Setting a business strategy for the digital age

Organizations need a tangible strategy and strategic plan, to know how to focus, and to align its resources and people. In the complex digital age, this is more important than ever, and the choices and possible diversions are plenty. Setting this strategy can be divided into five phases, which we will outline in this article, along with how to get started.

Why have a strategy

Most companies and executives would probably claim that they have a strategy in place. Usually this strategy was put in place using an external firm some time ago – and is often as obsolete, as it is difficult to digest. Having a strategy is important, but it needs to actually be practiced in order to mean something for the organization.

So what’s the point of having a strategy in the first place? We believe that direction, prioritization and alignment are the three most important factors.

  • Direction. Having a sense of where the company is going in the future, is crucial to be able to take the right decisions in the now.
  • Priorities. Understanding how limited resources should be prioritized, knowing what to focus on, and what to leave behind.
  • Alignment. Making sure that everyone is on the same page and working towards the same goal is vital for success in any organization.

Strategy is an important component for success in the digital age. A strategy for the digital age does not differ that much from a “regular” strategy, however we believe that the importance of strategy is greater when the surrounding environment is changing more quickly, as it currently does.

Before you start

We believe setting the strategy and the strategy process can be divided into five phases, but before digging into these, you should start by asking yourself the following questions.

What’s our ambition level and time-horizon? We recommend quick and structured processes (4-10 weeks) to build the basic “strategy storyline”. Don’t delay and make this into a huge project. Instead start with the basics, and deep-dive later if needed.

What’s the end-product or deliverable? We recommend aiming for a simple slide-deck or document, which outlines the basics of your strategy. This should be a material which most people in the company can consume, and therefore should be easy to digest.

Who should be involved in setting the strategy? A small core-team or the entire organization? We encourage relatively small teams to build the core of the strategy, but make sure you involve and collaborate with the rest of the organization when needed.

Who’s responsible for the work? Strategy is something that affects everyone, which sometimes clouds responsibility for the process. The executive board or the CEO is always the owner of strategy, but a manager/leader needs to be appointed for the actual process.

Do we have the right enablers in place? Depending on if you aim to build a recurring strategy process (which we recommend, once every year with updates in between), then you might need to look at first building the strategy process and the enablers for it.

What frameworks and models will we be using? To make the process easier, and the end-result clearer, you should decide on which frameworks and models you will use to structure your analysis and your outputs.

When you have clear answers to the above questions, then you can dig into the phases below.

The five phases

Below you can see the five phases. Before you get going, we would like to note that these phases usually overlap each other, and that the best strategy processes take an iterative approach. They might not be so clear-cut in real life, as we make them appear here. However, at the end of your strategy process, you should somehow have covered the content for all of them.

Image: The five phases in our strategy process.

Phase One: Preparation. Gather data and do research.

The first phase is about preparation only. This is where you do your research and gather the information you will need for the later phases. If you do this phase correctly, you can dramatically speed up the process in the later phases. This material can usually be prepared by a smaller team and is more “desktop-work”.

In this phase it can be a good idea to make a quantitative analysis and summary of your business, including financials and your most important performance indicators. This can help you have productive discussions later on. It’s also a good idea to get started on a market outlook, which details the state of your market and your competitors. If possible, try to gather the same quantitative data about your competitors, as you have about yourself, to be able to make informed comparisons.

Understanding and documenting the most important trends is a good exercise here. Usually you can find trend reports online, talk to people in the industry, talk to your peers, etc. Beware though, trends usually come with a certain amount of hype. Often you need to dig deeper to understand what’s really tangible and useful.

You can also do different types of customer surveys or interviews as a preparation for a strategy process. This is often called “voice of the customer” and can be a good way of listening to your customers, and make sure that their voices and opinions are heard throughout the entire strategy process.

When you have completed this phase, you should be able to answer the following questions:

  • What are our numbers – financials and performance indicators?
  • What is the market outlook for our industry?
  • What trends are important for our organization and our industry?
  • What do our customers think and say about us?

Phase Two: Starting point. Align on where you are and how you got here

To be able to know where you should go, and how you should get there, you need to get a sober view of where you currently stand. To do this you need to get a full and objective view of your business and organization. When you have that view, you should also discuss why you are where you are, and how you got there.

