8 strategy questions every CEO should ask

With 300+ likes and 1K shares, the strategy article 8 things every leader should know about strategy somehow struck a nerve. But as many readers pointed out correctly, it’s one thing to know what strategy is all about, but it’s another to get out there and come up with one.

As you will probably agree, there is no magic formula for crafting the perfect strategy. If there was, the business world would look a lot different. But that does not mean there aren’t a few shortcuts that you can take. Here are 8 strategy questions to inspire your strategic thinking.

1. Should I strengthen my current strategy? And if yes, how?

Are you doing ok today? If yes, ask yourself how you can strengthen your existing strategy. Look for ways to improve what you do well already. Think about introducing new technology, features, products or services that leverage other areas in the value chain and fit with the current strategy. In short, build on what you already have.

2. How can I copy with pride?

Copying what others in your industry in your main markets are doing isn’t smart. You will start competing on the same axes and this competition will lead to price erosion. But copying can still pay off big time. The world is a big place and many great companies only operate locally. But in this information era, it’s easy to find them, learn from their success and see if some of their ingredients for success can be copied.

By spending only one evening on the internet, 56 out of the 80 companies that participated in my research found at least one great example in another geographical area that fuelled their strategic-thinking process

3. How can I go beyond product innovation?

Don’t focus only on the product or service – a risk, especially in an engineering environment. There are more things to a value chain then the product itself. The key to a sustainable competitive advantage is that ALL activities are tailored to the value proposition.

4. How can I recapture company heritage?

If your company has been around for some time, it follows that it has been doing something well for at least a certain time period. Finding out what that uniqueness is/was and reapplying it to boost your strategy is an interesting way of fuelling your reflection process about strategy. This doesn’t mean that you have to re-do it in the same way, but an adapted version might be just what you need.

5. How can I take advantage of a crisis?

Take a look at these figures from an article in the Harvard Management Update(Baveja, Ellis, Rigby, March 2008). A study of more than 700 companies over a six-year period found that “Twice as many companies made the leap from laggards to leaders during the last recession (90-91) as during surrounding periods of economic calm”. And most of these changes lasted long after the recession was over − a clear indication that what you do during the crisis determines your position when it’s over. Put differently, what you do during a crisis determines your strategic position once it’s over. So when the going gets tough, the tough get going. And win in the end.

So keep going, even when it’s tough out there.

6. How can I build an execution edge

Strategy Execution provides a competitive edge. A strategy needs to reinvent itself every five to seven years. Execution capabilities last much longer. So it pays off to invest in strategy execution excellence.

7. How can I innovate my business model?

A business model is a fancy word for the combination of choices you have made in your activities – your value chain – to bring your value proposition to life. The concept has been around for a long time, but for some reason, everyone apart from strategy consultants have forgotten about it. A recent book by Alexander Osterwalder in which he puts thinking about business models in an easy-to-use format has been a big hit. If you want to get going, identify activities and ask yourself some questions for each block.

8. How can I create Shared Value?

Sustainability is a hot topic today and I believe it is more than a fad. Shared Value is a new concept that helps strategists to incorporate social value into the strategic positioning of an organisation. And it goes far beyond philanthropy.

Michael Porter’s definition of Shared Value is: “You create shared value by enhancing the competitive position of a company while at the same time advancing the society in which it operates.”

The words ‘at the same time’ are very important. When people look at the relationship between a company and society, they tend to think it’s a zero-sum game, a game with only one winner. The strategy concept of Shared Value looks at the positive sum. It means that certain choices will strengthen the strategic position of the organisation and at the same time offer benefits for society.

It’s your challenge as a strategist to find that sweet spot.

There’s an active discussion on LinkedIn Pulse. You can join it here

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Why action plans are overrated

Action plans: everyone tells us they are the key to success. But unfortunately, that is not true. There’s another ‘get it done’ lever that is so much more important. To understand this rather strange idea, let’s take a look at something a famous strategist once said:

‘Strategy is a pattern in a stream of decisions’

Professor Henry Mintzberg is an internationally renowned academic. He wrote more than 150 articles and 15 books on business and management. One of Mintzberg’s insights, “Strategy is a pattern in a stream of decisions,” helps us to better understand how decisions relate to strategy.

