Stage 1 – Designing the Strategy
CLCI consultants work closely with the Senior Leadership Team of the client organization to help it decide its strategic direction and create its strategic plan. This is the most important and critical phase of strategic planning as it must deliver unique value to the organization’s customers and distinguish the organization from its competitors.
Strategies are developed by the senior leaders of an organization, and implemented by the entire management and operational staff. CLCI works with the senior leadership team to clarify the mission, values and vision statements and to conduct strategic analysis leading to strategy formulation. The decisions made in the strategy planning sessions are captured on a template called the Strategic Framework, which becomes the precursor for the Strategy Map.
CLCI facilitation process helps the organization create a heightened awareness of the importance of constantly scanning the internal and external environment, creative thinking, focusing on the common vision, delighting the customers, and upholding values at all times. It also encourages open and candid communications, transparency, teamwork, breaking down of interdepartmental silos and risk taking.
Steps of Designing the Strategy
The steps in the CLCI process for Designing the Strategy are:
To lead the senior leaders and others in the organization to consider alternate ways of thinking and doing business, the CEO/ President must first get their attention.
The CLCI Model suggests that the CEO/ President first talk about the urgent and important issues that affect the organization, and the consequences delaying the response or not responding at all. Making a Case for Change is about building awareness for the urgent need to take stock of the dire situation the organization finds itself in.
A: The Burning Platform
High level issues that management foresees as likely, such as:
Anticipated future customer demand changes
Potential competitor responses
Technological innovations by competitors
Need to arrest current dismal performance
B. Big, Hairy Audacious Goals (BHAGs) set by the executive leadership
Ambitious goals set by the Board / top management to accomplish what would be otherwise considered impossible.
Such goal often times to transform the nature of the business.
C: Management Directives
Instructions of the top management you can’t ignore, and must abide at all times.
The reasons behind these instructions may or may not be explained by the top management.
This helps understand the extent to which the strategy and structure of the organization are matched or mismatched to the developments in the environment:
A: Strategic Performance Assessment (QuadStrat)
QuadStrat is a suite of organization assessments to pin point the best opportunities for strategic performance improvement. These assessments clearly illustrate management and employee alignment and answer the question: Are the senior managers on the same page and to what degree are your employees engaged and committed?
The assessment covers 35 key business disciplines tied to 3 critical areas of the organization: strategy, design, and culture. The report compares results with the over 3,000 organizations global best practice database and includes a “Strategic Performance Index” which provides the overall performance score in relation to this database.
Developed with the support of UCLA and Pepperdine University, QuadStrat assessments are rooted in fact-based primary and secondary research, yet are designed with practical business application in mind.
B: Internal Scan:
CLCI facilitates a session of the Senior Leadership Team to take stock of the Strengths, Weaknesses, Opportunities and Threats affecting the organization.
C: External Scan
CLCI facilitates a serious of sessions of the Senior Leadership Team to help it:
Understand changes going on in the environment that may affect the fortunes of the organization
Analyze the competitive position
The sessions the SLT participates in relate to the following analyses:
- PESTEL Analysis
- Porter’s Five Forces Analysis
- Competitor Analysis
- Growth Strategies (Product/ Market Matrix)
- Boston Consulting Group Index
- Market Segmentation and targeted customer identification
- Identifying customers to be retained/ dropped/ attracted
- Selecting from Value Propositions and Competitive Differentiators
- Other analyses
This is about formulating possible courses of action, evaluating them, and then making a choice between them.
Key aspects for consideration
- Products/ Services
- Value Proposition
Some of the other points for consideration while making strategic choices are:
- Deciding the basis on which the organization will compete or sustain excellence
- Choosing alternate directions in which to develop, as well as the methods
- Making choice about customers, products and value proposition
- Making choice of competitive differentiators and processes
- Using Financial models to test that choices made will support strategy
A. Financial Analyses to support strategy
The financial model must incorporate key strategic assumptions. These key performance indicators may be excellent choices for measures, such as:
- Key financial ratios that must be met for your bankers
- Customer or volume growth rates necessary to achieve returns on capital investment
- Manpower productivity levels that must be managed to contain unit costs
- “Break-through” in technologies that are expected to meet competitive challenges.
The model can be simple and high-level, or complex and integrated with the organization’s permanent business / management processes. It is important that the model use the same definitions for terms / measures as the accounting system. This will enable accountability for results. Scenarios are then run based on targets for all measures to ensure consistency between inter-related variables and that the plan will meet high-level shareholder / financial goals.
B: Financial Ratios:
The following five categories of financial analysis ratios are the most commonly used:
- Liquidity Ratios
- Leverage-Capital-Structure Ratios
- Profitability Ratios
- Turnover Ratios
- Capital-Market Ratios
The Strategic Framework lays the foundation of designing the Strategy Map and is an important template that brings together the vital elements of strategic thinking, listed below:
- Critical Success Factors
- Corporate Goals