How effective is your strategy? Why not take my quick strategy test, and see where your strategy management approach is working and where there is further work for you and your team to do.

Simply score yourself and your organisation from 0 to 5 for each of the statements below, where ‘0’ means you strongly disagree with the statement, and ‘5’ means you strongly agree with the statement.

After completing the survey sum up your total score and find out what it means for you and your company by comparing to the summaries below.

1. Do You Have A Compelling Strategic Intent?

2. Do You Have Clarity On Your Big Issues?

1. Performance Assessment. We know where we make money – and where we don’t - across the business.
2. Market Assessment. We understand our markets, their likely growth and profitability and their key trends and dynamics.
3. Competitive Position. We recognise our current competitive position and know what we need to do to succeed in the future.
4. Organisational Capabilities. We appreciate which capabilities drive our success and where we have emerging or critical weaknesses.

3. Do You Have A Focused Agenda For Action?

1. Addresses the big issues. We have a strategic agenda focused on the big issues and opportunities shaping our long-term performance.
2. Delivers the strategic intent. Our agenda will move us closer to achieving our major goals and objectives
3. Clear themes. The agenda is broken down into a few core themes that everyone in the business can get to grips with.
4. Prioritised initiatives. Our strategic initiatives are based on a few priorities that will best drive current and future success.

4. Do You Have An Effective Strategy Management Approach?

1. A consistent Executive focus. The strategy is the Executive’s constant focus and their decisions are consistent with it.
2. Organisational engagement. Our strategy is understood across the organisation, and our people actively support our direction.
3. Decision-making. Our people have the freedom to make decisions in line with the strategy, and are held accountable for them.
4. Ongoing strategy management. Strategy is managed on a continuous basis and is not a one-off exercise.

WHAT YOUR RESULTS MEAN

Your score is less than 40

Your company is probably struggling to make real progress in delivering a winning strategy. Your people and your stakeholders may be confused about your future direction and your key priorities, and senior managers may find it difficult to achieve alignment around decisions with a long-term impact. As a leader of the business you may find many low-level decisions are being passed up the chain for your approval and new initiatives may struggle to gain traction across the organisation. You are likely to find yourself being forced to compete on price rather than product/service quality or effective customer relationships.

Your score is in the range, 40-65

You have a reasonably effective strategy, yet you may find that you struggle to make it stick. Strategy is likely to be seen as something that is worked on once the “real” work has been done, and you may find it difficult to balance long-term goals with short-term demands. Strategic initiatives may be viewed as being distinct from business-as-usual, and you may have problems in persuading your best people to lead and drive these programmes.

Your score is more than 65

Your company is set up to develop and execute an effective strategy. You are likely to have set a clear direction, alignment around the strategy is likely to be high and your people understand their role in its delivery. The key watch-out going forward is to ensure that your strategy remains relevant in the context of fast-changing business environments. Remember, nothing fails like success, and you must ensure that you continue to be proactive in raising the bar and driving future growth.

© Stuart Cross 2010. All rights reserved.

For the past couple of months I’ve been posting strategy insights on Twitter. You can follow me at https://twitter.com/stuart_cross.

Just in case you’ve missed them, here are the first 50 insights:

