All Posts Tagged With: "strategy development"
10 Insights into Strategic Planning
Joan Magretta wrote a guide to strategy guru Michael Porter’s work called Understanding Michael Porter. As she worked on the book, she kept a list of insights, including “that most companies think they have a strategy when they don’t,” as she noted in an article on HBR.
Here are her ten insights and how they relate to the Baldrige model:
- You gain a competitive advantage by creating unique value for customers. Customer-driven excellence is a Baldrige core value, defined as an organization’s performance and quality being judged by its customers. If customers rate your performance and quality high, you will gain a competitive advantage.
- Your strategy must also clarify what the organization will not do. The Baldrige model asks several questions about how you develop strategies that will help you prioritize your strategies.
- “Competition is about profits, not market share,” writes Magretta. You grow a company by increasing profits, not market share.
- Brilliant strategies will not lead to performance excellence unless you execute them. The Baldrige Criteria devote an entire section to strategy implementation.
- Good strategies are interconnected and build on core competencies. The Baldrige Criteria ask how your strategic objectives capitalize on your core competencies and balance short- and longer-term challenges and opportunities.
- While it’s important to be flexible, your organization must stand for and excel at something. You must have the resources and capabilities to execute the plan
- You need not predict the future to commit to a strategy.
- “Vying to be the best is an intuitive but self-destructive approach to competition,” Magretta writes.
- You need both a distinctive value proposition and…
Which Comes First: Facts or Opinions?
The Baldrige model supports fact-based decisions. Management by fact is one of 11 Baldrige core values. One of the seven categories in the Baldrige Criteria focuses on measurement and analysis. Measurement—“how do you know?”—is woven into questions throughout the other five “process” categories, and the results of your key measures are reported in the seventh category.
Here’s what management guru Peter Drucker wrote on the topic: “Executives who make effective decisions know that one does not start with facts. One starts with opinions.”
I disagree.
According to Drucker, which Stephen Wunker addresses in his post on the HBR Blog Network here, if leaders do not make their opinions clear, they will simply find the facts that confirm what they believe. The problem is that the opinions and the confirmatory facts push the organization in one direction without considering other courses of action. Wunker writes, “Decision makers may have a general sense of stakeholders’ opinions, but in their eagerness to act and to avoid controversy they do not probe to understand these perspectives fully. Rather, they quickly make a decision and then marshal facts to support it.”
In the Baldrige model, the process of understanding opinions and perspectives fully would be part of the strategy development process, which encourages collecting and analyzing data and information to create an effective plan. As a result, decision makers can generate informed opinions based on their interpretation of fact-based knowledge about markets, customers, competitors, internal capabilities, and long-term needs. Rather than basing their opinions on assumptions and best guesses,…
7Nov2011 | Steve George | 0 comments | Continued7 Rules for an Effective SWOT Analysis
The Baldrige Criteria ask how, as part of your strategic planning process, you collect and analyze relevant data and information pertaining to your organization’s strengths, weaknesses, opportunities, and threats (SWOT).
Strengths and weaknesses are internal factors; opportunities and threats are external factors. A post on RapidBI describes the characteristics of each:
- Strengths are positive tangible and intangible attributes, internal to your organization, that are within its control.
- Weaknesses are factors within your control that detract from your ability to attain your goal, but that you could improve performance on.
- Opportunities represent the reason for your organization to exist and develop; identify them by time frames.
- Threats are beyond your organization’s control, which could place your mission or operation at risk. Classify them by their seriousness and probability of occurrence and develop contingency plans to address them if they occur.
RapidBI describes two acronyms for identifying the factors to address in your SWOT analysis:
- PRIMO-F for strengths and weaknesses: People, Resources, Innovation/Ideas, Marketing, Operations, and Finance
- PESTLE for opportunities and threats: Political, Economic, Social, Technological, Legal, and Environmental
The post offers simple rules for a successful SWOT analysis:
- Be realistic about the strengths and weaknesses of your organization
- Distinguish between where your organization is today and where it could be in the future
- Be specific. Avoid gray areas.
- Always analyze in relation to your competition and whether you are better or worse
- Keep your SWOT short and simple; avoid unnecessary complexity and over analysis
- Don’t list an opportunity if the same opportunity is available to competitors
- Don’t list a strength if your competitors also has it.
