The 8 Steps to Strategic Success

Unleashing the Power of Engagement

Gerben van den Berg, Paul Pietersma

• Publisher: Kogan Page
• Year: 2014
• ISBN:
  9780749469207
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

All organizations recognise the importance of strategy creation and execution: strategy is the process of developing the corporate future. Unfortunately, it often doesn't generate the required results. This book presents a new 8-step process for creating a strategy that really delivers. For each step, the book describes the key parts of the process, shows how to avoid the potential pitfalls, and points to the most useful strategic models and frameworks. Readers can see the process in action by following the intriguing case study that unfolds throughout the book. One of the critical determinants of strategic success is to see strategy not just as planning but as a process that involves dialogues with multiple stakeholders, both within and outside the company. This concept is integrated into every phase of the 8-step approach and is at the heart of its effectiveness in creating strategy that delivers in practice.

PART 1

Engagement on a strategic level

01

Introducing the strategic dialogue model:

8 steps to strategic success

Our strategic dialogue approach treats strategy as an integral process of formulation, implementation and mobilization. It focuses on content and process: doing the right things and doing things right. It is an iterative process that leads to choices while leaving room to keep options open. And it is an approach – the name ‘strategic dialogue’ says it all – that is based on engagement with key stakeholders: what the organization can and will do is not invented in an ivory tower, but in dialogue with key external partners and stakeholders, and is explored and discussed with internal stakeholders. However, a dialogue doesn’t imply a democracy: those responsible will still have the final say and have to make the strategic choices.

The strategic dialogue model is an integrated methodology of strategy formulation and implementation which has been developed on the basis of practical experience. It is not a one-size-fits-all standard prescription on how to do strategy, but it’s a generic approach that you can customize to your organization and circumstances. Every company and every environment is different and requires a customized approach. The strategic dialogue model offers an iterative process which is applicable to a multitude of situations and strategic issues. In the model we identified eight distinct steps, each with distinctive purposes, scope and activities:

• Searchlight: setting up the process of strategy formulation and implementation and finding a shared ambition and business scope.
• Outside-in: scenarios: mapping potential strategic positions from plausible future business environments.
• Inside-out: analysis: exploration of strategic options based on the abilities and limitations of the company.
• Options: translating analytical information to insights and then generating strategic options.
• Choice: estimating the risks and feasibility of the various options, leading to the choice of strategy.
• Operationalization: making an implementation plan, deciding the implementation process in detail and cashing in on ‘quick wins’.
• Execution: the actual implementation of plans, policies and actions for change.
• Monitoring: the assessment of ongoing developments in the environment and organizational performance in relation to the strategy and strategic goals.

The schematic diagram of the strategic dialogue model looks like two circles linked together: the processes of formulation and implementation. These two circles also form a lemniscate – the symbol for infinity – representing the integrated and iterative character of our approach to strategy (see Figure 1.1). It depicts how everything is connected with everything else in logical connections.

FIGURE 1.1 Strategic dialogue model

Ideally, the strategy process will go through all 8 steps of the model (an entire cycle run) from left to right in Figure 1.1. The process of developing a mission statement, vision and strategy is described in the left-hand cycle. This process is fluid, interactive and creative. In the middle, the actual process of selection of strategic options takes place. This is where different options are weighed and choices are made. In the right-hand cycle, the emphasis is on the realization and implementation of the choices made. This process is more rigid and action oriented.

Step 1: Searchlight

In Step 1, the playing field for the strategic dialogue is determined. This requires defining both the scope of the content and the scope of the process. In this first step of the strategic dialogue model, the content is scoped by formulating a working hypothesis of the mission statement and vision of the company based on dialogue with internal and external parties, commonly executives and non-executive members of the board. This working hypothesis aims to determine the scope of the company’s activities and to match the level of ambition of the different stakeholders: What is (or is not) in scope? What do we want for our future? What is the time horizon we are looking at? Next, the process is scoped through defining the degrees of freedom for the process: What is the overall approach, what is the overall planning of activities, who will be involved in what role and how will decisions be made? This helps to make the level of expectations for all participants clear.

The determination of the playing field can be seen as a design of the ‘window’ through which the company will look at the outside world and at itself to determine the future. It sets a first framework for the strategic direction of the organization. This direction also helps to focus the scope of the next steps in the strategy process, hence the name ‘searchlight’: where the beam shines determines what will be in scope. And by holding the flashlight in this first step, you can adjust the beam to your own situation.

