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By Ellen Pearlman
Strategic Thinkers: David Collis and Michael Rukstad
Credentials: Collis is an adjunct professor in the strategy unit of Harvard Business School and the author of several books on corporate strategy, he has studied and consulted to Edward Jones, the broker firm that is cited in this article; Rukstad, now deceased, was a senior research fellow at Harvard Business School, where he taught for many years.
Big Idea: Most executives don't know the elements of a strategy statement; if your firm's strategy can be applied to any other firm, you don't have a very good one.
Article: "Can You Say What Your Strategy Is?" by David Collis and Michael Rukstad, published by Harvard Business Review, April 1, 2008
I can't begin to count the number of meetings I've attended over the years designed to define or redefine the corporate strategy of the company I worked for. Rarely did these meetings yield a cohesive, simple statement that became the mantra for everyone in the organization. So when I read "Can You Say What Your Strategy Is?" in the Harvard Business Review, I must confess I smiled knowingly about all the mistakes that companies make.
The article leads off with these two sentences: "Can you summarize your company's strategy in 35 words or less? If so, would your colleagues put it the same way?" I couldn't help but wonder how many people could answer "yes" to both those questions. I wouldn't be surprised if it's less than 25 percent. The authors, Davis Collis and Michael Rukstad, contend that the most successful companies have executives that can answer those questions.
The reason this is so important is that without a clear strategy, workers and managers are not clear on which opportunities to pursue and which to pass over. And without clear direction they don't know whether growth is more important than profits. Mixed signals are frustrating and lead to poor results.
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Leaders often think they have a strategic statement, when in reality it is anything but that. "It is a dirty little secret that most executives don't actually know what all the elements of a strategy statement are, which makes it impossible to develop one," the authors say.
The article identifies three critical components of a good strategy statement: objective, scope and advantage:
- Objective is the part of a strategy statement that most companies have defined, but often not well. Most times they confuse their mission with their strategic objective. A strategic objective should be the "single precise objective that will drive the business over the next five years or so," say the authors. It should be specific, measurable and include a time frame. A mission statement (why your company exists) is not useful as a strategic goal that drives the business forward. In fact, your competitor could share the same mission statement with your company. But it's unlikely that they will share the same strategic objective.
- Scope includes three aspects: customer or offering, geographic location, and vertical integration. These three dimensions are not necessarily equal. The scope does not tell you how to achieve your goals, but it should specify where the firm or business will not go.
- Advantage is the most important part of a strategy statement. It clarifies what makes your company distinctive from its competitors. It should have two parts: A statement of the customer value proposition or why your customer should buy your product or service; and a description of the company's unique attributes that allow it to deliver on its customer value proposition.
Of course, it's not enough to understand what goes into an actionable strategic statement to achieve success. You have to begin with a great strategy. This involves a careful analysis of the business landscape you are in and a clear understanding of where the sweet spot is that will enable your company to stand out from the crowd. And then this all needs to be boiled down to a brief statement that can be distributed to everyone in the organization.
So what does a strong strategic statement look like? The authors provide a good example from Edward Jones, a St. Louis-based brokerage firm that has quadrupled its market share in the last 20 years:
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Jones aims to "grow to 17,000 financial advisers by 2012 [from about 10,000 today] by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions, through a national network of one-financial-adviser offices."
For a full examination of Edward Jones and how they developed their strategic statement, go to
Jones didn't arrive at that statement easily. Nor should you expect to. A well-crafted statement takes a lot of discussion and debate, as well as careful analysis of the repercussions of each part of it. But if it's well done, it is clearly worth the effort.
Also of interest:
- Article: "What is Strategy?" by Michael Porter, published by Harvard Business Review, November 1996. This article lays out the characteristics of strategy.
- Book: "Developing Business Strategies," by David A. Aaker, published by Wiley, 6th edition, 2001. Provides the framework &38; tools needed for effective strategy development.
CIOZ Question: What is your company's strategy statement?
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