The above are all high level terms applied to strategy and these notes have been prepared to help with their understanding.

Values and stakeholders

Even for small organisations, it is useful to make some explicit reference to values, as time allows, as such guidance will shape the decision-making of different people within it. This does not have to be an overly burdensome process, just a few bullet-points or statements may do, such as:

'Just as we expect to be paid fairly and promptly on presentation of invoices, we will always endeavour to pay invoices presented to us within 30 days or within the alternative time-frame we have agreed with our suppliers.'

For larger organisations the need to address the notion of values is increasingly being overtaken by the commercial imperative of adopting an acceptable 'Corporate Social Responsibility' policy, simply for the purpose of 'qualifying in' for certain business and being acceptable to an increasing number of investors.

Stakeholders are those people whose lives the activities of the organisation will touch in some way. How an organisation perceives, expresses and applies its values will ultimately impact its stakeholders. Sadly, there are many examples of organisations expressing deeply held values, which are then not implemented, through either fraud, negligence or some other unforeseen systematic failure: Union Carbide (Bhopal - loss of life); Exxon (Alaskan oil spill - environmental damage); Enron (Fraud - financial damage). 

For expressed values to be any more than meaningless 'lip service', resources need to be found to put into supporting systems and procedures, that help ensure they are upheld. When implementing a strategy it is essential that this necessary overhead is budgeted for, right from the very beginning.

Stakeholders include employees, investors and members of the communities and environments that the business' activities will either directly or indirectly influence. Big industrial companies impact stakeholders all around the globe, as when they source materials from distant countries, they shape the communities within them.

A stakeholder-mapping grid is one of many simple ways in which the relative importance of different stakeholder groups can be mapped. Unfortunately, for all those communities in far-flung countries, that have grown dependent on supplying the multinationals, many will probably never advance in stature from the 'monitor and respond' box. 

As indicated in the What strategy is and why it matters page, a strategic VISION is an ambitious, but credible and measurable long term goal that an organisation is striving to achieve. In commercial settings such goals are most often stated primarily in monetary terms. In not for profit settings they are very often stated in terms of measurable changes in stakeholder opinions, lifestyles, or behaviours.

MISSION is an understanding of both the reasons for an organisation's existence and of its core social values. 

An alternative approach is presented below
 

• Customers: Who are the firm's customers? 
• Products or services: What are the firm's major products or services? 
• Markets: Where does the firm compete? 
• Technology: Is technology a primary concern of the firm? 
• Concern for survival, growth, and profitability: Is the firm committed to economic objectives? 
• Philosophy: What are the basic beliefs, values, aspirations, and philosophical priorities of the firm? 
• Self-concept: What is the firm's distinctive competence or major competitive advantage? 
• Concern for public image: Is the firm responsive to social, community and environmental concerns?
• Concern for employees: Are employees considered to be a valuable asset of the firm?

Whereas the mission statement answers the question "What is our business?" the vision statement answers the question "What do we want to become?"

• Mission and Vision are the key to a good strategy 
• They lie at the heart of many small business problems 
• They form the foundation upon which SMART* objectives to propel the organisation forward can be built.

*SMART = Specific, Measurable, Achievable, Relevant & Time-based - see separate notes

The best way to develop an appreciation of good mission and vision statements is to check the published materials of companies or organisations you admire to get a sense of their mission and vision statements.

Far from being a consultancy-speak gimmick, a well-crafted mission and vision statement can be among the most valuable devices within a medium to larger business' communications pool for bringing staff together and ensuring they are all pulling in roughly the same direction.

Establishing a sense of place

Every business should also have a sense of place, encompassing:

• where it is relative to where it wants to get to
• the terrain it will have to cover to get to its destination
• and how it will overcome the principal obstacles along the way

However, a strategy is more than simply heading straight for an objective: it is about mapping the terrain first and the plotting a course via a series of milestone steps, with a view to realising an ultimate vision in due course. 

Without an understanding of where a business or organisation is relative to its 'operating terrain' there is a very real risk of simply moving from one crisis point to another. 

Crisis points can be, for example: entering market segments where there is no chance of winning; upsetting key stakeholders; running out of money, etc. 

Useful milestones on the other hand are situations where the organisation acquires some kind of additional strength to enable it to navigate its way to its next target milestone. Examples include: securing profitable and defensible market niches; gaining additional support from key stakeholders and acquiring access to additional cash. 

This aligns with understanding an organisations strengths, weaknesses, opportunities and threats, with respect to its vision and mission, as mentioned in the what strategy is page

Communication and control

Strategy and communications

For all but the smallest organisations or businesses, once a mission, vision and sense of place has been established the next aim must be communicate this in as full a context as possible to key stakeholders, preferably in a way which will encourage them to become champions and defenders of the strategy.

Many different types of mechanism are employed to effect this communication and the accompanying process of winning 'hearts and minds'. Many organisations embrace all types of stakeholder in their periodic strategic reviews to both harvest insight and to encourage a sense of joint-ownership of the approved strategy. 

All manner of communications are used, including social networks, intranets, formal top-down publications, news sheets and seminars. In addition, strategic objectives are carved and allocated out to managers as sets of objectives that they are then tasked to complete as part of their operational deployment plans and ultimately, individual employees are allocated personal objectives.