A long time ago, when I worked at Arthur D. Little, I learned this phrase by heart—but it took me 5 years to really grasp the point of it. The trick I use to understand Mintzberg’s cryptic statement is to approach decisions in 2 steps. First, there’s the overall decision—the big choice—that guides all other decisions. To make a big choice, we need to decide who we focus on—our target client segment—and we need to decide how we offer unique value to the customers in our chosen segment. That’s basic strategy stuff. But by formulating it this way, it helps us to better understand the second part, the day-to-day decisions—the small choices—that get us closer to the finish line. When these small choices are in line with the big choice, you get a Mintzberg Pattern.

The Mintzberg Pattern

The Mintzberg Pattern is crucial to understanding successful strategy journeys. When we think and talk about strategy journeys, we think and talk about people and the decisions they take. Successful strategy journeys follow a Mintzberg Pattern, small choices that are in line with a big choice, like wagons that follow the train engine to its destination.

At first sight, from a strategist’s point of view, the big decision seems like the tough one. But that’s not quite right. Yes, defining a strategy is hard, but the power of small decisions—the day-to-day choices of all employees on the execution road—cannot be underestimated.

10.000 Colleagues

If one person takes the wrong decision, the overall impact on the company is very limited (and surely less impactful than making the wrong strategy choice). But if 10,000 colleagues make wrong judgments about quality and cost on a daily basis, then these small decisions aren’t so small anymore.

Imagine a construction company and its relentless focus on safety. If one person doesn’t wear a helmet (a small choice), the impact on safety is limited. It’s unlikely that something would happen to that person on that day. But if everyone at that organisation decides to wear helmets only occasionally, the accident risk increases exponentially. Small decisions do have a big impact on the success rate of strategy journeys, not because of their individual size or importance, but because of their sheer number and exponential force.

Most of us don’t pay attention to these small decisions. And that’s mainly because we find it difficult to grasp the logarithmic effect of wrong small choices. (How much worse can it be if a few more people don’t wear a helmet?).

Brittney Gallivan of Pomona

Take 1 minute to solve the following challenge given to high school student Britney Gallivan of Pomona, California: If you fold a piece of paper in half 50 times, how thick would the end result be?

Most of us would imagine the end result to look like a stack as big as a large phone book. We visualize 50 pieces of paper lying on top of each other. But the answer might surprise you. Gallivan decided to test it. She knew she needed a big piece of paper. After some searching, she found a 0.75-mile roll of toilet paper. With her parents, she rolled out the jumbo paper, marked the halfway point, and folded it once. It took a while because it was a long way to the end of the paper. Then she folded the paper a second time, then again and again. After 7 hours, she folded her paper for the 11th time into a skinny slab of around 31.5 inches wide and 15.75 inches high and posed for photos. In the end, she was able to fold the paper 12 times. If she could have folded it 17 times, the final stack would be taller than your average house. Three more folds and that sheet of paper would be a quarter of the way up the Burj Khalifa, the largest tower in the world. Ten more folds and it would have crossed the outer limits of the atmosphere. Another 20 and it would be about 60 million miles high, about two-thirds the distance to the Sun.

“The world was a great place when I made the twelfth fold,” Gallivan wrote when documenting her experiment. She also explained the phenomenal exponential force of repetitive small actions, known as a ‘geometrical expansion’. This is an important lesson for us. Taking into account the sheer number and exponential force, small decisions become SMALL. And successful strategists have SMALL decisions on their radar.

A Decision Tree rather than an Action Plan

If strategy is a decision pattern, strategy execution is enabling people to create a decision pattern. In other words, strategy execution is helping people make small choices in line with a big choice. This notion requires a big shift in the way we think about execution. As a leader looking at strategy execution, we should imagine a decision tree rather than an action plan. Decisions patterns are at the core of successful strategy journeys, not to-do lists. To improve execution speed and accuracy, we should shift our energy from asking people to make action plans to helping them make better decisions.

This article is based on ideas explained in the book The Execution Shortcut. You can join the discussion on LinkedIn.

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