The output from this phase should be an analysis of where you currently are. Here you can use a framework to structure your work, for example the classic SWOT model (still works well!) or a simple theme-based model. The SWOT model (Strengths, Weaknesses, Opportunities, and Threats) is usually for initiating a discussion in a group, as everyone understands it quickly. A theme-based model is when you divide your work into a number of themes, which often helps to structure analysis and discussion. These themes can for example be: markets, branding, products, customers, technology, organization, etc. You should pick the themes that work for you.

Always start with hypotheses and work from there, that way you quickly iterate and save time. Work in a smaller team to get a few statements down on paper, and then test and refine these statements by showing them to larger groups. Remember that these statements should cover both positives and negatives, and that it’s always easier to have objective discussions if you back them up by data. You can gather data points your external market research, your own numbers, etc. Also, try to avoid working on solutions right now and instead focus on how things currently are. This can be quite challenging for some people.

Here are some examples of how statements of where you are can be formulated:

  • “Our products are behind our competitors, when it comes to segment Alpha“
  • “Our market penetration in the Nordics is growing rapidly according to data point Beta”
  • “Our staff is overworked and there is discontent spreading regarding matter Delta”
  • “Our new technology platform works very well and gives us a strategic advantage”

There is great importance in having these discussions within any management team, and they should end up in one of two things: You agree – or you agree to disagree. Opinions and conclusion, even when using objective data points, will always vary between individuals. The important thing here is to have the discussion and make sure you deep-dive in areas where you might lack consensus. In the end, everyone probably won’t agree fully (and that should be noted) – but at least you had the discussion.

When you discuss the current state, you might also want to have the discussion around why you are where you are, and how you got there. This is important from several perspectives. Firstly, it’s a great way of finding root-causes to problems. If your staff is discontent, you should of course ask yourself why that is. If you have a strong market position somewhere, you should ask yourself how you got there.

Secondly, these discussions can sometimes become a blame-game, often between two fractions of a management team (usually the “new ones” and the “old ones”). If we allow ourselves to talk about the why and the how, then this might be a good opportunity for people to explain the history, past reasoning, and their own role in the matter. This can take away tension and open up for honest discussions.

When you have completed this phase, you should be able to answer the following questions:

  • What is the current state of our business and organization?
  • Where do we excel and where is there room for improvement?
  • Why are we where we are, and how did we get here?
  • Where do we agree and where do we disagree?

Phase Three: Aspirations. Decide where you want to be in the future

The next phase is about deciding where you want to be in the future, where you want to play and what your goals are.

An important output of this phase is your vision statement. This is your short summary of what you want to be in the future. The vision is usually based on the mission, which we here use interchangeably with the purpose. Purpose (or mission) is your reason for existing, and the vision is how you enact that purpose.

If you don’t already have a clear formulated purpose, then that should be a part of this work as well. The importance of purpose, and purpose-driven organizations, is an ever-current debate in management circles. Many current technology companies (such as Amazon and Google) have successfully used their purpose to inspire and align their massive work forces in a very efficient way. We believe there is a generational divide over the importance of purpose, where for example the “Millennials” need to know that what they do contribute to something larger.

When formulating the vision, you can use a similar theme-based model as you might have used in phase one. This allows you to drill down and be more specific, while still having one short overall vision statement. For example, this allows you to discuss and decide your vision when it comes to products. Which might go something like: “Products of the best quality in the market”.

When doing this vision work, it is important not to be introverted as an organization. You need to look towards the market, talk to you customers, and understand your competitors. You need to understand what is possible. Often large corporations or organizations with a lot of legacy limit their vision to their current internal understanding of the world, without trying to understand how it is changing. A good idea here is to look at what the startups in your industry are doing. They usually have bold, naive and visionary – something you might be inspired by. You also need to understand what is not possible, for example by looking at limitations in technology or coming industry regulation.

A clear vision should be accompanied by a set of priorities (where you should focus) and non-priorities (where you should not focus). Often the number of strategic options in any given industry is overwhelming, and therefore it’s vitally important that you also decide where you should not focus at all. Priorities are sometimes also called principles, which works just as well. Priorities should be written in the form of short statements, such as: “We shall focus on advertising as a business model, and down-prioritize all others”.

In this phase you should also set your goals – knowing you might have to revise them later. Goals need to be clear and easy to understand for everyone affected by them. Usually this works well if you set one overall goal (your “north star”) which everyone is working towards, and then several goals supporting that. When setting goals in general, you can use the classic SMART model (Specific, Measurable, Attainable, Realistic, Timely). As an example, here is a SMART goal: “Achieve a yearly sales growth of 25% between 2020-2021 in product segment Alpha”).