Large organisations, often deliberately and smaller businesses, more inadvertently, also communicate through what might be called a storytelling process. Collections of stories, about how the organisation was formed and got to where it was today, and of how various customers, staff and suppliers have been treated along with the consequences of these actions are circulated through training, case studies and organisational folk-lore.

Stories, real or false but convincing, have a powerful influence on stakeholder perceptions of the organisation concerned. Even when not used formally, they tend to exist in all organisations and can have a powerfully positive or negative impact on the functioning of an organisation. Monitoring and rectifying incorrect stories that shape stakeholder perceptions is an important work area.  

The aim of such communications is ultimately to get everybody within the organisation pulling in roughly the same strategic direction whilst observing its core values.

Where's north?

The concept of vectors

 


Dotted line equals the sum of  the solid arrows

Vectors - a combination of force and direction. Basic physics shows how the sum of two forces is arrived at. Three simple examples are displayed above. As forces become aligned the impact on the sum of forces is considerable. Just imagine every force related to the contribution of an individual or team within an organisation. If all teams or individuals could be motivated to pull in the same direction, the impact on the organisation would be dramatic.

How is this achieved? Leadership, communication and effective motivation get people pulling in the same direction. The key however, is to make sure that such a potent force is then pulling in a desirable direction.

The need for feedback & control

From Kotler P. (1991) Marketing Management. Prentice Hall

BT has reinvented itself: from a telephone company to a broadband and digital services company. In the face of fierce competition, many corner shops have reinvented themselves: to Internet café's; financial, travel and utilities services vendors (Still grocers shops, but most footfall and revenue down to newly installed cash-point; travel-card; lottery and utilities cards machines)

Many businesses reinvent themselves as a result of a concerted strategic review. Many more evolve, sometimes radically, as a by-product of a conscious or unconscious strategy process, which effectively results in them, 'learning by doing'. So it is that many sub-post offices and corner shops now have cash-points and Internet terminals in place of the shelves of low-value staples, such as baked beans, they used to sell, but still along-side the high value 'distress purchases' such as disposable nappies, deodorant and wine, where price competition from the multiples remains irrelevant.

Small business owners may not realise it, but simple business evolution through learning by doing encompasses the basic strategic concept of feedback & control.

Most businesses shift in time across all four quadrants of the efficiency-effectiveness matrix, alternatively losing and gaining value. The trick is to spend more time gaining value than losing it and, when in a loss making situation, to get out of the 'Die Quickly' quadrant as fast as possible. Getting out of the 'Die Quickly' quadrant, often involves shedding costs and liabilities, which, in turn often means laying people off and freezing recruitment, until strategies are revised appropriately.

But how can a business know when it is headed for the rocks in good time? The key is to map the progress of the business against targets in areas of performance that are relevant to the business' success. 

Applying control limits

Solid straight lines equal upper and lower 'control limits'

As the McKinsey consultancy states: if you cannot measure it you cannot manage it.

The key is to regularly review your actual outcomes against your anticipated outcomes. If outcomes are better than expected, you might have latched onto a good thing. If outcomes are worse than expected, you might be headed in the wrong direction. What are the trends of actual versus anticipated outcomes? Are there any discernable trends to learn from?

In the three diagrams above, the centre line represents the targeted output over time. In the first, actual output is seen to deteriorate on a trend-line, downwards, towards the lower horizontal line, which may mean that urgent remedial action is needed to save the business from severe damage. Note these lines can represent whatever you want them to, provided you apply them realistically and consistently. In such a way, the converse to our lower line could be that if output reaches the upper line, the business might be under threat of missing out on a major growth opportunity, unless some urgent remedial action is taken.

The first example might therefore represent a small call centre business, with the centre-line equalling 100% of optimal call centre capacity being used; the lower line equalling 60% capacity and the upper line equalling 140% capacity. If this was the case and we were looking at a series of plots, which stretched over a year, we could deduce this call centre operation was running out of business.

If the first example showed the size of holes drilled in a widget factory with the upper and lower lines being the maximum and minimum tolerated dimensions allowable by the customer, we can also see that the business has run into big problems. In this case the problem could be down to worn-out drill bits which need replacing - something which the trend-line should have alerted people to earlier. Although not strategic, this is yet another example of what regular, periodic and timely measurements of actual against targeted measurable outputs can feed into business management.

The second example indicates that the measurement, feedback and control system appears to be working. The third indicates a measured output that appears to be out of control and therefore needs urgent managerial attention. If outcomes vary wildly relative to anticipated performance, it could be that the measure you have adopted is either irrelevant or beyond the control of your operation. Choose upper and lower control limits, beyond which you will take remedial action and monitor your performance against chosen measures regularly to learn and adapt, based upon outcomes against anticipations. This is the feedback and review cycle, if the measures you have chosen to review are appropriate. Apply. Learn. Adapt. Experiment. Do not take undue risks.

The concepts covered here may seem somewhat abstract but they are central to a well-executed and developed strategic approach. Strategy is all about setting communicating and then striving to reach objectives, prior to learning from how the business has fared against these.