5 Must-Follow Steps to Prepare Business Strategy

for an Execution
bscdesigner.com /5-strategy-steps.htm

by Aleksey Savkin

We often hear business professionals talking about vision, mission, strategy maps, SWOT analysis,
risk management, or using strategy execution frameworks like Balanced Scorecard. There are many
business tools that help to understand company’s challenges better, formulate its strategy, and achieve
desired outcomes.

To use these tools efficiently and effectively, it’s important to understand:

How each of them contributes to the company’s strategy, and

How the synergy is achieved.

Step 1. Define your Mission, Vision, and Values

The strategy game starts with a clearly defined mission (the purpose
of the company) and vision (a picture of the perfect future of the
company) statements; or at least that is what executives are told in
MBA schools.

In the real business environment:

Companies tend to use vague mission statements that

literally tell that the company exists and does what it does.
Companies often have boring vision statements, while a good
vision statement need to inspire.

An excellent example of good/bad mission statement might be the

Apple company. Back in 1980 Apple’s mission was based on
inspirational rhetoric of Jobs (he used such phrases as “digital media
revolution” and “a contribution to world”); now Apple’s mission
View full-size info-graphic
statement seems to be not formulated at all. You can follow the story in
the article [1] by Henry Blodget published on Business Insider.

In the perfect world strategy planning would start from the definition of the mission and vision
statements, but we often see companies with vague mission statements, no statements at all, or as in
the example with Apple, a company that is constantly reinventing its missions and vision.

To sort out with the terminology read my previous article “Vision and Goals vs. Strategy Map and
Objectives.” where I explained the difference between these ideas and why it matters. Also, there is a
very motivating post by Bernard Marr on LinkedIn [2] where Bernard shares some excellent examples
of bad/good missions.

On the diagram we put Mission, Vision, and Values on the top, implying that these statements contain
the most general ideas about company’s direction. In the worst case these will be some vague
statements that don’t help; in the best case these statements will be inspiring employees and partners
like Job’s statements did.

Step 2. Formulating business hypothesis and strategy

As explained by authors of “Strategy Safari” [3] there are at least 10 different schools of strategy that
explain different approaches to the strategy and the ways to formulate it. You can be a follower of a
certain strategy school, but there are some key components that exists in any good strategy.

According to Richard Rumelt (“Good Strategy. Bad Strategy” [4]), a good strategy includes these 3
components (called “kernel” by the author):

A diagnosis (a hypothesis about the reason of the challenge that company face),
A guiding policy (a hypothesis about the solution to the challenge), and
Coherent action (a hypothesis about what might help, e.g. a company’s response to the
challenge)

Under the umbrella of “strategy formulation” we can group various business tools that play some sort of
role in formulating an hypothesis about what might work:

SWOT analysis for reviewing company’s options from the positions of strength, weakness,
opportunities, and threats.
PESTEL analysis for an analysis of external environment.
Risk Management – for formulating risk assessment and risk control plans.
Strategy gap analysis to compare current strategy against the best practices.

It is also useful to define:

Constrains – limits applied by resources, technology, skills, etc.

Customer needs to define later Customer Value Proposition.

Is this the full list? For sure, no. Executive’s toolkit include some more popular tools, but for the
purpose of the article, it’s enough to mention on the diagram just the most important methods. All of
them will help to generate a business hypothesis.
 Read also: “3 Generic Strategies That Need to Exist in Any Business “

Strategy commentary document

In the next step we will need to convert these hypothesizes into the form of the strategy map with
specific objectives that will be linked with each other by cause-and-effect connections. A strategy map
cannot include all of the supporting ideas, so one might want to include these ideas into some kind of
supporting documentation, Strategy Commentary. This might be a 2-3 page document that explains
the logic that was followed to formulate the current strategy.

If you already have a strategy map and Balanced Scorecard in your company, then have a look at “6
ways successful leaders reinvent their Balanced Scorecard” [5] by Jeroen De Flander.

Step 3. Strategy description on strategy map

In this step one formulates business objectives on the strategy map. It’s important to catch the cause-
and-effect connections between them. As it was discussed before in “Strategy Maps: A Guide for
Getting Started” [6], the cause-and-effect logic is not always shown as an arrow, sometimes it is just
mentioned in the strategy commentary document.

One of the most popular strategy execution frameworks is the Balanced Scorecard; this approach
suggests focusing on 4 perspectives:

Financial Perspective
Customers Perspective
Internal Business Processes Perspective
Learning & Growth Perspective

It’s important that any objective on the map have an owner responsible for it, strategic initiative that
provides a proper action plan to achieve the objective, and metrics (often called KPIs) that tell that
company is on the right track. An ideal situation is when there is at least one leading and
one lagging metrics associated with each objective.

