How to Build Good Strategy - Why, What, and How

A strategy that does not offer solutions to a problem is not helpful. A slogan or a performance objective is not a strategy. A strategy does not state the obvious. For example, 'to become the best, most highly respected, organization that helps people' is not a strategy. It's a waste of time.



Good strategy has three elements that together form a coherent seed for action. It's a means to help leaders make decisions that are not going to please everyone. It is a way to concentrate resources for the best chances of success. Good strategy prioritizes the most important and crucial area for concentrating resources. A strategy helps clarify tough decisions and overall direction. Any organization can not be everything to everyone.

Good strategy does not mean right strategy. The strategy still needs to be assessed and tested, adjusted for changing circumstances and situations. Organizations necessarily need good strategies but that is not always sufficient. Successful operations implement good strategies that are also the right strategies for the time.

A strategy emphasizes planning and it only impacts the critical parts of the organization for the problem to be solved. Don't fix what isn't broken. Some processes do not need strategy.

Adaptive and localized processes fuel innovation but alignment and centralized planning provide organizational coherence.

All good strategy development follows these three steps.

Step 1: Identification

    Define and explain the nature of the challenge. Simplify the often overwhelming complexity of reality by identifying critical aspects of the situation.

Step 2: Guidelines

    Develop guiding principles and policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the challenges identified.

Step 3: Actions

    List a set of coherent actions designed to implement the guiding principles. These actions are coordinated with one another to work together in accomplishing the guiding policy.

Notice that I left out vision, hierarchies goals and objectives, references to time span or scope, and ideas about adaptation and change. All of these are supporting elements not to be confused with a strategy, which consists of identification of the problem, guidelines for implementation, and the specific actions required to solve the problem.

Examples

Consider a physician. The challenge appears as a set of signs and symptoms with a history. The doctor names a disease or pathology. The therapeutic approach are the guidelines, and the specific prescriptions for diet, therapy, and monitoring are the set of coherent actions to be taken.

And think about a business. The challenge usually deals with change. The first step toward effective strategy is identifying the specific structure of the challenge. The second step is choosing guidelines for dealing with the situation that builds on or creates some type of advantage. The third step is the design of a configuration of actions that allocates resources for implementing the guidelines.