7 elements for building a successful strategy
A clear strategy is the basis for a successful company and also a prerequisit for its survival
Many entrepreneurs work for their dream. But only a few have clear strategies and also fields of action that they can pass on to their employees. We show how to go from the company’s own dream to an applicable and understandable strategy in 7 steps.
Companies need a strategy. This is often said, but few companies have a real strategy. It doesn’t even have to be about topics such as digitalization, new business models, their own digital transformation if the question of strategy is asked. Since many companies without a strategy are more concerned with the day-to-day job without a big goal or plan, this can have long-term consequences on their business success. Since many founders of a company still have problems to define a strategy and do not know which elements basically occur in a strategy, we explain here the 7 most important elements of a strategy briefly.
It is always important to understand that every strategic planning starts with the vision and with every step becomes more and more tangible for the responsible persons.
7 key elements in building a strategy for business
1. Vision – without the vision there is no strategy
The so-called “Vision Statement” is one of the central components of a good strategy. One should clearly think long-term. Where should the journey of the company go and above all explain the vision of the company, where it should be in 3, 5 or more years.
Especially here you should take care to really work out your own core and your own goals and to deal with them over several hours and days. This vision is then the basis for all further steps.
A good example of a vision has Amazon: “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
2. Mission – clarify who you are
In contrast to the vision of a future for the company, the mission statement is the description of what you represent as a company. It describes what makes you unique and how to make customers happy with what you do.
Often vision and mission statement are combined into one. But you should clearly distinguish between describing where you are now, what you represent now and what you are doing to move towards your vision in the future.
A good example of a Vision Statement is Harley Davidson: “We fulfill dreams through the experience of motorcycling, by providing motorcyclists and the public with an expanding line of motorcycles and branded products and services in selected market segments.”
3. Core value – the values of a company
By looking at your core values, you can also quickly define what values you represent as a company and what values you avoid. This is also almost like a guide on how to work to achieve your goals.
Coca Cola has very clear and simple core values:
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, it’s up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
4. SWOT Analysis
To achieve goals, it is not only practical to have instructions but also to know where you stand and what your own strengths, weaknesses, opportunities, and risks are. This is exactly the task of SWOT analysis. It systematically illuminates the areas. This works best with as many members of the company as possible, so that any not so obvious weaknesses or strengths can be better identified.
Strengths – Here you describe your own strengths. For example, where you are better than the competition, what advantages you have, etc.
Weaknesses – Here you can find out which weaknesses exist in the company. For example disadvantages, problems, stumbling blocks, etc.
Opportunities – What are the possible opportunities on the market and where are the possibilities for development.
Threats – What dangers can arise on the market and what should be watched out for.
5. Long-term objectives
After you have intensively dealt with your vision, your mission, and your SWOT analysis, you should also set goals. In this document, you try to describe in 3-5 statements how you want to achieve your vision. The plans are briefly formulated so that they are comprehensible. This step also helps to look realistically at how far the vision is realistic or unrealistic.
6. Set targets for each year
Based on the long-term objectives set out in point 5, it is advisable to abstract them on an annual basis. What do we need to achieve this year to achieve our long-term goals? What is the desired progress this year?
Especially these targets should be created according to the SMART principle.
Specific – Simple, clearly defined, and relevant objectives
Measurable – Targets must be measurable and comparable
Achievable – Set achievable goals
Realistic – Targets must be realistic and achievable
Time-based – The goals must have clear start and end points or be delimitable in time.
7. Establish an action plan
The final breakdown of the planning is then at the most concrete level with the action plan. Here you define clear activities for the individual goals in the year. Depending on the complexity of the annual goals, these must be explained in detail. Especially the action plan should be easy to understand for everyone so that employees or business partners can easily get an overview of the
“A vision without a plan is just a dream. A plan without a vision is just drudgery. But a vision with a plan can change the world.”
10-steps for strategic business planning
The 10-step process for strategic planning of businesses is a comprehensive and organized approach to help business leaders achieve their desired outcomes. By clearly defining the company’s vision and mission, analyzing the current situation, setting goals and strategies, and creating action plans with timelines and assigned responsibilities, businesses can increase their chances of success. Monitoring progress and making adjustments along the way is also crucial to the success of any strategic plan.
1. Define a Vision
The first step in the strategic planning process is to define a vision for the company. This vision should be ambitious and inspiring, yet realistic and achievable. It should also be aligned with the company’s core values. Once the vision has been defined, it should be communicated to all members of the organization and also be a guide in daily decisions.
You might also want to say what you are “not” in this part of the vision statement. For example, a company that is not environmentally friendly might want to make that clear in its vision so they are not associated with negative environmental practices.
2. Define a Mission
The next step is to define the company’s mission. The mission should be a statement of the company’s purpose that clearly articulates what the company does and why it exists. The mission should be brief, clear, and memorable. It should also be aligned with the company’s vision.
3. Analyze the Current Situation – Status-Quo Assessment
After the vision and mission have been defined, it is time to analyze the current situation of the company. This analysis should at least include a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis as well as an assessment of the company’s current position in the marketplace. Other analyses that could be conducted include a competitor analysis, customer analysis, and industry analysis or sourced from external research agencies or platforms.
4. Set clear Goals, Targets & Objectives
One of the most overlooked but critical steps in the strategic planning process is to set clear goals, targets, and objectives. These should be specific, measurable, achievable, relevant, and time-bound (SMART). Without these elements, it will be difficult to track progress and know if the company is on track to achieve its vision and mission. Once the goals have been set, it is important to communicate them to all members of the organization.
