“Strategy can be defined as the determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” – Alfred D Chandler, Jr.
Introduction
Formulating the strategy that an organization or team will use to achieve its envisioned future is a key component of the VUCA Strategic Planning process.
The word “strategy” has as many different meanings and interpretations as there are leaders of organizations who want to have a strategic plan. This is unfortunate because this lack of clarity and confusion often leads to disappointment and has given strategic planning an undeserved bad reputation.
The rest of this article will present a simple definition of strategy and how it fits into the VUCA strategic planning process.
Strategy Defined
In the realm of VUCA Strategic Planning, “strategy” has a central and extremely important role to play. To ensure the highest probability of success, the leaders of an organization must choose and articulate a clear strategy to follow. It will define the approach, or the “how”, that individual contributors and teams use to do their work and achieve their short-term objectives. The complete VUCA Strategic Plan is then built around the execution of the chosen strategy. Ultimately, successful execution of the strategy will propel the organization towards achieving its long-term goals.
This leads us to a simple VUCA Strategy definition: The approach that will guide the team on “how” to achieve the short-term objectives that move the organization from its current state towards achieving its long-term goals.
Where Does Strategy Fit Into VUCA Strategic Planning?
Strategy plays a vital role in VUCA Strategic Planning. It is quite literally the vehicle that will help the organization bridge the “gap” between where it is today (its current state, or sometimes referred to “as-is”) and it wants to be in the future (desired future state).
The Core Ideology of the organization is the planning filter than any strategy should be evaluated against, and the Envisioned Future is the baseline definition for the desired future state. When combined with robust Situational Awareness, which details the current state of the organization and its operating environment, your Core Ideology and Envisioned Future create the springboard for strategy development. Previous articles have described these three planning elements in greater detail:
- Core Ideology – defining the mission, values, and purpose of the organization. These elements describe why the organization exists and what it stands for. They form the “true North” guideposts for making strategic decisions and are the foundation for any VUCA Plan. With this solid planning foundation, you will have a clear understanding of what your organization stands for and its unique strengths. This understanding provides greater clarity and a useful strategy filter for making critical business decisions that affect the future of your organization.
- Envisioned Future – defining a clear vision for what the organization aspires to become or achieve, and your long-term goals. These elements explain the desired “future state” of the organization, and the long-term goals you and your team are working towards achieving in order to get there.
- Situational Awareness – a thorough analysis of the environment in which the organization operates. Situational awareness involves knowing where you are (“current state”) and being aware of what is happening in your environment, in order to better understand how information, events, and one’s own actions will impact both immediate and future outcomes. This typically includes an analysis of internal and external factors with a focus on the organization, its market(s), and its customers.
In the definition of Situational Awareness above, the environment refers to everything that is going on around the individual, team, or organization. The reason we focus on important elements of the environment is to emphasize that situational awareness is ultimately about enabling an individual, team, or organization to get something done. This can be a task, a project, an initiative, or anything else that requires interaction with, and reaction to, relevant elements of the environment.
With this solid planning foundation, leaders are then ready to consider strategic options that will enable the organization to bridge the gap between the current state and the desired future state while factoring in the operating environment as revealed by the Situational analysis. This is where strategy comes into play.
- Strategy – defining the approach that will guide individuals and teams on “how” to achieve the short-term objectives that move the organization from its starting point towards achieving its long-term goals.
As you can see, in its simplest form, a strategy should bridge the gap between “current state” and “future state” for the organization.
The Value of Strategy Frameworks
Formulating a strategy for the organization to achieve its long-term goals is a complex endeavor because it is highly situational – every organization is unique, more often than not operating in an uncertain VUCA (volatile, uncertain, complex, ambiguous) environment, and their situation is unique. The need for VUCA Strategic Planning has never been greater.
Many leaders find strategy formulation to be extremely challenging, yet intellectually stimulating at the same time. In many respects, defining strategy for the organization is the very essence of leadership!
Strategy formulation is not easy. Depending on the current state of the organization, the envisioned future, a comprehensive situational analysis, and the size/complexity of the “strategy gap” there can be any number of potential strategies and variations to consider.
Given the complexity of operating environments, marketplaces, and competitive forces, this is one of the most challenging tasks for modern business leaders. Fortunately, there are a number of established frameworks that can help us to identify the best strategy for the organization to reach its identified long-term goals.
Perhaps the simplest strategy framework is the basic “gap analysis” – a strategy designed around answering the question: “How will we get from here to where we want to be?”
There are a number of other strategy frameworks, some of these (like SWOT and PESTEL) are quite useful during the Situational Awareness phase of strategic planning. Each of these incorporate different approaches to evaluating the challenge and formulating the resulting strategy. A few of the more well-known strategy frameworks include:
- SWOT
- PESTEL
- Porter’s Competitive Forces
- McKinsey 7-S Framework
- Pareto Analysis
- Constraints Analysis
- VRIO Analysis
- BCG Matrix
- Ansoff Growth Matrix
Future articles will explore each of these, and their application, in greater detail.
The Basic Elements of a Good Strategy
No matter what strategy framework you decide to use (if any!) there are five common elements to any good strategy:
- Situational Awareness: You must have clarity on the starting position (current state), and consideration of the environmental factors that could influence your success.
- Envisioned Future: A realistic long-term goal (future state) that can be achieved, or enabled by, the successful execution of the strategy.
- Diagnosis: A reasonable diagnosis of the challenge. This is the logical, and fact-based, explanation for the reason(s) behind the challenge the organization is facing.
- Hypothesis: A simple hypothesis on the solution to the challenge, one that the strategy could reasonably be expected to solve.
- Action Plan: A logical and feasible action plan, spelling out the high-level actions the organization is capable of taking that would lead to overcoming the challenge or achieving the objective.
These elements provide helpful criteria for leaders to use when evaluating any considered strategy.
Next Steps
Formulating strategy is not easy. And unfortunately, it only signals the beginning of the next phase of VUCA Strategic Planning because once a leader formulates a strategy they must make the all-important “go or no-go” decision. If the decision is to move ahead with a chosen strategy then it is time to build a complete strategic plan around it.
-Onward