1. Many companies fail because they’re great, not bad, at what they do – it’s just no longer valued, eg Kodak.
2. Don’t let planning kill strategy. Focus on the what, not the how.
3. Raise the bar and focus on your real priorities. What 3 things will really drive your long-term performance?
4. Innovation is more valuable than problem solving. How do you split your time and effort?
5. Don’t be mindlessly customer led. Innovation means that you must lead not follow the customer.
6. Nothing fails like success. Even the best strategies erode, so you need to refresh it constantly.
7. The #1 reason for top entrepreneurs’ success is the ability to ‘experiment fearlessly’. How fearless are you?
8. Strategic success happens when you’re the first to profitably exploit a change in your external environment.
9. The essence of great strategy = informed choice + timely action.
10. Separate objectives from tactics. Be fixed on the vision, but flexible on the route.
11. Your ability to deliver your strategy is directly proportional to the quality of your relationships.
12. Who owns your growth agenda for the next 2-5 years? If no one, then you’ll always have incremental plans.
13. Strategy is as much about what you’re not as it is about what you are. Are you clear what’s off-strategy?
14. Avoid developing strategy within your annual planning process. It only leads to incremental change.
15. A great strategic vision is specific, focused on outcomes, and gives a sense of how it will be made real.
16. The top 3 threats to ongoing success? Arrogance, defensiveness and inertia. Focus on the future, not the past.
17. If you’re not leading, you’re not succeeding. In what ways is your business a market leader?
18. Successful strategies rely on serendipity as much as analysis. In what ways are you open to opportunity?
19. A great strategy process starts with these two words: “What if…..”
20. The 3 characteristics of sustainable business success: distinctiveness, operating excellence and agility.
21. Which of these do you lead on – Best Product, Low Cost, Most Convenient, Best Service or Bespoke Solutions?
22. The secret of great strategy is action. Only when you are doing stuff can you learn, grow and succeed.
23. It’s better to be great in a poor market, than poor in a great market. Focus on your advantages.
24. Ideas are the currency of strategy. Be a big spender in giving your ideas away to others in your business.
25. When it comes to strategy, disruption is mandatory. Be bold. Sometimes you need a little dynamite.
26. Having an effective organisation is more important than a great strategy. How capable is your organisation?
27. The best strategies tend to be pretty simple. A simple solution is easier to understand, explain and deliver.
28. Strategic success is far more about dogged, persistent action than it is about brilliant thinking.
29. Failure is inevitable in any new venture. The secret is to fail quicker and cheaper than the other guy.
30. A good strategist is a good storyteller. You need to tell a great story over and over again.
31. Expect to communicate your strategy 6,000 times: 3 years x 200 working days per year x 10 meetings per day.
32. Many busy, successful executives resent the time they spend on strategy. Find ways to engage, not bore them.
33. Strategy is about choices and trade-offs. These require useful data, not ungrounded opinions.
34. You can only succeed if you focus on a few – say 3 – key areas of the business. Dabbling drives failure.
35. You must face into the real issues. Challenge assumptions and conventional wisdoms, and tell it straight.
36. Always develop more than one possible solution. Robust alternatives give you clearer choices and trade-offs.
37. Avoid long strategy reports. Instead of pages of analysis ask, “What are the five key issues we need to focus on?”
38. Profitable growth is the benchmark of strategy. Don’t just fix current problems; deliver new growth.
39. You must bring your “high level” strategy down to “ground level”. What specifically do you want to achieve?
40. The 3 characteristics of great strategic leaders: passion, rigour and persistence.
41. It’s fine to use opinions to develop strategy, but be rigorous in testing that they’re valid.
42. Don’t fear competition. You need competition to create a market. Even Apple needs competitors to reference against.
43. Shop your business. What does it feel like to be a customer of yours? What frustrations do you have?
44. Don’t just ask customers, observe them. Customers are poor predictors of their own future behaviour.
45. Ask different work groups to develop their ideal strategy for your business. What ideas do you get from new starters, retirees or suppliers?
46. Discuss companies you admire in other sectors. What excites you about them, and how could you translate their benefits for your business?
47. What will happen if you carry on with your current strategy? In the next 5 years, 2 years, 6 months?
48. What are your internal barriers to growth? The biggest one is fear, masquerading as intolerance, of failure.
49. Be prepared to cannibalise your sales. If you don’t do it your competitors will. Look at Gillette for inspiration.
50. Invest in strategies, not initiatives. Ryanair could profitably add first class seats, but it ruins the strategy.

© Stuart Cross 2010. All rights reserved.

I wrote a week or so ago that Apple didn’t see itself in the computer market, but that the mobile communications market was part of its core business. Sure enough, during the launch of the iPad, Steve Jobs commented that Apple were now the world’s largest player in the mobile devices market.

One of the best ways to drive growth for your business is to have a clear view about the markets you play in. Like with Apple, these may change over time, as technology, customer behaviours and competition changes.

Kodak is struggling because, for too long, it continued to believe it was in the film processing market, not the mobile devices market. Olivetti made the mistake of believing it was in the typewriter market, not the word processing market.

If Kodak’s and Olivetti’s executives had been able to make this perceptual leap much earlier, like Steve Jobs and his team did, they would have been much better able to deal with the rapid changes that brought their companies down.

Understanding what your real markets are, requires you to answer these three questions:

1. For what purposes do your customers and users use and derive benefit from your products and services, and how is this likely to change in the future? For Olivetti, the purpose was to prepare and share written documentation, and the introduction of digital technology was likely to affect both these activities.
2. What alternative or substitute products and services could and do they use, and how is this likely to change in the future? Olivetti was up against the pen and pad and manual typewriters, but even by the 1970s word processing applications were being developed.
3. What complimentary products and services are available to your customers when they purchase from you, and how is this likely to change in the future? By the 1980s the complimentary products and services were rapidly changing from paper and ink, to personal computers, floppy disks and memory cards.

As you can see, once you have answered these questions you are likely to have a very different view of your market.

To begin with, it’s likely to be much larger than you think, with more existing and potential competitors to consider. It will also be more uncertain as it requires you to anticipate future changes and dynamics.

All this will make your market more difficult to predict, messier and more difficult. At the same time, however, it will also have far bigger and more interesting possibilities and opportunities.

