5 Steps to rock-solid Strategies (the S in OGSM)
OGSM Series: The S
This article is the third in a series focusing on each component of the OGSM framework. The goal is to break down the framework, sharing the purpose and development process of each element. We hope providing a deep dive into the functionality of the framework will offer a refresh for current OGSM users and inspire others to consider OGSM as their strategic planning solution. If you missed our other articles on Objectives and Goals, you can access them here.
Not to downplay the other components of the OGSM framework, but Strategies are most definitely the pièce de résistance. So far, we’ve covered Objectives, which set the direction for the entire strategic planning exercise, and Goals, which add quantitative context to Objectives. But Strategies, those magnificent, clarity-inducing statements that create a roadmap on what we need to do and how we need to prioritize, are where OGSM can really set an organization above the rest.
Definition of Strategies
Strategies are statements that explain the choices an organization makes about what it will prioritize to accomplish its Objective and Goals. Strategies are a set of guiding principles. They are guardrails on decisions, actions and allocating resources. Simply put, strategies communicate to an organization what work is important – and what is not.
Again, Strategies are choices. They are not mandates, and should shift as the organization inevitably will, responsive to internal changes and external challenges and opportunities.
Before we get too far in this piece, let’s be clear on what Strategies are not.
A Strategy is not your mission, vision or Objective. Strategies are specific, outlining “the what” and “the how” an organization will achieve those more nebulous aspirations and numerous, covering all operational elements. “Build world-changing products and sustain a creative organizational culture” isn’t a Strategy. It’s an Objective (and not really a good one, get tips on creating killer Objectives here if you need help). Strategies go deep and communicate exactly what we will do and how we will do it.
A Strategy is not a business plan, a financial plan or a budget.
Only companies with no competitors can settle with just a business plan, which typically considers a one-year time frame. For the other 98% of us, competition forces us to strategize over the long-term. We look at our company and decide how we will gain a sustainable competitive edge. We make differentiating choices on quality, branding, service and technology – these choices leading to strategic intent. If we are not deliberate with our choices, we can end up in a race to the bottom of pricing and margin.
Business plans include directional statements, “we will be customer-centric,” where Strategies include intentional statements, “we must be customer-centric.” The nuance is indicative of a choice.
If we have competitors we must choose, and this is true regardless of organization size. Even mom-and-pop pizza places need a strategy for competing against big pizza and other mom-and-pops in town.
Where business plans are narrow on timing, financial plans and budgets are narrow in context. Neither are Strategy – they are assumptions of how we should fiscally perform, but lack detail on how performance will be achieved. Many companies unfortunately operate using only financial plans and budgets to guide them. Strategies should always include “the how.”
How to develop a Strategy
In our approach to OGSM, developing Strategies is done with consideration to the three drivers of competitiveness: growth, productivity and people. Every component that makes up an organization can be categorized into one of these three drivers. Below are some Strategy “buckets” for each competitive driver.
- Marketing & Branding
- Product Management
- Supply Chain
- Continuous Improvement
- Hiring & Staffing
- Succession Planning
- Performance Management
With this in mind, let’s begin.
1. Gather the team.
Strategy development should not be done in isolation by leadership. If it is, there is a risk of misallocating or overextending resources, creating conflicting workflows and even pitting departments against one another. You also risk setting Strategy expectations too high or worse, too low. Gather those people essential to providing input and gain buy-in on the new direction. The key word here is “essential” – try and avoid including team members not pertinent to the process and keep the group size to a minimum.
Key team members typically include upper management and some middle management. Each function should be represented by someone who can accurately depict life in their department, share what they’re really good at, express needs and identify opportunities for improvement.
By including people in this process from the beginning, you set an expectation that their involvement (and their department) will be required for success.
2. Go back to your Objective and Goals.
Developing Strategies is no easy task and made more difficult if you lose focus on your Objective and Goals. Print them out, put them up on the wall, use them as your screen saver – whatever it takes to keep them front and center throughout this exercise. If you haven’t already established your Objectives and Goals, pause and do these first before proceeding.
3. Develop Strategies based on the three competitive drivers.
This step can be difficult if you’ve never done an OGSM, or if strategic planning just isn’t working as well as it should be in your company. If you need some thought starters, below are some questions to workshop with your team. If you’ve worked with us, you know we love putting flip charts on the wall and using Post-It notes to capture answers. This gives visibility into what everyone is thinking and gives you the ability to move things around, creating clusters of common themes in the discussion.
