The year 2020 was far from a normal one. Given the incredibly turbulent times caused by the global pandemic that continues to impact daily lives worldwide, many business leaders made different strategic choices that ranged from identifying and capitalizing on new sources of value to merely finding ways to stay in business. As a very uncertain and turbulent 2020 comes to an end and we enter 2021 with a vaccine on the horizon and cautious optimism for a less disruptive year, it is an opportune time for business leaders to step back and assess their current strategies. Even if your company is not on a calendar-based fiscal year, periodic assessments of your strategy in addition to the existing measurement and tracking, can both validate the current strategic direction while identifying opportunities for refinement, and in some cases, a complete overhaul. The output of this assessment provides a valuable baseline understanding of the strategic direction to date, a sense of whether the plan is both feasible and achievable, as well as an historic view of the performance vs. the current strategy’s objectives. To guide this exercise, the following outlines Denneen & Company’s Strategy Assessment Framework.
Denneen & Company’s Framework For Strategy Assessment
Do all strategy elements exist and are they succinctly articulated?
The first step in the Strategy Assessment is to review how you have articulated your strategy. A solid strategy articulation clearly lays out both a vision for what the company aspires to be and a mission which defines the company’s overall purpose or reason for being. These vision and mission statements should provide the big picture under which the strategy exists.
In addition to the vision and mission, a review of the strategy articulation involves ensuring that your strategic choices regarding where the company is choosing to play and how they will win, any key initiatives or projects related to the strategy, and the overall business goals and objectives are all documented. It is also important to assess whether these elements are aligned with each other and are not in conflict confirming, for example, that the vision and mission work together to communicate a company’s future state and that the initiatives clearly linked to the choices.
That said, this is largely a collection exercise that, at a minimum, determines if these key elements of your strategy exist. If they do not, it is indicative of gaps in the articulation that need to be addressed before moving forward. Though if some or all of the strategy articulation is found to be in place, the following steps of the framework provide a guide for you to more deeply assess the strategy.
Do the “where to play” choices clearly communicate what the organization will do and NOT do? Does the strategy articulation drive clear direction and enable decision-making?
At the core of any strategic plan are choices. However, it is very challenging for a company, product, or service to appeal to every customer or consumer in every part of the world. To be successful, a strategy must be choiceful – for the most part, companies cannot do or be everything. These choices often answer who the company will target (a specific consumer and/or customer segment, not everyone), in what geographies or markets it will compete (specific geographies, not everywhere), on what products or services it will focus (often the most promising and profitable, not the entire portfolio), on what internal projects to prioritize, and if growth is expected to be driven organically or inorganically. And with limited resources, strategic choices need to be made to direct an organization as to not only what they will do, but also what they will NOT do. Understanding where your organization will NOT play is a critical aspect to your strategy, as it helps to prioritize the areas of greatest impact and opportunity while ensuring resources are not expended against potentially wasteful and non-profitable activities.
Communicating Strategic Choices:
P&G In 2015, Procter & Gamble announced a plan to sell approximately 100 brands. A.G. I_, P&G’s CEO at the time stated, “The broadest articulation of the company’s strategy is we’re going to play where we can create significant consumer preference for differentiated, premium-priced brand and clearly, noticeably, importantly better-performing products.” In this statement, communicated clear choices and provided direction to the entire organization: P&G brands will have a role if they can deliver consumer-noticeable performance and differentiation, and command a premium for that performance. His statement also conveys that P&G is choosing not to compete at opening price points or within fully commoditized categories.
Another aspect of assessing strategy “choicefulness” is whether it drives decision-making throughout the organization. Does your strategy direct a business leader or brand manager to make specific choices about their division or brand? Can you easily determine whether individual brand or business unit choices are “on strategy” or is there significant flexibility within the choices that allow for business units to make their own choices? In P&G’s case, based only on Lafley’s statement above, brand managers have a clear understanding of not only what brands will drive the future growth, but how those brands are expected to create value. Are your choices this clear?
Is the current business, market, competitive, customer, and consumer Landscape well defined and understood? Does the organization have proprietary insights that create competitive advantage? Is “what has to be true” feasible?
Determining whether the strategy is supportable starts with an assessment of whether the internal and external business landscape is deeply understood. This should begin with a review of where and how your company is making money, an exercise we have found to be surprisingly eye-opening as internal biases and “doing things the way they have always been done” often create internal blind spots. The internal assessment should also be accompanied by an evaluation of your external understanding of the market, which could include market and industry size, growth rates, competitive dynamics, market shares, and other trends and drivers including the identification of key risks and potential disrupters. A review of your most current consumer and/or customer research can also help determine if there are proprietary insights that offer a competitive advantage vs. what is generally known in a given industry. Finally, this step concludes with a feasibility exercise, which requires you to envision a future state where the goals have been achieved and outline “what has to be true” in order to achieve that future state. This would often include assumed market growth rates, share gain/loss across the competitive set, future business growth rates in the context of historical performance, and the extent to which the future growth is predicated on the success of new products or innovation. Determining “what has to be true” provides a sense of the overall feasibility of delivering against your plan while also identifying elements that may be overly aggressive or optimistic.
