Strategy Development
 


In a for-profit company, for which competition and profitability are important, your goals will differ from those of a nonprofit or government department. Likewise, objectives for a department or team will have a different scope from objectives for your organization as a whole.

For example, and depending on scope and circumstances, you may want to develop strategies to:

  • Increase profitability.
  • Gain more market share.
  • Increase approval ratings, or boost customer satisfaction.
  • Complete a project under budget.

To determine your strategy, you must understand fully the internal and external environmental factors that affect you. With that understanding, you can identify your clear advantages and use these to be successful. From there, you can make informed choices and implement your strategy effectively.

So, strategy creation follows a three-stage process:

  1. Analyzing the context in which you're operating.
  2. Identifying strategic options.
  3. Evaluating and selecting the best options.

We'll look at this process, and review some useful tools that can help you develop your strategy.

Stage 1: Analyzing Your Context and Environment

In this first stage, you ensure that you fully understand yourself and your environment. Do the following:

  • Analyze your organization
  • Firstly, examine your resources, liabilities, capabilities, strengths, and weaknesses. A SWOT Analysis is a great tool for uncovering what you do well and where you have weaknesses, providing that you use it rigorously. It's much easier to achieve your objectives when your strategy uses your strengths without exposing your weaknesses.
  • Also, look at your Core Competencies. These highlight your unique strengths, and help you think about how you can set yourself apart from your competitors.
  • Analyze your environment
  • Now you need to examine your current operating environment to predict where things are moving. Are there exciting opportunities that you should pursue? What future scenarios are likely in your industry, and how will these impact the work that you do?
  • PEST Analysis, Porter's Diamond, and Porter's Five Forces are great starting points for analyzing your environment. They show where you have a strong position within the larger environment, and where you may have issues.
  • As you prepare to create your strategy, make sure that you're working in a way that's aligned with changes in your operating environment, rather than working against them. These external factors are often beyond your control, so if you pursue a strategy that requires a change in one of these elements, you may have a long, exhausting, unprofitable battle ahead of you.

Tip:
A TOWS matrix can help you with your internal and external analysis. This framework combines everything you learned in your SWOT Analysis (TOWS is SWOT in reverse), and then applies it to developing a strategy that either maximizes strengths and opportunities, or minimizes weaknesses and threats.

  • Analyze your customers and stakeholders
  • Your strategy defines how you'll win, and winning is typically framed by how well you satisfy your customers. For-profit companies must keep their customers and shareholders happy. Governments, nonprofits, and project teams all have other stakeholders to satisfy as well. Strategy creation must consider these needs.
  • Identify your clients and stakeholders. What do your clients want? And who are the key stakeholders in your success? A Stakeholder Analysis will help you uncover these needs and preferences.
  • Also, look at your market in detail. Answer key questions such as "How is our market segmented?", "What subpopulations can we reach cost-effectively?" and "What is our optimal Marketing Mix?"
  • Analyze your competitors
  • In a traditional for-profit company, you must understand how your products compare with competitors' products, and what your competitors' competencies are. How easy, or difficult, is it to enter your market? What alternatives do customers have?
  • Our article on USP Analysis helps you identify ways in which you can compete effectively. You'll also find many useful tools that can help you understand competitors in our article on Competitive Intelligence .
  • Non-profits, departmental teams and projects have competitors too. Other projects and teams within the department compete for money and other resources. Therefore, you must prove that you can add value, meet objectives, and contribute to organizational success.

Stage 2: Identifying Strategic Options

In Stage 1, you developed an understanding of how your organization or team fits within the context of the internal and external environments. Now it's time to think about the different things that you could do to create a clear advantage, and meet your objectives. Here are some fundamental activities that can help you make this decision.

  • Brainstorm options
  • Use creativity tools like Brainstorming, Reverse Brainstorming and Starbursting to explore projects that you could run to develop competitive advantage. Guide your brainstorming with reference to the organization's mission statement, but, depending on your role in the organization, consider how far you should be constrained by this.
  • Examine opportunities and threats
  • Your SWOT Analysis identified some of the main opportunities and threats you face. Using this as a starting point, brainstorm additional ways to maximize your opportunities, minimize your threats, or perhaps even turn your threats into opportunities.
  • Solve problems
  • A problem-solving approach can also help at this stage. If your problem is that you're not achieving your goals, ask yourself how you can ensure that you do. (If everyone in your industry finds it hard to deal with a particular problem, then you may gain a competitive edge by dealing with it.)
  • For example, if you want to increase your customer satisfaction ratings in an industry plagued by poor customer relations, your starting position is "low satisfaction." Brainstorm why this is the case, and create strategic options that would increase satisfaction. Tools like Root Cause Analysis, the 5 Whys, and Appreciative Inquiry can give you some interesting new perspectives on these problems.

Stage 3: Evaluating and Selecting Strategic Options

The final stage is to evaluate strategic options in detail, and select the ones that you want to pursue.