5. Formalize Strategies and Strategic Options
After the basic elements like vision, mission, status-quo, and goals are set, the next step is to formalize the company’s strategies and strategic options based on all the previous assumptions. This step should involve the development of detailed plans for how the company will achieve its goals. The strategies and options should be based on the results of the analysis (e.g. SWOT) and the goals you want to achieve.
The SET-Model also differentiates between three different areas where strategies need to be developed:
- Survive – Strategies that secure the bottom-line and keep the companies alive.
- Expand – Strategies that improve current offerings, expand the market reach, creat new markets, etc.
- Transform – Innovations, totally new offerings, out-of-the-box thinking, radically new things, etc.
6. Create Tactics & concrete Action Plans
After you have designed and developed your long-term strategic options and plans, the next step is to create tactics and concrete action plans. Tactics are the specific actions that need to be taken to achieve the desired goal. The action plan should specify who is responsible for each task, when it needs to be completed, and what resources are required.
7. Allocate and Plan for the Ressources needed
After a strategy is broken down into tactics and a concrete action plan a company should allocate and plan for the resources that will be needed to implement the plans. This step should involve the development of a budget and a schedule for this budget to get the cash flow managed. The resources should be allocated in a way that ensures they are being used effectively and efficiently and prioritized according to the strategic objectives.
8. Assign clear Responsibilities
It is important to assign clear responsibilities for each of the tasks that need to be completed. These responsibilities should be assigned to individuals or teams. The assignments should be based on the skills and abilities of those involved but also on the availability of resources.
9. Create and Manage Timelines
Create and manage timelines for each of the tasks that need to be completed. Timelines should be realistic and achievable. They should also be flexible enough to accommodate changes that might occur during the implementation process.
Note: Most projects take about 30% longer and are over budget. Calculate your projects with this in mind.
10. Monitor, Review and Evaluate Progress
The final step is to monitor, review, and evaluate progress. This step should involve the creation of reports that track the progress of the company towards its goals. These reports should be shared with all members of the organization. The results of the reports should be used to make adjustments to the plans.
Common Challenges in Developing a Strategy
Developing a strategy is not easy, and there are many challenges that organizations face.
Lack of clarity
Lack of clarity is a common challenge when developing a strategy. The first step in creating a strategy is to develop a clear and concise statement of the organization’s overall mission and purpose. This can be difficult to do if there is confusion or disagreement among members of the organization about the organization’s direction.
Unrealistic goals are another common challenge in strategy development. Organizations often set goals that are too ambitious or unrealistic, which can lead to disappointment and frustration when those goals are not met. It is important to set realistic and achievable goals as part of the strategy development process.
Lack of resources
Lack of resources is another challenge that can impede strategy development. Organizations need adequate resources (e.g., financial, human, technological) to develop and implement a successful strategy. If an organization does not have the necessary resources, it may need to consider alternatives, such as partnering with other organizations or seeking outside funding.
Lack of alignment
Lack of alignment is another common challenge in strategy development. This can happen when there is a lack of alignment between the organization’s strategy and its structure, culture, and systems. This can lead to confusion and frustration among employees and can ultimately hinder the implementation of the strategy.
Lack of information
Lack of information is another challenge that can make it difficult to develop an effective strategy. Organizations need access to accurate and up-to-date information in order to make informed decisions about where to allocate resources. Without access to the right information, organizations may make decisions that are not in line with their goals.
Conflicting priorities is another challenge that can arise during strategy development. This can happen when different members of the organization have different ideas about what the organization’s priorities should be. This can lead to disagreements and stalled progress on developing a strategy.
Shifting goal posts
Shifting goalposts is another challenge that can make strategy development difficult. This happens when the goals or objectives of the organization change after the strategy has been developed. This can occur in response to changes in the external environment (e.g., changes in the competitive landscape or economic conditions) or internal factors (e.g., changes in the organization’s structure or culture).
SET-Model for Strategy Development
The SET-Model is a way to remember the three most important things companies need to do to be successful: Survive, Expand and Transform.
- Survive is the part where the company focuses on the bottom line to keep paying invoices, and wages and keep the company alive.
- Expand means doing more of what you’re already doing, but better. e.g. Improving offerings, Expanding to new markets, and adding additional services to extend the product.
- Transform means changing what you’re doing completely. This means investment in absolutely new ideas, disruptive innovations, or other areas which were not explored before.
Who should develop a strategy?
Creating a strategy is no easy task. It requires the input and cooperation of many different people across the organization. But the CEO is ultimately responsible for ensuring that the strategy is developed and executed effectively.
The CEO must be able to manage their time effectively and carve out time to work with senior management on strategic planning and adjustment. They can’t be bogged down by day-to-day tasks and need to be able to take a step back and look at the big picture.
Management should have a time distribution between Survive, Expand and Transform strategy development. In particular, management must spend 60% of their time on Survive activities, 20% of their time on Expand activities, and 20% of their time on Transform activities. This will help ensure that the organization can develop and implement a successful strategy.
Developing a strategy is essential for any company, but it’s not enough to simply create one and put it on the shelf. Strategies need to be managed, and CEOs and top-management need to pay a lot of attention to the alignment of attention and resources to the SET-Areas Survive, Expand and Transform. But without a clear vision, mission, status-quo assessment and comprehensive goals, it will be a challenge to create a successful strategy.
Only when you have all elements and challenge them constantly, then can you ensure that your company is moving in the right direction and achieving its goals.
Author: Benjamin Talin, CEO of MoreThanDigital
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