A well-thought-out and logical strategy will enable your group to accomplish its objectives and contribute to the larger organization’s competitive edge. A strategy defines what your organization will do and, critically, what it won’t do.
The fundamental strategic questions concern customers, capital, capabilities, and commitments. Use the following list to quickly sketch out your unit’s strategy.
- Customers. Which set of existing customers will we continue to serve? Which markets are we going to exit? What new markets are we going to enter, and when are we going to do it?
- Capital. Of the businesses we will remain in, which will we invest in and which will we draw cash from? What additional capital is likely to be required and when? Where will it come from?
- Capabilities. What are we good at and not good at? What existing organizational capabilities (for example, a strong new-product development organization) can we leverage? Which do we need to build up? Which do we need to create or acquire?
- Commitments. What critical resource commitment decisions do we need to make? When? What difficult-to-reverse past commitments do we have to live with or try to unwind?
It is beyond the scope of this article to delve deeply into business strategy, but excellent resources are available to help you answer these questions. (See the suggestions in the Recommended Reading section at the end of the article.) Our focus here is on assessing strategy by looking at its coherence, adequacy, and implementation.