What Makes a Great Strategy?
Strategy is a business management term we use all the time, yet many struggle to crisply define what it means. In my work, I help organizations create roadmaps for success. An effective mission, strategy or business model (I think they are the same thing), and action plan are a critical parts of this roadmap.
A great strategy answers the question "how?"
Every roadmap should to answer four questions – Where, Why, How, and What. A mission answers the questions "where" we are going and "why" we are going there. A strategy answers the question "how" we get there. And an action plan answers the question of "what" do we do right now.
A great strategy describes how you create sustainable value
I define strategy as:
￼A cohesive model of how your organization achieves its mission by creating, delivering, and monetizing value.
A great strategy creates leverage through six drivers of value
Great strategies create a sweet spot of value through six interdependent strategic drivers:
- TEAM: Your culture and the skills of your team members are the foundation of your strategic value.
- CAPABILITIES: The unique and distinctive activities and processes you perform along with your physical, intellectual, and financial resources create leverage and give you scalability.
- OFFERINGS: The key features of your offerings and the value proposition it delivers to your customers and partners are critical to delivering real value in the marketplace.
- ECONOMICS: Your revenue model and cost structure are the ways in which you monetize the value you deliver to your customers.
- CUSTOMERS: The key customer segments you serve and their needs and wants are the reason someone is willing to pay you money for your offerings.
- CONNECTIONS: Connections are the types of relationships you have with your customers and the channels through they want you serve them.
Take a look at a slideshow I've created below. It will give you more details on the six drivers of strategic value. And while you are watching it, ask yourself, "What grade would I give my strategy?"