Are resources and organizational capabilities adequate to deliver against the strategy? Is the timeline clearly defined and sufficient? Are incentives in place to drive focus on the strategy and reward results?
While the previous “Supportable” assessment examines the feasibility of your strategic plan, the Achievability assessment looks at whether your current organization has the ability to achieve it. This step seeks to answer whether the right resources, both in people and investment levels, are in place, and if the organizational capabilities exist to execute the strategy, especially if your strategy calls for a significant change in direction or you are asking the organization to do something they have never done before. Part of the achievable element is also to review your forecasted timeline to determine sufficiency, as well as if incentives and compensation are in place to drive focus on, and reward delivery of, your strategy. Without the resources, capabilities, adequate timeline, and appropriate incentives, achieving the goals laid out in your strategy will be challenging.
Is the strategic vision well understood throughout the organization? Does every function know what is required of them to achieve qualitatively and quantitatively to deliver against the initiatives?
While your overall strategy articulation is collected and reviewed in the very first step to ensure it is in place and exists, it is also critical to gauge whether your strategy is well understood throughout the organization. If it is not, how will your organization be expected to achieve it? Via interviews and/or simple online, anonymous questionnaires, the level of strategy understanding across your organization can be easily assessed. Not surprisingly, we have found that organizations with a solid understanding of the strategy, how it specifically impacts them, and high confidence in its success often correlate with a clear strategy articulation. Conversely, a weaker or more ambiguous strategy articulation often correlates with poorer recall, less confidence in success, and a general lack of understanding of what the company is trying to achieve. The output of this step can help you with regard to not only the strategy articulation and how it is communicated across the organization, but also identify specific departments or business units on which to focus these communication efforts.
Is there a dashboard with KPIs at the right levels of the organization that accurately reflect the progress against the strategy? Is there a process by which progress is periodically assessed and the strategy is course-corrected? What progress as been made thus far?
The final step in the Strategy Assessment Framework is to review the ways in which progress against your strategy is tracked, as well as to examine performance to date. The Measurable assessment should include a review of the performance of your current strategy and whether it is on track to achieve the original objectives. Assessing dashboards and KPIs (key performance indicators), as well as the processes utilized to review and discuss performance helps to ensure that you are reviewing the right measures at the right levels at the right times. Having the right metrics at the right levels, all of which link with the overall strategy, enables more efficient reviews, and keeps the organization, regardless of level, focused on the most meaningful metrics. Additionally, you should assess whether your KPIs are truly performance indicators vs. just metrics that can be measured. Finally, a critical aspect of the Measurable assessment is to determine whether the reviews of the trackers and/or dashboards are actually driving action. When metrics are off-track, is there an explanation as to why as well as a plan to address? If elements are significantly off-track, is there a process to re-assess the overall choices and change direction as needed? Clear measurability and a process to drive action when KPIs are off track are critical to driving overall success, as well as change when required.
In summary, conducting periodic reviews of your strategy using the framework outlined above can be a valuable way to ensure that you not only have a strong strategy in place, but also that your entire organization is set up to deliver against it. Furthermore, the review can also highlight potential areas of weakness, opportunity, or mis-understanding that may need to be addressed, while also identifying areas of the strategy that could use additional refinement. And in some cases, the assessment may indicate that it is an opportune time to think about an entirely new or significantly revised strategy altogether. That said, these assessments require business leaders to take an objective approach, navigate internal biases, and ask questions that often challenge the organization and the status quo. As we emerge from a very atypical year in 2020, taking time to review and assess your current strategy will provide a valuable foundational understanding of your strategy today while offering insights and direction to further refine your path to success in 2021 and beyond.
Denneen & Company is a growth strategy consulting firm that has been helping companies find and follow their unique paths to growth for over 27 years. With experience across 20+ industries, 40+ consumer categories, and 40+ countries, Denneen & Company consultants leverage their former backgrounds as industry practitioners and past engagements to develop practical and achievable strategies based on rigorous analysis, breakthrough insights, and a collaborative approach. To learn more, please visit denneen.com.
Phil Ryan is a Principal at Denneen & Company where he has led numerous client engagements over the past six and a half years. Prior to consulting, Phil was a brand and business leader at Proctor & Gamble. He lives with his wife and three children in Arlington, MA.