How you do the practical work in this second phase is similar to what we described in the first phase. You need to form hypotheses, go talk to people, do the research and analysis, consider different options, hold workshops, iterate, and so on. Again, remember the importance of data and numbers when you form your vision and priorities. In the end, these should be backed up by objective data points for everyone to see.

In the first phase we mentioned that there is room for explicit disagreement – in this phase there is no such room. Even if people might not agree initially and have other opinions, at the end of this phase you need to make sure that everyone commits (agreeing or not). If this does not come naturally for the group, then you must force it to make it happen. Any “strategic cracks” within a management team usually becomes painfully obvious for the rest of the organization, sooner or later.

As a final note, we can mention that what’s usually the most difficult exercise in this phase is to be concrete enough, while still being visionary. You should challenge any statements you come up with which sound too generic and that don’t really mean anything. A good exercise here is to negate a statement and see if it still makes sense. For example, the statement “focus on product Alpha” still makes sense if you negate it (“don’t focus on product Alpha”). However, the statement “be the best company ever” doesn’t make sense if you negate it, which means it’s too generic and should therefore be avoided.

When you have completed this phase, you should be able to answer the following questions:

  • What is our purpose for existing?
  • What is our vision to enact our purpose?
  • What are our priorities and non-priorities?
  • What are our (SMART) goals?

Phase Four: Imperatives. Understand what you need to be successful

When you have decided on your future aspirations, you can start understanding what you need to achieve these.

The output from this phase is usually a set of enablers and blockers. These will tell you what you need to be successful (enablers) and what is currently stopping you (blockers). An enabler might be something simple as: “customer support function” or “e-commerce platform” – i.e. something that helps you to deliver on your vision. Note that this phase still doesn’t have anything to do with what you should do and how you should transform (that’s the next phase). This current phase focuses on what you need to achieve your aspirations.

To do this you can start breaking down your vision statement(s), goals, and priorities, and asking yourself: what do we need to achieve this? Here again it can be useful to work with a theme based-model, which focuses more internally on your organization. For example, one of our vision statements might be: “Become the market leader in the Nordics” and the accompanying goal for this is “achieve 20% year-on-year sales growth”. Then you might come up with the following things you need to succeed with this:

  • “Skilled sales force in the Nordics”
  • “Products which caters to the specific market-needs”
  • “Internal IT system to measure our progress”

Many of these statements might seem obvious and basic, but usually it’s in these basic functions that many organizations fail. Therefore, we recommend that you detail these, even if they seem basic, as you in the coming phase will use them to set your plan of action.

This is also a good time to discuss which barriers you might see that is stopping you – your blockers. Usually organizations have actual (or imaginary) internal obstacles that stop them from achieving their aspirations. Examples of these are: legacy IT systems, non-growth mindset, or specific people trying to protect their own domain. You should discuss these and understand how they can be mitigated.

Note that there is good reason to have this phase in between your aspirations setting, and your planning phase. This phase four allows you to consider what you need in the future, without thinking too much on your current organization. This can be helpful, as you won’t get internally focused.

When you have completed this phase, you should be able to answer the following questions:

  • What do we need to succeed with our aspirations – enablers?
  • What is stopping us from succeeding today – blockers?

Phase Five: Plan. Set your plan of action

Now you have all the components you need, in order to set your actual plan of action. You have your starting point, your vision, and what you believe you need in order to be successful.

This phase is basically about asking yourself: how do we close the gap between what we currently have (phase two) and what we need in the future (phase four)? An example: You have identified in phase four that you need a skilled salesforce to be able to succeed with your vision of growing product segment Alpha. You have also concluded (in phase two) that your current sales force is underskilled and lack incentives. This is an obvious gap that you need to mitigate if you want to succeed.

The output from this phase is usually a set of actions, projects, and initiatives which will help you close the strategy-to-execution gap. These will be large and small, easy and difficult. Some might be possible to close right away, and some will be three-year projects. What’s important here is that you manage this plan a whole, and make sure you prioritize. Usually you will have 3-5 large projects that are “must-wins” and which your future depends upon, and these must be highest on the list.