We highly recommend having an open discussion before committing to any Strategy. Dialogue with your team, specifically about Strategy, often leads to thought-provoking conversation and enlightening information. Leaders should never assume they know everything about their organization.
ArchPoint’s founding partners are Procter & Gamble alumni, so we’re big fans of legendary P&G CEO A.G. Lafley. In his book co-written with Rotman School of Management Dean Roger Martin, Playing to Win , he outlined five essential questions every business must answer.
- What is winning? (What does it mean to us? What does it look like?)
- Where do we want to play to win? (Consider services, markets, channels, geographies and customers.)
- How will we win where we play? (What is our proposition to our target segments? What are our dimensions of excellence? What distinguishes us from the competition?
- What capabilities must be in place to win? (How will we build and maintain our sources of advantage? Is it through technology? People? Alliances?
- What management systems are required? (What organization structure do we need to win? What reward system? How will we communicate?)
For each competitive driver – growth, productivity and people – create Strategies that bridge the gap between where your organization is today and where you want to be in the future. Internally, review where there are strongholds, gaps and where the company needs to grow. Externally, consider your customers, services, markets and geographies. It’s important to remain grounded in the reality of the business in this step so Strategies are attainable, but also stretch the organization.
Keep the Strategy buckets in mind to make sure you cover all your bases. You should have at least one Strategy per competitive driver. We recommend five to six Strategies per OGSM. Remember, the more Strategies you have, the more complexity you create with priorities and resource allocation.
Below is a Strategy statement that demonstrates choices that this company is making in the marketplace, specifically focused against customers.
Customer Management. We will develop and leverage a best-in-class customer service approach that establishes our reputation based upon market performance metrics and customer feedback. Through technology, we will scale our customer service resources to achieve higher levels of satisfaction. We will customize service and incubate innovation through partnering with our strategic customers.
In the above example, underlined are some of the choices that we’ve made, where we could have gone right or left in a competitive environment. We could have chosen different metrics upon which to base our customer service approach, another method to scale customer service resources. But we made these choices, and they will guide the organization in the corresponding direction.
4. Develop Initiatives underneath each Strategy.
Once Strategies are established, develop Initiatives to support each Strategy. Initiatives consider the organization’s current state and the Strategy as the future state. They address gaps in performance and outline the activities required to deliver. They explain “the how” each Strategy will be accomplished. These are the directives the people in the room will give to their respective teams, explaining how their individual departments and roles will contribute to achieving success.
If you consider where we came from in creating the Objective statement, we’re continuing to get deeper, more detailed and tactical with “the how.” This is essential to giving teams and individuals the best chance at understanding and contributing to the OGSM. (In another piece, we’ll cover how to take Initiatives down a level further.)
The example Strategy above could have the supporting Initiatives below.
- Improve sales effectiveness by increasing product and technical knowledge
- Conduct joint business planning with strategic customers
- Reorganize and add resources to customer support team
5. Prioritize the Initiatives and allocate resources accordingly.
Once Initiatives are complete, they must be prioritized to ensure ample resources are available to execute. Unless one of your Initiatives is to quickly double your workforce, you will be using the same resources for multiple Initiatives. In our experience, resources are precious and limited.
Remember, the OGSM is a three-to-five-year living document. Things can and likely will be de and re-prioritized, but for now focus on the items that will make the biggest impact. A good rule of thumb is to have no more than ten initiatives prioritized within a calendar year. Two or three per quarter may sound light, but remember the people doing this work also have their day jobs. If an Initiative requires significant meaningful change in a critical function, consider devoting an entire quarter solely to that one Initiative.
This portion will require some master facilitation on your part, as each team member in the room will no doubt want to prioritize their own area. Remind everyone to keep an objective view of the business and keep pointing to your Objective and Goals.
What Initiatives provide the most direct route to where you want to be? Choose to do those first and assign quarterly deadlines. For everything else, denote what year you would like to complete them. You’ll be reviewing and refreshing these Strategies at least on a biannual basis (right?), so don’t worry about exact due dates.
Phew! You’ve made it through creating Strategies. This was no easy task, so give yourself a pat on the back. Measures are up next, so be on the look out for the next newsletter. If you have any thoughts or questions, please feel free to give us a call.