“If you don’t know where you’re going, any road will get you there”. This is of course the famous quote by Lewis Carol from Alice in Wonderland that has been used a metaphor for business strategy (and likely other things as well) for the last 150 some odd years. (Actually, based on a couple of quick Google searches, it seems that there’s some debate around whether this was the exact quote, but this is how I’ve heard it used so I’m just going with it for the purposes of this post).
Historical accuracy aside, it does set up the strategy discussion quite nicely since strategic management is largely about asking questions like – ‘Who are we?’, ‘What do we do?’, ‘Where are we going?’ ‘How will we get there?’ Once defined, the organization can then develop its mission, vision, as well as its supporting goals and strategies for ensuring that the answers to these questions are woven into everything the organization does, cascading down from top management to all its teams and employees.
In terms of how an organization (or an individual – from a personal development perspective – for that matter) can go about defining this strategic blueprint is to perform an “environmental analysis”. This is a process whereby an organization (or a person, though let’s go with an organization so I don’t have to continue pointing out how this can be used for personal development also) performs a thorough analysis of both its external environment as well as its internal environment. Ideally this process will include involvement from the organization’s employees – not just management – both from the perspective of increasing of ‘buy-in’, as well as from the perspective of soliciting input from the employees on the ‘front lines’, as nobody understands the business as well as they do.
Integrated into this environmental analysis is a technique called a SWOT analysis. Most people with a background in business will have heard of, if not spent a fair bit of time performing, this type of analysis because – though basic – it does provide a simple framework for evaluating factors, both internal and external.
Internally, you are looking for ‘S’s and ‘W’s (strengths and weaknesses). These could include things like your organizational structure, culture, processes or technologies.
Externally you are looking for ‘O’s and ‘T’s. These could include things like economic factors, supplier relationships, customer or tech trends, or perhaps most importantly, what your competition is doing.
The next step is to then perform a “gap analysis”. (More analysis, you say? Yes, but…please read on). This is where you take your findings from the external and internal analysis and compare them in relation to each other to determine where they fit within these 4 categories, in ascending order of most competitive.
- Opportunity + Strength = Leverage
- Opportunity + Weakness = Constraint
- Threat + Strength = Vulnerability
- Threat + Weakness = Problem
Once completed (at least an iteration, as this should be an ongoing process) the next step is important: Do something about it!
Though, as the analysis leads to action something to consider will be how – potentially – different what you thought you were and where you thought you were going may not be the same as when you had started. The rest is up to you.
In addition to the Wikipedia links above, combined with ten or so years in the biz, my own worldly knowledge of business strategy from previous courses, a keen eye for detail and the occasional episode of The Lang & O’Leary Exchange, the Performance Management text from my current MBA course was referenced in the creation of this post.