success or causing us problems? What are the timings and milestones in the teams mind?”
  • Develop – Take groundwork of the discovery phase to create strategies, change scenarios and develop plans for the future. A key part of this is taking baseline metrics and asking the questions “Where are we headed? What’s stopping us? And How are we going to get there?”
  • Decide: Sort choices into a coherent journey and road-map that leads to outcomes. It’s important that everyone at this stage knows what KPIs are being aimed for as well as the current baseline measures.
  • Deployment: The most important part of making all the above hard work come to life in your business is communication and commitment. The team must all be clear on their goals and committed to supporting the transformation in the long term.

The 4-step Balanced Scorecard- Kaplan and Norton

A more traditional four step approach to strategy development developed by Harvard scholars Robert Kaplan and David Norton, this model basically helps organisations reach long term goals by mapping interim, measurable objectives along the way and providing a method for ensuring management can make them happen.

The four dimensions of the “balanced scorecard” are Financial, Customer, Internal Processes, and Learning and Growth’ and dividing everything you do into these four areas helps entrepreneurs both remain focused, and understand exactly how successful they are. The basic principle of working with the scorecard is “what you can’t measure, you can’t manage”.

Balanced Scorecard

Balanced Scorecard (see below for downloadable tool)

Using the scorecard on a regular basis can help SMEs to map a long term path towards their objectives. However, again, the biggest impact is achieved when the scorecard goals are communicated effectively throughout the organisation so that all staff understand that they are a core part of the organisation reaching these long term goals. It’s also important for managers to recognise and acknowledge small incremental moves in the right direction if the bigger changes are to be made.

Porter’s Competitive Strategy Model

Harvard Professor Michael Porter is recognised as the foremost expert on how competitive forces shape strategy, and his seminal book Competitive Strategy (1980) remains extremely important for organisations and companies globally. His Five Forces model basically helps companies analyse market forces to ensure they remain competitive and continue to assess threats according to their position in the market. The Five Forces are, essentially:

  1. Existing competitive rivalry between suppliers
  2. Threat of new market entrants
  3. Bargaining power of buyers
  4. Power of suppliers
  5. Threat of substitute products (including technology change)

The Five Forces concept is often used alongside a SWOT analysis. Thinking through the theory can help an organisation work through a SWOT analysis with an informed understanding. SWOT stands for Strengths, Weaknesses, Opportunities and Threats and is a way of analysing your competitors and your competitive advantage in a constructive way- helping you effectively assess risk and not to get daunted by seemingly insurmountable competitors!

Try the BusinessBalls free SWOT Analysis guide and template here, which comprehensively explains how you can use SWOT. Tools available in a number of formats. There’s also a good guide with examples here at MaxiPedia.

Additional Mowgli Resources:

Got your strategy sorted out? Make sure you communicate it effectively throughout your team. Visit our Communications page for more about how to get the message across to individuals.

Additional Resources:

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