Facilitated decision-making directing prioritised actions and how to get there
Business Strategy Noddy Guide
Defining the Strategy Game
Strategy formulated without first consulting the context will probably end up being bad strategy. Initiate the strategic conversation on neutral ground. The neutrality of the opening questions precludes any attempt by individuals to be defensive about their previously stated positions.
Where have we come from and where are we heading? Every organisation has a destiny line that can be drawn from its beginning through its current form and into the future. The line is jointly determined by two factors: the internal development of the organisation as expressed in its action and result and the external evolution of the environment in which it operates.
How have we fared? Have we simply been surviving or have we been able to influence the game to our advantage (trend setter vs. follower).
Understand the Scope
To understand the scope we have to define the boundaries of our game. What is our playing field today? There has to be boundaries we don’t cross because focus is a key element of a successful strategy. We have to understand what we can and cannot control and define our playing-field accordingly. We have to play to our strengths and employ them wherever possible to make up for our weaknesses. Once the scope has been agreed on, it is possible to start positioning our players and motivate their actions.
What is our product range (horizontal range of goods and services) offered by our company?
What is our product chain (vertical chain of processes from raw material extraction through manufacturing, wholesale, retailing to customers and even recycling)?
Do we want to operate through the entire chain so that we have control from start to finish or do our competencies dictate that we should only operate in a particular link in the chain and try to dominate that?
If we are an upstream producer, are there opportunities to go downstream and add value to our product offering by selling it?
If we are a downstream producer, might we wish to go upstream to control some of our raw material sources?
Are there constrictions in the product chain that are negatively affecting our offering? Can they be avoided?
How do we want to expand the playing field in light of the developing context and the resources at our disposal?
Who are the Players?
We are all part of an interconnected system. We need to know who is for us, against us and who is neutral? Who are all those players that can most advance or retard our strategy? It is important to prioritise players according to their importance in our game plan. Never take other players for granted and never be ignorant or miss another player’s repositioning within the game as it changes! Part of analysing the game is assessing how the other players have fared or modified their function and what new players have emerged?
What are the Rules?
There are rules that are determined by forces and factors outside of the control of any player and there are rules decided and interpreted by the players themselves. They define the game and provide a framework through which and within which, the game is played. Changes in business rules are driven by the evolution of social, political and regulatory conditions surrounding the game. These rules together with our DNA help define the limits or bounds of acceptable behaviour.
What are the Uncertainties?
What are the key uncertainties that could have a significant impact on the game and divert course either positively or negatively? We have to play out the uncertainties in our minds or conversation. There are ‘known unknowns’ – things you know you don’t know and ‘unknown unknowns’ – things you don’t know you don’t know and never can prepare for yourself for. The latter have to be handled with a mixture of gut feeling and instant reasoning.
Just by having the uncertainties on a radar Screen (probability vs. potential impact) and that you have thought about their consequences allows you to react quicker to it than the competition.
Is the uncertainty something you can tolerate or does it make the game unplayable?
What are the positive as well as the negative consequences for you if an uncertainty materialises into actual fact? Remember that many uncertainties affect all players equally.
Align the Business Goals with Strategy
Defining the Ideal & Strategically Aligned Function Decomposition
The functional decomposition indicates the complete set of functions, the achievement of which is required to fulfil the business. It ensures that the minimum set of manual or automated activities are executed to achieve the goals of the business. Accordingly, the next step should be to sharpen up the functional decomposition, based on each function’s contribution to the achievement of the strategic positioning of the business.
After the business critical success factors have been derived the functions of the functional decomposition must be mapped to the critical success factors to become strategically aligned or ideal to the business. We want to ascertain whether the perceived model for this specific business scenario contribute in the correct manner to the business goals. It may be that after the mapping we conclude that we are focusing on incorrect issues.
From the result of the mapping between the perceived ideal functional decomposition and the critical success factors, adjust the functions to become the ideal functional decomposition or strategically aligned.
The business functions must be mapped to the critical success factors by using a matrix. The mapping between a function and a critical success factor is qualified by answering a very specific question: “Once the goal that is represented by the function has been achieved, has the function contributed directly to resolving the critical success factor?"
This exercise is executed to verify and refine the function model until it represents the ideal function structure that is required.
The first thing we have to do is to add all the functions together that support the same critical success factor. The sum of the goals that represent the functions must be tested against the critical success factors to establish whether the critical success factors will be solved by them. If these goals together are not enough to solve the problem of the critical success factor, functions must be added to the function model until the critical success factor is satisfied. The mapping to the critical success factors has to be re-done.
For each critical success factor that has no functions associated with it the required set of functions that will be sufficient to support the critical success factor, has to be added to the function model. This change requires the mapping of functions to the critical success factors to be conducted again.
The contribution that a function makes must be tested against the critical success factor. If a function is not definitely required in the context of all the other functions that support the critical success factor, its contribution should be removed.
Some functions will not support any critical success factors. These functions cannot just blindly be removed. They should however be investigated. The only implication of such a function is that it is not a critical function for that specific time period associated with the scenario on which the critical success factors are based.
It is clear that this mapping results in major changes to the function model. Any function that was added or removed to or from the function structure will result in the parent function’s scope being changed and these changes must be reflected to the highest level of the function model.
The function model that we end up with now will be the ideal function model that the business requires to align itself with the strategic positioning of the business.