In the previous blog post we presented the definition of vision, mission and values in the context of strategy creation. This article is now about how we proceed to set up a strategy – i.e. the plan for the next few years.
The goal is the way
Our target state is defined by the vision and the mission. We have a clear idea of where we want to go. The task now is to define the path from the current point of view to this goal. And as so often, there can be several ways.
For example, imagine you want to ride your bike from one place to the next. There is a short trail but it is a dirt road over a high mountain. Or there is a long way that is well developed with a bike path and does not contain any steep parts, but is considerably longer. Which one do you choose?
Your choice could depend on several parameters:
- First of all, which bike you have. You probably don’t want to ride a dirt road on a road bike, but if you have a mountain bike this could be an alternative.
- Then the choice also depends on your fitness. If you are well trained and love a challenge on the mountain, you might choose the first route to get there faster. If you want a more relaxed ride that can take a little longer, the second variant is more appealing.
You see, with the same starting point and the same goal, there are different ways to get to the goal. And the choice of which path you choose depends on environmental factors on the one hand (gravel path or developed bike path, mountain or flat route) and on the other hand on yourself (your level of fitness).
It is similar in companies when they formulate a strategy. In this case, too, environmental factors are included (e.g. political environment, competitors and customer interests) and one’s own performance (available resources, skills, strengths and weaknesses) is considered.
In what environment do we want to achieve our goal?
There are a variety of methods for analyzing a company’s environment. For example, there is the PESTLE method (environmental analysis), whose name is derived from the first letters of the areas to be considered: Political, Economic, Social, Technological, Legal, Environmental . It is immediately obvious that these areas have a significant impact on a company’s scope for action.
In the last 10 years in particular, technological developments have opened up completely new market opportunities, but at the same time have made their application in many areas absolutely necessary in order to be able to continue to exist on the market. It is becoming apparent that in the next 10 years, in addition to the continued rapid development of technologies, environmental protection will also have a significant impact on the actions of companies.
Analysis of the environment
Another commonly used approach analyzes the following areas:
- Customers – What are the current needs of your (potential) customers and how will they develop in the coming years? Think about it in the position of your customers.
- Partners – Which companies do you work with (e.g. also suppliers) and what are their current and future drivers?
- Technologies – Which technologies are currently available and are you already using them? Which new technologies have the potential to change your market or the processes in your company in the coming years?
- Market – What are the trends in your specific market and how will the market develop? Will your services continue to be in demand on the market in their current form, or are adjustments necessary?
- Competitors – Who are your main competitors and what are they doing to improve their position? Could there be new competitors who may not have played a role in your industry in the past?
After analyzing these areas, you will have an overview of how your environment is likely to develop over the next few years. With the help of this information, in the next step you can analyze what influence these factors have on your company and what opportunities and options for action may result from them.
When you look at your company, it is helpful to identify opportunities and threats in addition to the classic analysis of strengths and weaknesses. The SWOT analysis does exactly that. The advantage of this is that, in addition to looking at the company itself, its environment is also included in the evaluation.
- Strengths – The strengths of your company
- Weaknesses – The weaknesses of your company
- Opportunities – The opportunities that will present themselves to you in the previously analyzed environment over the next few years.
- Threads – The risks or threats likely to threaten your business over the next few years.
It is important with this procedure that you strictly separate between
- the strengths and weaknesses on the one hand, which arise from within your company and
- the chances and risks on the other hand, which are to be found in the environment of the company . The environment analysis from the previous step will also help you.
Examine the above points in the context of the previously defined mission, vision and values. Areas that are not relevant to the implementation of your mission are hardly relevant in a weakness analysis. Likewise, strengths will be of no use to you if they do not contribute to the achievement of the vision.
Be critical when analyzing and try to examine hyped topics in detail to see whether they really bring the promised advantages for your application. For example, many of the promises about blockchain that have been loudly communicated in recent years have turned out to be largely exaggerated up to now. In the field of artificial intelligence, on the other hand, there are many useful areas of application. Therefore, this topic should be analyzed more closely in most companies for its possible benefits.
Identify strategic fields of action
After you have analyzed the environment and your company within this environment, it is time to draw first conclusions. Based on the results of these analyses, you can now define strategic fields of action in which you want to become active. Fields of action arise, for example, if
- You recognize new potential in the market, which your company should use with its strengths in the future
- You want to fix weaknesses in your company in order to remain competitive, or
- You identify new technologies that could make your company more efficient.
The strategic fields of action specify the topics that need to be worked on in the coming months and years in order to implement your mission.
By defining the strategic fields of action, you have taken another important step in defining your strategy. Some companies remain too vague here and subsequently have difficulties operationalizing their strategy. Therefore, in the next part of our blog series on strategy creation, you will learn how to specify the necessary steps to implement the strategy and set up a plan for the next few years.
If you want to start creating your strategy now, the ConWISE platform can support you with the individual steps. If you want to know how this works, just contact us . We would be happy to arrange a personal demo appointment with you.