🚀 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲 𝐈𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 101 🚀
After teaching over 40h of lessons at Preply. I've decided to start sharing here some of the key topics I use to teach and support my students with 💪The first one is related to the baseline of any Strategy, and even though it seems quite basic, I've seen many teams and companies forgetting about it, when we're super focused on execution mode.
1️⃣ 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲
It all starts with defining the long-term strategy you have for your area and where you want to land. An interesting caveat here is that the definition of long-term varies significantly from company to company - I've worked in banks where we were looking at 5-10 years periods, while I've seen tech companies that looked at 3-5 years, and really scaleup startups where we look at maximum 1-3 years.
We usually connect a company/team strategy to two essential components, their I) Vision and their II) Mission. A simple definition of those is that the mission is why the company exists, and the vision is where they wanna land in the future.
An example is Google's Mission and Vision.
Mission: Google's mission is to organize the world's information and make it universally accessible and useful. That's why Search makes it easy to discover a broad range of information from a wide variety of sources.
Vision: to provide access to the world's information in one click
Based on these 2 items we are able to nail down the opportunities the company wants to leverage in the future, as strategy is more than anything else a work of prioritization and as importantly de-prioritization. Some companies tend to have broader statements which allow them to diversify their product/services offering, while others tend to have a more restrictive one which might constraint their ambitious for example for specific markets and geographies.
With that said, you should always aim to align your strategy with your vision and mission statements, so that the direction that you're taking puts you closer to both.
2️⃣ Tactics
When you have a clear direction of where you want to go, it's time to translate it into levers you can pull to move toward that direction. It is important to understand that even though the direction (strategy) shouldn't change, the tactics to get there (the how) might vary across quarters based on context changes.
To make this concept clearer we can use an easy example, so let's take a consumer goods company that is producing chocolates, for instance. For this company one of the strategies for 2025 might be to optimize their profits by 30%. To do this there are a few areas they could focus on, as reducing operational costs by leveraging automation in the production, reducing distribution costs by looking for alternative suppliers, increasing their Points of Sales, adding new distribution channels - e.g. e-commerce, and so on.
In order to understand which ones of those the company should prioritize, I'd recommend assessing the impact/contribution of each one to their goal. This will give you a sense of the impact relevance, while understanding the feasibility and the cost of implementing those will allow you to have a clear view on the Return over Investment of each one of those and choose based on your company's pre-defined minimum thresholds what should be prioritized and when.
3️⃣ Operation
Then it comes down to breaking those focus areas down into actionable strategic initiatives which you will develop to pull those levers. This means that even though focus areas a great way to translate how you should reach your strategic goal, they are still a level above in terms of granularity which leads to the following question: What should me/my team do in order to get us there?
That's why you should break down these focus areas into strategic initiatives that different teams could see themselves delivering within their scope. This way you'll be able to say that in order to for example expand distribution channels you would (as a chocolate producer)
1. Create a business case comparing the cost to build their e-commerce vs integrating to the key ones already available in the market (Strategy/Finance team)
2. Understand the potential impact of cannibalization of offline sales by digitalization. Can you have a higher margin online or offline? Are you reaching to new consumers or shifting them to a new channel?
3. Assess the technical requirements to build and/or integrate to an existing e-commerce (IT)
(non-exhaustive list)
4️⃣ Balance
An important reminder is that the sum of each of those layers should always be the same, which means that if you're able to deliver all the operations, you will deliver as well the tactical level and achieve your strategic goals.
In other words, if you can deliver initiatives 1-3 from the last section, you should be able to reach your objective of expanding your distribution channels, and by expanding your distribution channels you should be able to contribute positively to increase the company's profit by X%.
5️⃣ OKRs
A good way to translate it all into something actionable is through OKRs, a tool that is used by many of the companies I've worked in and helped to set up. Overall the aim of this methodology is to connect Companys/Teams' Objectives to their Key Results
Objectives can be seen as focus areas or strategic pillars of your company, which should be the strategic direction you want to move by the end of the period. To maximize your planning process I always recommend aiming for a longer period of time, as we tend to overestimate the impact of the short term and underestimate the impact of what we can do in the long term.
By setting at least 1 year you allow yourself to think and aim bigger with your strategy, and the growth you're aiming at might move from single to double digits, while if you're looking at 3-5 years you might even see the potential to aim for a 2-5x growth!
When you've set these Objectives is time to understand what you need to achieve to get there. What strategic initiatives should you prioritize to move the needle in the direction you're targeting? These initiatives are usually framed as Key Results, which are recommended to meet the following standards
- Are specific
- Are quantifiable
- Have a clear target
- Have only one target.
- Have a clear owner
Based on these formats, you'd be able to set up your OKRs. Overall, the next steps are mostly regarding Implementation, as 80% of the strategy is execution. You can plan with multiple assumptions and scenarios, but when you start running your strategy, the context might change due to competition, customer feedback, company blockers, and so on.
If we piggyback on the previous example, we're gonna see that the recommended strategic initiatives are not written in the most well-designed OKR format as they are lacking a concept that I love to borrow from the product world which is the definition of done.
Let's say I've done initiatives 1-3 and launched an e-commerce successfully. From a strategic point of view I'd say that my job is done as we actually delivered what we've intended to. But as those metrics are input based vs output based, I might be able to implement them all but still not help the company to hit their strategic goal.
One example would be that I overspend on delivering an e-commerce which reduces the company level profit and this e-commerce requires more investment in the market than forecasted due to the low-efficiency of user acquisition. Because of the lower pace of this new channel, I have been delivering less revenue than forecasted with higher costs. If I'm looking only into the input I'd say that the company properly executed on their strategy, but if I am - as I should - be looking into their output.
A great way that we can shift this around with a few tweaks would be to make out Key results output driven as follows:
1. Have sign-off on the approach on how we are gonna expand to e-commerce (build vs integrate)
2. Ensure that our business cases proposed have a return of at least 10x the investment needed
3. Increase our operational margin by X% moving to a channel with lower fees/commissions of intermediate players.
4. Ensure that our budgeted cost doesn't surpass 110% of the allocated resources for the project
This way we as a company have more control of the output we're looking for and allow teams to have more flexibility on how they are gonna get there. If you will be measured by the output and, after you started to execute you realize that with the planned initiatives you won't be able to reach this output, you have freedom to look for alternative innovative ways to deliver this output while if you are locked with the input, you reduce the team's freedom to course-correct and might be incentivizing a look of work that doesn't contribute to your teams strategy.
6️⃣ Key Results Tracking
In order to ensure that you're walking towards your goal and you're not caught by surprise in the end of the year. I highly recommend that you put a process in place to track these Key Results with a cadence of at least a month. This way you're able to course-correct in a timely and effective manner.
Based on these formats, you'd be able to set up your OKRs. Overall, the next steps are mostly regarding Implementation, as 80% of the strategy is execution. You can plan with multiple assumptions and scenarios, but when you start running your strategy, the context might change due to competition, customer feedback, company blockers, and so on.
This allows you to build alignment across the company, which is one of the biggest challenges of any corporation as it scales. I'd also recommend that you double down on my previous mention regarding accountability. Any process/governance system without proper incentives will be set up for unsuccess, so one of the best ways to ensure this happens is to connect these Key Results with the Performance Review programs you have within your company. I hope you've enjoyed this article and if you want to know more insights/tips regarding strategy, mostly applied to technology companies, follow me on Linkedin or book a mentoring!