The top five…
18May2011 | Steve George | 0 comments | ContinuedBaldrige Model: How do you develop your strategy?
The Baldrige Model: How do you develop your strategy?
Item 2.1 in the Baldrige Criteria asks key questions about your organization’s strategy development process. The following processes, best practices, and problem areas look at critical issues in this part of the Baldrige model.
Your organization needs processes for:
- Conducting strategic planning, including identifying key steps and participants
- Identifying potential blind spots, core competencies, strategic challenges and advantages, and short- and longer-term planning time horizons
- Collecting and analyzing relevant data and information upon which the strategic plan is based including your organization’s strengths, weaknesses, opportunities, and threats; early indications of disruptive change; long-term organizational sustainability; and your ability to execute your plan
- Identifying strategic objectives that address your challenges, advantages, and opportunities for innovation; capitalize on your core competencies; balance short- and longer-term challenges and opportunities; consider and balance the needs of all key stakeholders; and enhance your ability to adapt to sudden changes in market conditions
Best practices to consider:
- Strategic planning is a continuous process that involves ongoing collection and analysis of relevant data and information, regular review of performance to plan, and the agility to modify the plan as conditions change.
- The strategic planning is inclusive, involving those employees, customers, suppliers, and other stakeholders with unique insight in the planning process.
- Since the quality of a strategic plan depends on the quality of the information upon which it is based, senior leaders and other planning participants are responsible for identifying, analyzing, and communicating information about the areas they have been assigned.
Common problem areas:
- Strategic planning is confined to senior…
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31Mar2011 | Steve George | 0 comments | ContinuedFREE REPORT: Strategy Development
How do Baldrige Award winners conduct strategic planning? You can learn from the best practices of six recent Award winners in our free report. Enter your name and email address in the purple box on the right and you will receive a PDF that includes:
- The strategic planning processes of four organizations: Heartland Health, Premier, the VACSP Center, and MidwayUSA
- Ideas on how to prepare to plan, including where to look for relevant data and information and how to analyze what you collect (Iredell-Statesville Schools is a example)
- The key questions Cargill Corn Milling asks to determine how it should act within a strategic space
- How these organizations determine and review their core competencies and strategic challenges and advantages
- Four key elements to consider while developing your strategic plan
- How to identify effective strategic objectives
As the report concludes, strategy development at these six Award winners shares common elements that your organization can use to create an effective approach:
- Strategic planning must be a well-defined and refined process that involves key stakeholders in developing strategies. As the diagrams in this report illustrate, a systematic strategic planning process shows who does what, when, with an emphasis on involving key stakeholders in the process.
- Strategy development is an ongoing process. The front end of the process, collecting data and information, occurs daily throughout the year, a responsibility of key people in the organization to find, collect, and communicate what is happening—or may happen—that could affect your organization’s future. The back end of the process, reviewing performance to plan, must be flexible to allow…
10 Tests to Assess Your Strategies
McKinsey & Company has identified ten tests to help executives assess the strength of their strategies. The ten tests fit nicely with the first Item in the Strategic Planning category of the Baldrige Criteria, which addresses the strategy development process.
An article in McKinsey Quarterly emphasizes the importance of a rigorous strategy development process through a quote from Phil Rosenzweig, a professor at IMD in Switzerland who has devoted his career to advancing the art of strategy: “Rather than looking for the next musing, it’s probably better to be thorough about what we know is true and make sure we do that well.” (“Have you tested your strategy lately?” Chris Bradley, Martin Hirt, and Sven Smit, McKinsey Quarterly, January 2011)
According to a McKinsey Quarterly survey of 2,135 executives, few of their strategies pass more than three of these ten tests:
- Will your strategy beat the market? “Good strategies emphasize difference—versus your direct competitors, versus potential substitutes, and versus potential entrants.”
- Does your strategy tap a true source of advantage? “Competitive advantage stems from two sources of scarcity: positional advantages and special capabilities.”
- Is your strategy granular about where to compete? “…80% of the variance in revenue growth is explained by choices about where to compete.”
- Does your strategy put you ahead of trends? “Always look at the edges. How are early adopters and that small cadre of consumers who seem to be ahead of the curve acting?”
- Does your strategy rest on privileged insights? “Developing proprietary insights isn’t easy. A search for problems can help get you started. Create a short list of questions…
