As this blog is about strategy approached from a marketing perspective (see this post to understand exactly what I mean by that) it is important that I talk about what I see as the very best approach to understanding strategy and to strategic planning. This post outlines what strategy is, talks about how to think strategically and recommends a tool for strategic planning; the OGSM. There are two videos below on how to use the OGSM strategy planning tool; a 6 minute introduction and a more complete 20 minute version.
Try looking it up. Strategy is one of those words (like innovation) that everybody seems to use but few understand. The definitions I have found are unsatisfactory. My definition is the following.
‘How & where resources are focused to create structural effectiveness in order to achieve our objectives.’
Fundamentally it is about structural effectiveness, specifically how you prioritise the resources you have to achieve that structural effectiveness. The structural idea replaces the idea of long-term, often highlighted in attempts to define strategy. In my view time is not a factor – strategy is about direction not time.
Another key aspect is the idea of making choices. Former P&G CEO AG Lafley described choices as “the essence of strategy” and he was right. To get strategy right you must make choices in fact you must prioritise. By that I mean there can only be one number 1 priority, one number 2 etc. I have seen enough of people unable to prioritise and highlighting two or more number 1 priorities to last a lifetime.
So structural effectiveness and choices. Specifically, how you prioritise the resources you have to achieve that structural effectiveness.
Now that we know what strategy is, it’s a short trip to thinking strategically. Again it’s prioritising resource allocation to achieve objectives. To successfully think strategically you need to be clear on those choices and be true to the idea of prioritising. The priority calls you make are the principles of you strategic plan, they do not change. Of course strategies must be flexible (beset illustrated in a boxing term I particularly like: “everybody has a strategy ‘till they get a punch in the face!”) but the principles on which they are based – the priorities, the choices – are not. If those principles do change for whatever reason then you have a new strategy and have some planning to do.
Here’s a tip for when designing strategies, it’s from the recognised strategy expert and HBS professor Michael Porter who said “An essential part of strategy is choosing what not to do”. In assessing whether you have a strategy or not ask the following “would I choose not to do this”, the classic example is something incorrectly seen on most strategic plans – “execute with excellence” according to Porter’s rule this is not a strategy. You wouldn’t choose to execute badly would you? Yes, I know if you chose to focus on execution to the exclusion of other areas and to the extent that it becomes a differentiating factor Vs competition e.g. Avis with “we try harder” then it can be a strategy but the rule still holds true … you could choose to focus on something else and not on execution.
A strategic planning tool called the OGSM is an excellent way to both formulate and communicate strategy. The letters stand for Objective, Goals, Strategies, Measurers. Note that in order to use this tool effectively you must understand strategy as it is outlined above. Using the OGSM is in fact an excellent aid to understanding strategy and to practice thinking strategically. Below are presentations that outline all you need to know to get started on using the OGSM.
Here is a shorter version without the detail.