Strategy Is More Than a Pretty Plan
Many companies face the challenge of creating a strategy but struggle to implement it effectively. Here are eight ways to focus your operations to drive impact.
Creating a strategy is hard work. It requires reliable data, keen insights, a touch of innovation, and a lot of difficult decision-making. When executed effectively, it can create clarity and focus that can truly accelerate a business's growth and profitability. If done poorly, it can be a time and money pit that leaves you more confused than when you began.
However, the most challenging aspect of the strategy is implementation. A strategy that doesn't drive actions remains a dream. You need to drive strategy into the heart of a business operational system to see an impact. The key to achieving this is to identify and focus on a specific set of operational activities.
As a strategic coach who has collaborated with dozens of companies on strategy, I prefer using what Harvard Business School professor Michael Porter calls an "activity fit map." An AFM captures the unique and focused set of interconnected activities that drive a company's market positioning. While a company needs to excel in various aspects, the AFM identifies activities where exceptional performance, not just adequacy, is essential.
Creating an AFM can be challenging and somewhat of an art. While they evolve, it's crucial to refine them from the beginning. When guiding teams on strategy, I encourage considering the following factors when generating their map.
1. Capabilities and capacity
The initial focus should be on assessing raw capabilities and capacity. Can you do the things that you need at the volume/quantity that you need to do them? Building capabilities and capacity is a fundamental way to establish differentiation. Possessing the ability to do things that competitors can't do at a volume they can't support is a core value driver.
2. Processes and procedures
Some companies have capabilities similar to their competitors'. However, differentiation is still achievable by improving and excelling in variables such as speed of delivery or quality. In these cases, having well-structured processes and procedures becomes a differentiating advantage. You'll win in the market if you can deliver faster, more consistently, and with high quality.
3. Policies and business rules
In some cases, your ability to drive strategic value is based on the decisions you make, whom you make them with, and how quickly you can make them. A classic example of this is Southwest Airlines' decision to only use 737 airplanes. This choice simplified pilot training, reduced maintenance complexity, and standardized operational procedures. It was a simple rule that had a far-reaching positive impact on the company's ability to deliver on strategy.
4. Knowledge and data
Many companies have generated strategic value by accumulating a substantial volume of data and insights. These can be used to identify patterns and trends, as well as create insights for customers that other companies just can't provide. Evaluate what your business has or could capture that might be of value to your prospects.
5. Relationships and reputation
If you've been in business for a while and have a good reputation and deep relationships with key companies, you can turn that into a strategic advantage. These relationships will provide access to supplies, information, and talent, along with the ability to forge new relationships quickly based on your history. IBM, for example, was hired many times because of its reputation and weight in the industry.
6. Intellectual property and copyrights
While enforcing intellectual property and copyrights can be costly, it gives potential competitors pause before going head-to-head with you. If you have or can obtain legal protection for what you do or how you do it, it could create strategic value. Just be sure the cost is reasonable and that it's enforceable and difficult to circumvent.
7. Talent and expertise
Although people can come and go, having a team of highly skilled and capable staff is a real advantage in many businesses. For service companies like law, engineering, architecture, and design, significant experience in specific industries and deep experiences in domains can be key to driving strategic value.
8. Sourcing and supplies
For many companies, strong relationships and formal agreements with key suppliers are strategically important. If you have access to supplies and materials that others don't, or maybe at a price or volume that others can't get, you can create leverage. When possible, secure exclusive agreements to lock out competitors or negotiate a pricing agreement that gives you a clear advantage.
A great strategy without a set of operational activities to back it up isn't worth the paper it's written on. If you want to be successful, you need a clear and specific differentiated position and the operational plan to make it happen. The best strategies are ones that lead to operational focus and innovation, not just pretty slideshows.
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