  • Evaluate options
  • By this stage, you've probably identified a range of good projects that you could run. You must now evaluate these to choose the best strategic options. Consider every option you've identified, but don't make a final judgment until you've completed your assessment.
  • Start by evaluating each option in the light of the contextual factors you identified in Stage 1. What do these tell you about each option?
  • Techniques like Risk Analysis, Failure Modes and Effects Analysis and Impact Analysis can help you spot the possible negative consequences of each option, which can be very easy to miss. Make sure that you explore these thoroughly.
  • Many options will be analyzed on a financial basis. Here, techniques like Cost-Benefit Analysis, Break-Even Analysis , use of Net Present Values (NPVs) and Internal Rates of Return (IRRs), and Decision Trees are helpful.
  • Grid Analysis is particularly helpful for bringing together financial and non-financial decision criteria. It helps you weight individual decision criteria, and consider subjective features - like team fit and the likelihood of team buy-in - as well as objective, tangible factors like cost and return on investment.
  • Choose the best way forward
  • With your evaluation complete, you now must choose the best strategic option or strategic options, making sure that you don't choose so many options that you spread your resources too thinly.
  • Check your ideas for consistency with your organization's Vision, Mission and Values, and update these if necessary. It's easy to forget about these critical elements during strategic planning, so ensure that what you want to "win" is something that contributes towards the organization's overall purpose.
  • Check your assumptions using the Ladder of Inference . This helps you confirm the soundness of the reasoning process used to develop your strategy.

Tip:
There's a lot of debate and disagreement about the best way of developing a strategy. Don't be afraid to adapt this approach to your own, specific circumstances!

Implementing Strategy

It's no good developing a strategy if you don't implement it successfully, and this is where many people go astray.

See our articles on VMOST Analysis and the Balanced Scorecard for ways of bridging the gap between strategy development and implementation, and our Project Management section for the techniques you'll need to use to implement strategy successfully.

Key Points

Your strategy tells you how you'll achieve success, no matter how that success is defined. And whether you're developing a strategy at the personal, team or organizational level, the process is as important as the outcome.

Identify your unique capabilities, and understand how to use these to your advantage while minimizing threats. The process and tools identified above will help you identify a variety of potential strategies for success, so that you can ultimately choose the one that's right for you.


Data Warehousing strategy:

Enterprise data strategy is a key part of both IT strategies and business strategies. Too often we see the enterprise data strategy focus on “capture, store, and manage,” becoming more of an IT-based strategy. The information “use” component of a data strategy in achieving business goals is often neglected. The result is that business leaders question the relevance, need, or value of a data strategy.

A strategy is basically the plan for how an organization will achieve its mission or specific goals. Often, the IT department champions, or is assigned ownership of the data strategy. In many of these cases, then, the data strategy is considered primarily in terms of the IT organization and those goals, not the business nor the business goals.

Many elements of a data strategy are IT-centric. This also tends to drive the data strategy to become more about technology. The resulting “enterprise” data strategy, and how it is communicated, tend to focus on the IT issues (such as storage, integration, and security) and not the business aspects of using data to achieve business goals.

Both of these issues -- IT solely driving the data strategy and focusing on the IT-centric elements -- are exacerbated if the organization does not involve business users in developing the data strategy. If that strategy is perceived to be “an IT thing,” it becomes more difficult to involve the business.

The key is to begin with the business in mind. Start any work or discussion on a data strategy with an understanding of the business vision, mission, and goals and determine the strategy for achieving those goals. Every element of the data strategy should support the business goals and the business strategy for achieving those goals.

Business involvement is key to ensuring the data strategy drives business goals. Too often we start the thinking about a data strategy too low in the pyramid. We may start in data management or storage and focus on selecting a system platform or acquiring data quality tools, then figure out how those choices support the business goals. The key is to begin with those business goals.

For example, Amazon.com’s mission statement reads: “We seek to be Earth’s most customer-centric company for three primary customer sets: consumer customers, seller customers and developer customers.” In their 2009 letter to shareholders, Jeffrey Bezos, founder and CEO compared results with some of the goals that support that mission, including adding 100 more brands of jeans, a 24 percent increase in seller customers, and 21 more product categories (including categories in France and China). He noted that for 2010, the bulk of their company goals will have a direct impact on the customer experience (source: www.amazon.com investor relations).

If your task was to create the data strategy for Amazon, given this mission and the goal examples, you would have clear considerations for elements of their data strategy. You’d be thinking about the data needed for three different types of customers and how those customers would use that data; tools to quickly capture, store, and management large amounts of data and the international implications to the data strategy. If you didn’t start with the mission and business goals, you may select a data management approach that didn’t consider the international aspects of the data, or a storage platform that couldn’t scale for adding large amounts of data quickly.

How, and at what level of detail, the data strategy is communicated to an IT data architect vs. the CFO is vastly different. Too often, communication about the data strategy is “one-size (or version)” fits all. The CFO is going to struggle greatly sitting through a presentation on the data strategy designed for an IT data architect. The IT data architect will be delving for more detail if he or she sits through a CFO-level presentation on that strategy.

Unfortunately, we tend to err on the side of communicating about the data strategy in IT terms, and detail as if all audiences for the data strategy are data architects. The CFO only wants to know what time it is, not how to build the watch. Developing an audience-targeted communication plan to share the data strategy will engage your business users. A data strategy developed from the top down with the business goals as the first consideration makes it easier to target data strategy communications.

Beginning with the business strategy in mind and planning business-audience communications, ensures you will a)develop the right data strategy, b)demonstrate the business relevance of that data strategy, and b)spend less time selling, justifying, and enforcing that data strategy.