The end of the year is approaching and that is when we start planning the next one; all of us who have decision-making power meet in the company and we intend to analyze the year and, above all, put together a strategy for the next.
Of course, depending on the size of the company, it can be a big board meeting like you just sitting at a bar with a pencil and paper.
This varies from company to company, but what matters is that the idea is to “put together the strategy”.
In either of the 2 extreme cases, the result will most likely be something like this:
- More efficient work practices to improve productivity
- To be more competitive in the market xx (complete according to your needs)
- Increase sales
- To be the market leader in the xx segment
- Optimize ROI
- Expand business to other regions
- Etc etc.
It looks good, doesn’t it? After writing this list you might say: Ok, this is very good. Nope? NO.
What we saw above is a list of goals, wishes, actions, whatever you want to call them, but one thing It Isn’t: Not a list of strategies. It is a deception that will end up costing us dearly.
The expression of wishes is not a strategy. To put together a strategy, it is necessary to answer: How are we going to achieve it, with the help of whom, in what times, with what money, under whose responsibility?
Three (3) Steps to Build a Strategy
Identify the stakeholders on which success depends.
It may seem obvious that you need to start here. But most managers, even in the world’s largest companies, don’t take this basic step. Instead, they focus on a limited set of key performance indicators and become interested in developing solutions that feed into those metrics, digging deeper and deeper into the details.
Very quickly they lose their “aerial vision” and get stuck. Suggestions follow one after another: Involve the points of sale, develop an advertising program, attract, retain and develop capable staff, etc., etc.
That may be all well and good, but how do you know if you haven’t defined a framework for success? Your company or unit of it is completely dependent on others outside of it. Without the support of stakeholders, such as customers, suppliers, employees and shareholders, for example, you have no organization.
You have to identify those who are key to the long-term survival and prosperity of your company and then satisfy them.
Here, we can learn a lesson from John Mackey, co-founder of Whole Foods Market. His company dominates natural foods retailing in the U.S. In a Harvard Business Review interview, Mackey describes what has made Whole Foods successful:
“Customers, employees, investors, suppliers, larger communities, and the environment are all interdependent,” he explains. “Management’s job at Whole Foods is to hire good, well-trained people who flourish in the workplace, because when people are truly happy in their jobs, they provide much better service to customers. A team of happy people results in satisfied customers. Happy customers do more business with your company. They become advocates for your company, which translates into happy investors. That’s a win, win, win, win strategy. «
Recognize what you want from those stakeholders
Most management teams do not identify key stakeholders or even get to this point. And those who do often rush to see what they have to do for customers, for employees, and so on, without first thinking about what they want from them. Why is that classification so important? What an organization wants from each stakeholder group translates perfectly into its goals.
For example, sales and revenue growth will come from customers, productivity and innovation from employees, and quality goods and services at a fair price from working with suppliers. Although clear goals and objectives are not a substitute for strategy, you do need to design them, stakeholder by stakeholder, before you can develop a smart strategy for each stakeholder.
Unfortunately, strategies are often created in a vacuum. They will not make sense if you have not first decided what you want to achieve with them.
Recognize what those interest groups want from you
When management teams delve too quickly into problem solving, they make assumptions. They think they already know what is good for their stakeholders.
As a result, their companies end up with products and services that don’t sell. When you articulate what key stakeholders want, you are defining what I call “strategic factors” which are not the same as “critical success factors.”
Strategic factors provide an outside perspective. They are those few things that you must excel at if you want to achieve a competitive advantage while meeting your corporate objectives.
As an examplehere is a list of the strategic factors of a company that manages a port and its objective is to attract the largest possible number of ship operators:
- Port capacity (suitability for the size and load of a ship)
- Availability of Cargo (to be picked up on the return trip)
- Congestion (download speed and response time at the port)
- Location (which affects time between destinations)
- Price (port fees for mooring and remaining moored)
Notice how these factors are defined from the point of view of an interest group, not from those of the company. If you’re not sure about them (which is the norm), interview stakeholders to better understand their stories and needs. If you’ve been struggling to develop strategy and write your strategic plan, what you may have been missing until now is a method.
These steps will help you. Toyota doesn’t produce flawless cars every day without a system. Surgeons do not operate on hearts and brains without clear procedures. Architects do not build buildings without a calculation and construction methodology. You also shouldn’t expect to design an effective strategy without a process.