Development and adoption of Corporate Strategy is the lynchpin of the Growth Framework. While the first two aspects of the growth framework, Leadership Approach and Objective & Analytical Culture, are ongoing foundational elements, Corporate Strategy is a tangible outcome that is developed and articulated on a cadence that aligns with the company’s fiscal year and budgeting process (i.e. Strategic Planning).
Admittedly, strategy as a concept has lost its meaning due to overuse. Strategy development is also a highly analytical exercise that requires significant discipline. Finding resources with the appropriate experience and structured problem-solving skills is also not trivial. These factors result in a temptation to skirt around the development of a comprehensive Corporate Strategy, which comes at the cost of deploying the company’s resources on suboptimal underlying operational plans.
Corporate Strategy development exercise is analogous to hand-painting a complex landscape; more of the canvas is filled and more of the finer details appear over time. It is always a triangulation effort, where details have to be reevaluated continually and improved. Optimally, a company should set an annual or bi-annual cadence for the reevaluation of its Corporate Strategy.
Right vs. wrong is not an optimal way to think about strategy as there are many externalities that a company cannot control. Good vs. bad strategy is a more appropriate way to think. A good strategy is cohesive and comprehensive. Its development considers all known-known factors, works to understand all known-unknowns, and uses objective frameworks to minimize unknown-unknowns. The real purpose of a strategy is to articulate hard choices made by the company to meet its goals.
So, What is Corporate Strategy? It is a clear articulation of investment choices – both positive and negative – to meet company-level goals and it supersedes all functional plans. It is developed as a triangulation of five key components:
- Market Position: First of the five variables of the strategy equation helps companies choose a corner in the market to focus on.
- Identify the Sweet Spot: Potential customers do not value a company’s offerings equally. The second step is to identify the most optimal customer groups to focus resources on.
- Who is the Customer?: The development of corporate strategy has to be based on specific stakeholders – Buyers, Users, and Approvers – at potential customers in the Sweet Spot.
- Assess Buyer Values to Develop Product Strategy: Understanding Buyers and evaluating the company’s capabilities is the path to develop the first half of corporate strategy – Product Strategy.
- Understand Decision Drivers to Develop Commercial Strategy: Formulate Commercial Strategy based on Buyers’ and Approvers’ Decision Drivers.
Each of these components are discussed in more detail in the related sections.