Given that there are so many strategy frameworks available, and consultants that develop them, what works practically for SMEs that helps drive long-term growth? Mike Lander answers that question.
In a previous life, I spent several years as a Strategy consultant developing global transformational strategies and implementation plans for FTSE100 and Fortune 100 corporations. This taught me a huge amount about the need for comprehensive frameworks, rigorous analysis, competitor intelligence, stakeholder management and finance, it has however recently raised several questions in my mind, one of the most significant being:
Given that there are so many strategy frameworks available, and consultants that develop them, what works practically for SMEs that helps drive long term growth?
The starting point in my experience is to define where strategy fits with respect to your Mission, Vision and Values. I have developed the following hierarchy with input from referenced sources:
Now that we have a context for where Strategy fits, we can go on to define a framework that anyone can develop within a couple of days. The following is based on an article by Collis and Rukstad which I have adapted/added to and used with many businesses to get to the real essence of their strategy.
Step 1: Strategic scope
- Which countries are we going to focus on
- Which customer segments are we going to focus on
- Which service/product lines are we going to focus on
Step2: Strategic objectives (3 years’ out)
- SMART business objectives (scale, growth, market positioning, market share, etc)
- SMART financial objectives by year (sales, gross margin, net margin, working capital, financing, etc)
Step 3: Strategic context
- What are big obstacles/barriers that can get in our way of achieving our objectives and how are we going to deal with them (you could consider this to be a strategic risk framework)
- Current and past performance (financial and non-financial). This should be used as a reality check to make sure that your objectives are achievable
Step 4: Sources of competitive advantage
- What is it that we have/own, or know (i.e. processes, methodology, skill/qualifications) that make our offering unique in our chosen market?
- What intellectual property can we develop that has significant value to customers and potential buyers and acts as a barrier to entry for our competitors (i.e things that we can patent or trademark, exclusive licenses, brand value)?
- Long term (3-5 year) contracts (with no “terminate at will” clauses) with customers that guarantee future, profitable income streams. These create barriers to competitors taking away our clients
- Are there any material capital barriers to entering this market that we can create
- Are we the “lowest cost producer” in our industry compared to our competitors
- What strategic partnerships should we develop (and contractually engage with) to add value to customers
There are lots of references to this topic on Google for further ideas
Step 5: Strategic roadmap
You now need to work out how you are going to achieve all this in very broad terms. The model below shows how you can create a visual roadmap with milestones each year to show progress (I usually use this with the Executive team/Board as a visual on the wall to maintain focus). This is just an example (the purple triangles are milestones which should have descriptions to track progress), you should develop your own version within the context of your business
Step 6: Strategy strap-line
- This should capture the essence of your strategy in <35 words
- Take out any jargon, make it crisp, succinct and compelling
- The acid-test is once developed, everyone in the company should be able to repeat it and get it right
In summary, without a clear, well thought through strategy that sits within the context of a Mission, Vision, Values and Business Plan, you will have no-clue where you are going (and nor will anyone that works for you) and your probability of survival is less than 50 per cent.
Mike Lander, is a Director and co-founder of www.ensoul.co.uk , business consultant and writer.