Here are her ten insights and how they relate to the Baldrige model:

1. 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.
2. 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.
3. “Competition is about profits, not market share,” writes Magretta. You grow a company by increasing profits, not market share.
4. Brilliant strategies will not lead to performance excellence unless you execute them. The Baldrige Criteria devote an entire section to strategy implementation.
5. 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.
6. 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
7. You need not predict the future to commit to a strategy.
8. “Vying to be the best is an intuitive but self-destructive approach to competition,” Magretta writes.
9. You need both a distinctive value proposition and a value chain tailored to deliver it. The Baldrige model promotes the development of a work system that capitalizes on your core competencies, delivers customer value, and achieves success and sustainability.
10. Your strategy should delight your most important customers while deliberately making your least important customers unhappy. The Baldrige Criteria ask which customers you intend to pursue, and why.

To read more about effective strategic planning, click on these articles:

• Revolutionary Thinking
• What Path Is Your Organization Taking?
• Effective Strategic Initiatives
• 10 Tests to Assess Your Strategies
• The Vital Few

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, they rely on data and information. The process starts with the facts.

However, I agree with Drucker that decision makers can be quick to choose a course of action without exploring their different opinions about what the facts are telling them. “Disagreement is a safeguard against being a prisoner of the organization and seeing an issue just as underlings want,” Wunker writes. He suggests soliciting opinions through anonymous questionnaires or interviews by a neutral party, pushing executives to think about the criteria for future success, and linking opinions to fact-based tests that would validate or disprove the opinion.

By integrating Baldrige, decision makers can develop a fact-based strategy development process that encourages dissent and values different perspectives.

To read more about strategy development, click on these articles:

• The First Critical Phase of Strategic Planning
• Challenge Your Assumptions
• The Most Important Question in Strategy
• Identifying Potential Blind Spots
• What Path Is Your Organization Taking?
• Identifying Game Changers
• 10 Tests to Assess Your Strategies

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:

1. Be realistic about the strengths and weaknesses of your organization
2. Distinguish between where your organization is today and where it could be in the future
3. Be specific. Avoid gray areas.
4. Always analyze in relation to your competition and whether you are better or worse
5. Keep your SWOT short and simple; avoid unnecessary complexity and over analysis
6. Don’t list an opportunity if the same opportunity is available to competitors
7. Don’t list a strength if your competitors also has it.

The top five mistakes are:

• An unclear goal
• Maintaining too narrow a focus
• Neglecting input from others
• Performing an analysis only once
• Relying on SWOT as a holistic diagnostic strategy

To read more about SWOT and strategy development, click on these articles:

• The First Critical Phase of Strategic Planning
• Challenge Your Assumptions
• Identifying Potential Blind Spots
• Revolutionary Thinking
• Where to Play and How to Win

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 leaders creating the plan over a few months at the end of the year.
• A lack of rigorous pursuit and analysis of the information that feeds the planning process makes the plan vulnerable to undetected conditions, trends, and blind spots.
• No processes exist to determine the organization’s core competencies and its strategic challenges and advantages.

To read more about strategy development, click on these articles:

• The First Critical Phase of Strategic Planning
• Challenge Your Assumptions
• Identifying Potential Blind Spots
• Revolutionary Thinking
• 10 Tests to Assess Your Strategies

The blue banner at the top is worth $100 when you sign up for ActiveStrategy’s conference, Next Generation Strategy Management. The conference takes place in Philadelphia in early May and features three state-level Baldrige Award recipients. Topics include achieving alignment through strategy execution, becoming an outcome-focused organization, a leader’s role in performance excellence, and best practices in strategic planning. Click on the blue banner to learn more. Sign up, enter the code Baldrige11 when you register, and save $100.

Strategy development is the focus of the fourth report in Baldrige.com’s series on Baldrige Award-winning best practices. Learn how six Baldrige Award winners conduct strategic planning, gather and analyze information, and address their strategic challenges and advantages. Subscribe with your name and email address in the purple box and receive the report today.

If you’re wondering how Baldrige can help you secure your job, make it better, and advance your career, get our 61-page guide, The Baldrige Edge. I guarantee you will learn how to become a strategic performer at your organization. The guide costs $17, it’s easy to order, and it comes with a money-back guarantee. Click on the black banner to find out more.

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• 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 changes to the plan as conditions change.
• The foundation of a strategic plan must be solid. Challenge your assumptions about your organization’s core competencies, strategic challenges and advantages, stakeholder needs, and market conditions.
• An actionable strategic plan builds on your strengths, addresses your weaknesses, and adapts to changing conditions.

Find out how six Baldrige Award winners develop strategies that support ongoing performance excellence. Subscribe to our free report today!

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:

1. Will your strategy beat the market? “Good strategies emphasize difference—versus your direct competitors, versus potential substitutes, and versus potential entrants.”
2. Does your strategy tap a true source of advantage? “Competitive advantage stems from two sources of scarcity: positional advantages and special capabilities.”
3. Is your strategy granular about where to compete? “…80% of the variance in revenue growth is explained by choices about where to compete.”
4. 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?”
5. 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 whose answers would have major implications for the company’s strategy. Don’t forget to examine the assumptions, explicit and implicit, behind an established business model.”
6. Does your strategy embrace uncertainty? “Rigorously understanding the uncertainty you face starts with listing the variables that would influence a strategic decision and prioritizing them according to their impact.”
7. Does your strategy balance commitment and flexibility? “A market-beating strategy will focus on just a few crucial, high-commitment choices to be made now, while leaving flexibility for other such choices to be made over time.”
8. Is your strategy contaminated by bias? “Developing multiple hypotheses and potential solutions to choose among is one way to ‘de-bias’ decision making.”
9. Is there conviction to act on your strategy? “CEOs and boards should not be fooled by the warm glow they feel after a nice presentation by management. They must make sure that the whole team shares the new beliefs that support the strategy.”
10. Have you translated your strategy into an action plan? “Develop a detailed view of the shifts required to make the move, and ensure that processes and mechanisms, for which individual executives must be accountable, are in place to effect the changes. Quite simply, this is an action plan.”

The Baldrige Criteria provide a roadmap for strategy development and deployment. To read more about strategic planning, click on these articles:

• The First Critical Phase of Strategic Planning
• Challenge Your Assumptions
• Identifying Potential Blind Spots
• Revolutionary Thinking
• Where to Play and How to Win
  
• Sustainability Forces Wheel