Step 2: Outside-in: scenarios

In Step 2, all relevant external developments are mapped. The focus is towards the future. This step can be characterized as straying from conventional paths and exploring all possible and plausible futures (scenarios) in a structured way. In this step it is important to keep in mind all relevant stakeholders, to identify trends and uncertainties, and to help construct scenarios of the future. The objective is to detect opportunities and their consequences. The main question is: what do we have to take into account in the coming years and how do we deal with it? Discuss this with all relevant stakeholders – the usual ones (customers, suppliers, scientists, politicians, etc) but also the more unusual ones, for instance from other industries or an artist, to freshen your insights and perhaps to identify cross-over possibilities from other industries. Usually Step 2 generates a lot of questions that need to be answered. What do stakeholders expect of our organization? Which developments should we consider or deal with? What is the future purchasing power and behaviour of customers? What expertise and technologies will become available? Which networks and partnerships are interesting? Which positions in the supply chain will give the best value? What is our relative position in comparison with our competitors? With what products do we control which markets and are there opportunities in new markets? What are the unknown but inevitable surprises?

Patterns from past and present times offer guidance for the estimation of possibilities and opportunities. Therefore, in this step, there is an analysis of the total market in which the company wishes to operate and of the forces that influence those markets. Not only should the current market segments and customer groups of the company be analysed, but also adjacent segments and potential customer groups. This broad approach forces us to think outside the traditional patterns. It explores new opportunities and leads us towards a nuanced understanding of the market position that the company actually has.

Step 3: Inside-out: analysis

In Step 3, we map all relevant internal developments that determine the possibilities and impossibilities for the company. This step includes all relevant aspects linked to the existing working processes, procedures, structure and governance of the company. Discuss this with all relevant internal stakeholders and get them engaged: board members, employees, councils, former customers, customers, former competitors.

In this step we answer questions such as: Do we fully utilize our capacities? Can we do more with our current assets? Where do we make a profit and where not? Should we be doing different things? Should we be doing things differently? What can we learn and develop? What should we change and what can we change? What are our core competences? What are our core values and what is our organization’s identity? How is the organization structured and governed? What is our current financial situation and our room for investment? How much risk can and should we take?

Focusing on the capabilities of the organization, which are assessed by performing a financial, operational, structural and risk analysis, and on the (potential) capacity for change in the organization, Step 3 gives insights into the possibilities and impossibilities facing the organization.

Step 4: Options

Step 4 serves three goals:

• To integrate the outcomes of Steps 2 and 3: interpreting the analyses enables you to identify the options the organization has.
• To finalize the working hypothesis of the vision and mission statement drafted in Step 1 by confronting (or combining) the beliefs of the management of the organization with the actual data from the analyses. If necessary, the vision and the mission statement should be adjusted.
• To generate a number of strategic options in line with the formulated vision, mission statement and ambition.

The questions to be answered in this step are: Which business concepts are appropriate? What are the advantages, risks, limitations and (financial) implications of each option? How do we take our own abilities and conditions into account? How do the options relate to each other? Do we have all the information needed to make a choice?

The strategic options are determined using data and insights from the outside-in and inside-out steps and are then sharpened and further developed creatively. From the multitude of options, the most promising options must be selected based on their contribution to the strategic objectives as expressed in Step 1. This often entails making a shortlist of the options. These shortlisted options are then broken down further into business cases, target groups and competences to give more insights into the pros and cons of each of the options and to facilitate decision making.

Step 5: Choice

In Step 5, the various options are put side by side. First, they are scored on three criteria: usability, feasibility and applicability. This results in a choice of an initial strategy or strategic direction. The challenge lies in making choices and at the same time keeping options open. This sounds ambivalent and indeed it is: a choice must be made, but at the same time there has to be sufficient flexibility to allow quick adaptation to changing circumstances and to make a quick exchange of options possible. After an initial choice, it is therefore common to look again at the options not chosen and to identify which elements are very strong and should ideally – somehow – be combined with the chosen overall strategic direction. This combination can lead to a new, adapted option. It can also lead to a combination that is sequential in time: go for one strategic option but keep things flexible enough in the implementation of the chosen strategy to be able to switch to the other option. This sequential combination is often chosen in situations with high levels of uncertainty about future developments. You might call it having a Plan B for the case of a specific change of circumstances.

The questions in this step include: What are our preferred options and what is their ranking? What criteria and weighting factors do we apply and how do we apply them?...

Table of contents

• Cover
• Title page
• Imprint
• Table of contents
• List of Figures
• Foreword
• About the authors
• Introduction
• Part 1 Engagement on a strategic level
• Part 2 The 8 steps to strategic success revealed
• Part 3 Key strategy models
• Part 4 Key engagement methods
• Part 5 Applying the strategic dialogue
• References
• Index
• Full imprint