Somewhere here you should also create the full financial plan for your strategy – your quantitative forecast of how your plan will lead up to the goals you set previously. This is important to get a full quantitative understanding of the transformation plan, and also to discuss if it seems doable or not. Most companies can quite quickly create a quantitative high-level model of their entire business, and this is very useful for all types of strategic planning.

Finally, to be able to execute the plan you will have to look at what management and support systems you have in place. Do you have clear responsibilities? A follow-up process? A portfolio management function perhaps? What this looks like will vary depending on the scope of your transformation plan, and what support capabilities you have in place already. Be aware though that this is where most new strategies fail – in the execution.

When you have completed this phase, you should be able to answer the following questions:

  • What is our plan of action?
  • How do we prioritize this plan?
  • What is our quantitative plan?
  • How do we manage the execution of the plan?
  • Do we the right support in place to succeed with execution of the plan?

Summarized outline for your strategy

As a concrete summary of the outcome, here is an example of how you can structure your strategy material in five sections, with a total of about 10 to 20 slides (excluding Appendix). It is vitally important to keep this material as short as possible – for two reasons. Firstly, it challenges you to distill the most important parts and not lose yourself in fancy slide-making. Secondly, it allows people to more easily digest the material and actually understand it.

  • Executive summary
    • Summary that everyone can understand (1 slide)
  • Our starting point (Phase One and Two)
    • Quantitative history (1 slide)
    • Market performance and outlook (0-1 slides)
    • Industry trends (0-1 slides)
    • Voice of the customers (0-1 slides)
    • Summarized statements – or SWOT (1-2 slides)
  • Our aspirations (Phase Three)
    • Purpose and overall vision (1 slide)
    • Detailed vision in themes (0-2 slides)
    • Priorities and non-priorities (1-2 slides)
    • Summarized (SMART) goals (1-2 slides)
  • Our transformation plan (Phase Four and Five)
    • Current barriers and stoppers (0-1 slides)
    • What you need to succeed (0-1 slides)
    • Your action plan – prioritized initiatives (1 slide)
    • Quantitative forecast (1 slide)
    • How you will execute your plan (1 slide)
    • Immediate next steps (1 slide)
  • Appendix
    • Data points
    • Analysis and deep-dives
    • Details on initiatives
    • Details on quantitative plan and assumptions
    • Strategy process and involvement

The story outlined above is your core-material, which in turn will take many forms depending on who consumes it. If you’re doing a presentation for the board, it should include clear decision points and needed financing. If you’re doing a presentation for the entire company, you might want to skip some more sensitive areas and jump right to vision and execution plan.

Acting on your strategy and plan

Okay, so now you have your strategy? What’s next?

First of all, if you have not already done so, you might need to get it approved and blessed by other instances – such as your top-management team, board of executives, or even the owners. Depending on your organization, this can be a quick task or something that takes months.

When your strategy is approved, you can start to communicate and act on it with full force. Right here is where most organizations fail fatally. Putting together the strategy is doable for most companies, especially if you do it in a smaller team, but acting on your strategy and aligning your entire organization to it – that’s difficult. We see three factors that can help.

Communicate and evangelize. Communication of the strategy starts at top-management, but should involve all leaders in the organization. Everyone who has any type of leadership position must know the most important parts of the strategy, and be able to reason why it’s formulated the way it is. When you communicate you must tailor the message to the different groups, so that each of them understands what this means for them, and how they should act.

Iterate and adapt. When you start communicating your work to the masses, you might also get input which in turn changes parts of the strategy. This is a good thing, if you can keep the balance. Large parts of the strategy should remain solid, otherwise you have not done your job in the first place, but to change smaller parts is usually good for iteration and anchoring. This shows you are listening to your organization, which of course is important.

Remember to act. Remember that action plan you put together earlier? That plan should be in full execution by now and should have but the right support systems in order to be able to execute it well. Any plans that didn’t work out should be iterated and restarted, or distinctly terminated. There are few better ways of losing your organizations’ trust, than launching a new strategy, and then nothing happens in practice. The organization must feel the change.

Finally, when you have your strategy, and have started to act on it, might be the perfect time to make your strategy process into something recurring. Therefore, you should already now plan for when and how your next strategy update should be carried out.

In conclusion

This article was a brief introduction to how you can run a practical strategy process, that is fit for the digital age. What it will look like in practice is up to you, and you will need to adapt the process to make it work in your organization.

Do you want to know more or need help with a project related to this topic? Talk to us on to see how we can help. We always welcome your queries and feedback.

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