Most organisations have written a business strategy that provides guidance for the business direction and operational decisions.
Often these business plans have some weaknesses that only become apparent after major shocks like the GFC; some basing actions on:
- Opinions rather than a rigorous fact base
- Assuming the future will be like the past, and not considering other scenarios
- Focusing on current operational problems not long term opportunities
New business leadership or the Board may harbour uncertainties about the business strategy. A typical solution is to replace the senior management and/or commission a major strategy project with an external firm.
A more efficient and targeted approach is to audit the foundations of the current business strategy through a comprehensive checklist. This allows a good check of how solid the foundations of the strategy are, and the targeted remediation required. Perhaps most importantly, this approach does not result in a loss of corporate memory inherent in major organisational changes. Through use of our diagnostic clients are able to:
- Understand how comprehensive and complete the foundations of the business strategy are
- Pinpoint areas of weakness, and areas that do not require remediation
- Form a view of the likely remediation actions required depending on the particular areas of weakness in the strategy
A business strategy in this context is one part of the business planning continuum. The business strategy components covered in the diagnostic are those typically associated with the 3 to 5 year planning of the organisation (see Figure 1).
Figure 1: Strategy Diagnostic Scope
The business strategy checklist covers the four key questions of business strategy:
- What does the organisation want to achieve?
- Where should the organisation compete?
- How can the organisation compete effectively?
- How can the strategy be delivered?
The key questions have then been broken down into the elements that make the strategy foundation (see Figure 2).
Figure 2: Business Strategy Elements
For each of these we have developed a checklist to enable assessment of the strategy elements robustness. For example, Figure 3 is an extract of the market segmentation checklist. Similar checklists exist for each strategy element.
Figure 3: Example Strategy Checklist Page
Figure 4: Checklist Assesment Page
Our experience is that robust, well thought out and supported strategies have these foundation characteristics. Conversely, companies that have recently failed had a business plan that has lacked rigour in one or more of the strategy elements. Notably, disconnects between element 1.1 (mission, vision, values), 3.2 (strategy choices) and 4.3 (targets) were common in many corporate failures in recent times such as ABC, Allco and Ansett. Our approach includes an assessment section that gives the implications, and possible recommendations for each section of the checklist (see Figure 4).
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