Strategy is vitally important and creating a good one is challenging. The word strategy has an aura around it. The best leaders are said to be strategic but what do we mean by that. When I started managing strategy for one of Intel’s divisions, I needed to develop a clear point of view about what strategy is and what constitutes a good one.
For me, strategy is all about deciding what you are and are not going to do. These decisions should chart a path to get from where you are today to your longer term vision. Strategic planning is a framework in which to help you make good decisions. In this post, I am going to discuss what makes a good strategy. I describe ten attributes below.
Elements of a Good Strategy
It should be created from considering big picture perspectives rather than bottoms up tactical thinking. Think about being the captain of a ship scanning the horizon versus being below decks figuring out how to increase the performance of the engines.
All leaders face the challenge of seeing the world as it is rather than how they would like it to be. Strategy has to reflect the real challenges and opportunities facing the company.
In addition to facing reality, the strategy must anticipate what could change. This is often done as an assessment of the surrounding environment factoring in risk and return.
Challenges existing thinking.
It is easy to become constrained by our current thinking. This is often what we believe is possible. A better way to approach strategy is to ask what would have to happen to achieve X.
Specific and focused.
I have seen strategic plans that run into pages. They certainly are comprehensive but they lack the focus and clarity to understand exactly what we will and will not do. I believe in focusing on a few key strategic actions, no more than five, and that is probably too many. These actions need to be specific enough to create a set of short term tactics.
While the strategy must challenge the current thinking, it also needs to be realistic. It can certainly be a stretch that requires changes to achieve it. The people executing it also must feel it is doable.
I see many strategies focused on the next five years. That may have been appropriate a few years ago when the environment was less dynamic. With today’s pace of change, I recommend strategic plan horizons of 12-18 months. These plans should be updated at least annually.
The strategy must describe the results that will be generated. The results help leaders assess the performance of the strategy, whether it is having the desired effect.
As mentioned above, the strategy must move the organization closer to its vision. Be careful not to get distracted and create a strategy that is interesting and goes off into the woods. Achievement of the strategies should increase the likelihood of achieving the vision.
Many organizations pride themselves on execution and sticking to their strategy. While this is admirable, if the strategy isn’t right execution isn’t helpful. The strategy should flex as needed to take account of and leverage learnings along the way. Don’t pass up a short cut or worse still, stay on the path if it leads to a cliff.
How effective is your strategy?
I recommend using the above list to assess where your strategy is strong and where it can be improved. Involve some of your critics and naysayers in your review. The more diverse their opinions, the more you will learn about your strategy and how to improve it.