In an October 2013 McKinsey Quarterly article titled “Mastering the building blocks of strategy” the authors, Chris Bradley, Angus Dawson and Antoine Montard feel successful strategies focus on what they call the core building blocks. These are discussed below. They feel that companies that are unsuccessful in implementing new strategies overlook these building blocks.
The Building Blocks of Strategy
1) Frame – What are the questions we should be asking? The authors feel that too many companies jump right into the strategy process without first spending time agreeing on the questions that need to be addressed. And the team must agree because they will determine which of the building blocks below may be more important to address than others.
2) Diagnose – In this part of the process the team determines where and why the company creates value. Where and why do we make money?
3) Forecast – How do we see the future unfolding? What are the opportunities for us? What are possible threats to our growth, profitability or even our existence?
4) Search – After agreeing on why we exist, how we make money and what are future opportunities now ask, how can we be even more successful? Where can we gain market share? What are our growth opportunities?
5) Choose – Now comes the difficult decision on which opportunities to pursue. Some may be a drastic shift from the company’s core business and, therefore, get a lot of pushback on the risks associated with moving away from our comfort zone. Some may require a significant capital outlay in the form of new buildings and equipment and human capital.
6) Commit – Eventually the team must decide and agree on the direction to take. An action plan with milestones needs to be developed and necessary resources allocated. And everyone in the room needs to walk out committed to the direction whether they are in total agreement or not.
7) Evolve – I feel this is the most important step in any strategic planning process. This is where the strategy and its milestones are regularly monitored and adjusted as conditions change and new information becomes available. My experience suggests holding monthly meetings with the team where progress and commitments are reviewed. It is important that there is no judgment expressed if a team member has not met their commitment. Team support should be volunteered to keep the process moving forward.
The authors emphasize that block #1 (framing) is often shortchanged or omitted because it can be time consuming and everyone wants to jump right into the planning process. It’s sort of like starting to build a car without designing it first. What do customers like about the current model, which we should keep, and what don’t they like that we should change? You should be asking the same questions with regard to your company. To skip this part of the exercise may cause you to miss opportunities that could be important to your company’s success either by adding a new product or service or jettisoning one that is unprofitable.
Understanding why you exist and how you make money, part of the block #1 discussion, will keep everyone focused during the planning process of staying true to your company’s core values.
Another justification for spending time in the framing discussion is that the authors state their research found “Nearly eight in ten executives we surveyed say that the processes of their companies are more geared to confirming existing hypotheses than to testing new ones.” How will you become more relevant in your marketplace by being the “same old same old”?
Discussions in the framing stage can often get personal since change can be fearful and may challenge someone’s area of responsibility. Your job as leader is to keep discussions about the topic and not about some one. You want to encourage disagreement. You just don’t want personal attacks.
Also remember to set short-term strategies or milestones. Sometimes a long-term strategy can appear daunting with little chance for success. Celebrate milestones that are achieved.
Investing time in strategic thinking and planning can bring remarkable success to your company as well as bonding among your leadership team. I encourage you to improve on the process you are currently using.
Consider Reading This
The Tipping Point by Malcolm Gladwell is about when small numbers of people start behaving differently and that behavior ripples outward until a critical mass or “tipping point” is reached, changing the world. This book has been around for a while but if you haven’t read it I encourage you to do so. Very interesting.