To my mind, this is part of Steve Jobs’s genius. He recognises markets aren’t defined by products but by customer experiences. As technologies develop and converge, customers will demand and respond to new and better experiences.

This has meant that Apple has shifted its perception of its market from the personal computer to a much bigger and dynamic market, which is now called the mobile devices market.

What market are you really in?

© Stuart Cross 2010. All rights reserved.

I was in a meeting with a strategy director yesterday, when he shared his concern that his strategy team may be missing a trick. He wanted to make sure that the processes and approaches he is currently using to develop his company’s strategy were going to take the business forward, not backwards.

So, here are my top 10 strategy pitfalls. How many of these are evident in your business?

1. A failure to make trade-offs. A strategy is defined as much by what you’re not about as it is about what you are about. A key differentiator of many market-leading companies is that they are willing to make choices about how they wish to compete. Many struggling companies are unwilling to make these trade-offs and end up stuck-in-the-middle, being outflanked by companies with more innovative products, lower prices or stronger customer relationships.
2. Confusing strategy with planning. The annual financial and operating planning process drives many corporate strategy exercises. However, they are different activities and should be separated: strategy is about developing a framework that guides future actions and decisions; planning is about resource allocation. Big strategy decisions don’t fit with the annual planning timetable, and neither should the strategy process.
3. Incremental thinking. When you immediately focus on next year’s budget the strategy process becomes incremental, and discussions are about whether the sales growth target should be 3.7% rather than 4.1%, and not about the fundamental direction of the business.
4. All process, no output. When I worked for Boots the Chemists, the executive and management teams were weighed down with a Managing For Value approach. It involved a 7-step process for all strategy development. The result was an excessive focus on process, needless reports and analysis and insufficient emphasis on the key issues faced by the company.
5. Too much data, too little insight. Linked to the over-emphasis on process is the development of a whole industry on data analysis. I need to ‘fess up’ here. In my past I have been guilty of excessive data-diving (or ‘bog snorkelling’ as one ex-colleague succinctly put it). It’s the key insights, not needless detail that’s required. Understanding the 80:20 of any project is essential to effective strategy work.
6. Lack of informed decision-making. In contrast to point #5, other organisations end up with uninformed choices, based on hunches and gut feel. Or, at best, any analysis that is performed is driven by the CEO to fit with the conclusion that he or she has already reached. The strategy process should bring rigour and challenge to management’s thinking, and not be a passive activity designed merely to maintain the status quo.
7. Being excessively tied to one alternative. It is important to have a point of view, but it is also essential to appreciate when a better alternative has appeared. Developing three or four credible alternative strategies is a highly effective way of ensuring that there is real discussion on the best way forward, and that the executive with the loudest voice, or the most stripes doesn’t automatically win the argument.
8. Insufficient alignment, commitment and communication. Having spent so much time creating strategy with the Executive team it is tempting to believe that the strategic intent is clear to everyone across the organisations. In most companies this is far from the case. The strategy process should include ensuring that executive alignment and commitment is strong (see a previous post on this here), and that sufficient time and effort is spent on communicating the strategy (see a previous post on this here).
9. Trying to solve everything at once. Creating an implementation agenda that resolves all issues immediately is a huge temptation for managers. They want their new vision to be delivered immediately. But you can’t do everything at once, and need to prioritise and sequence your implementation if you wish to build momentum, growth and profits.
10. Insufficient focus on action. Most strategies fail in delivery, not formulation, and the value of successful strategies are only realised when they are executed well. Ensuring resources are allocated, accountabilities are clarified and performance goals and milestones are established is critical, as is a bias for action and learning.

© Stuart Cross 2010. All rights reserved.

If you think of your core business as a set of products or range of services you are making a big mistake. Products and services become obsolete over time – just ask Kodak’s camera film executives or Olivetti’s typewriter teams.

Both these companies were highly skilled at what they did, but their excessive product focus created such high levels of inertia that they were unable to change as quickly as their customers. As Seth Godin wrote earlier this week you must be willing and able to adapt to your changing markets.

Both Google and Apple are now in the smart phone business. And although this represents a big leap in terms of the products and services they offer, the smart phone sector is definitely within each company’s core business.

Apple’s core business is to provide people with the best designed computing and digital communication and entertainment products and services. Google’s core business is the sale of focused advertising services that result from on-line searches.

As the computing, mobile phone and digital electronics markets continue to converge, it makes logical sense for both companies to offer mobile phones. It helps them both drive forward their core business.

So what’s your core business? Are you like Kodak and Olivetti, and focused on a particular range of products and services? Or are you like Google and Apple, and delivering a set of customer benefits and solutions in whatever form makes most sense in your constantly evolving markets?