Needless to say that to use the benefits of the performance measurement one needs to specify
respective targets, thresholds, and benchmarks.
Metrics cannot be just copied from the list of popular KPIs. A good metric needs to be formulated during
the discussion around the strategy, it need to be aligned with business objectives, and needs to
pass validation (confirm that this metric is measurable, realistic, and aligned with business goal). More
ideas about metrics and their validation were discussed in “Why most KPIs don’t work and what to do
about this” [7].

Step 4. Strategy alignment (cascading)

In simple words, a strategy alignment (cascading) is a discussion around business goals that helps
participants to understand how desired business outcomes can be achieved on a certain business level
(alignment of business objectives, initiatives, and action plans), and how the success/failure can be
measured (alignment of respective measures).

Strategy is not for the top management (Tier 1) only. The idea is that everyone in the company,
including business units (Tier 2) and employees (Tier 3) is aware of the strategy, and understands how
their job is linked to the ultimate goal (achieving company’s vision).

On the diagram Strategy Alignment is a separate block, but it should not be treated as a separate step
of the strategy process.

The alignment process doesn’t need to be top to down, actually in the best case it is bi-
directional.

It means that department managers are involved in strategy discussion on the early stages. The
resulted strategy will reflect various perspectives, and will be much more realistic. One of the best
realizations of this idea is Catchball process from Hoshin Kanri method.

Strategy budget

A side product of the strategy description is that it is possible to give a rough estimation of the strategy
budget – a cost of the future strategy execution. I’m putting it on the diagram, but I don’t want to
include it as a separate step, as a strategy exercise should not be reduced to the budgeting.

Step 5. Strategy execution

Once a strategy was formulated and aligned, one can start the strategy execution. Having a well-
defined and described strategy in front of your eyes will be your company’s GPS.
 Strategy map will help to focus company’s resources on the important objectives;
Leading and lagging metrics will help managers to track execution process;
Aligned/cascaded objectives will make strategy everyone’s job;

Strategy software

For sure one might survive using old-school tools like MS PowerPoint or MS Excel to catch important
ideas about company’s strategy, but when strategy discussion is done seriously, regularly, and involves
more than a few persons, a professional strategy execution software might be helpful.

Anticipating questions from the users of BSC Designer, I’m sharing some ideas about how this strategy
execution software can help:

Step 1. Vision and Mission statements. In BSC Designer: one has a possibility to enter the
company’s vision and mission statements. If your mission is a motivating one, then it’s good to
see it every time you hold a discussion around strategy.
Step 2. Formulating strategy hypothesis. With BSC Designer you can create a support
scorecard that would map the results of the SWOT or PESTEL analysis, or reflect your
risk assessment. The tool is not locked to a certain business method, and is quite flexible for
various strategy related methods.
Step 3. Strategy maps. In BSC Designer you can formulate business goals, convert them into a
strategy map, add necessary details to the strategy map and use it for the future strategy
discussion and execution.
Step 4. Strategy alignment. With BSC Designer one can create and link together several
scorecards. Your HR might have its own scorecard, which would report necessary data
automatically to the top level scorecard.
Strategy budget. In BSC Designer: you can align “Budget” and “Duration” initiatives with any
business goal or KPI; using “Budget and Duration” report one can get an overview that will show
the total budget and time needed to execute the described strategy.
Step 5. Strategy execution. BSC Designer provides such tools as strategy maps, dashboards,
and reporting, that will help executives to keep track of how the strategy is executed and where
any attention is needed.

How do you feel about the strategy definition and execution? Do you agree with the steps? Would you
add something to the diagram? Please share your point of views.

References
1. ^ Apple’s ‘Mission Statement’ Is Making People Worry That The Company Has Gone To
Hell http://www.businessinsider.com/apples-new-mission-statement-2013-8
2. ^ What The Heck is Wrong with… Mission and Vision Statements?, 2013, Bernard
Marr, https://www.linkedin.com/pulse/20130626044531-64875646-what-the-hell-is-wrong-with-
 mission-and-vision-statements
3. ^ Strategy Safari: A Guided Tour Through The Wilds of Strategic Management, Henry Mintzberg,
Joseph Lampel, Bruce Ahlstrand, Free Press, 2005
4. ^ Richard Rumelt “Good Strategy. Bad Strategy. The difference and Why it Matters”, 2012,
Profile Books LTD
5. ^ Jeroen De Flander 6 ways successful leaders reinvent their Balanced
Scorecard https://www.linkedin.com/pulse/20140910184614-1404807-6-ways-successful-
leaders-reinvent-their-balanced-scorecard
6. ^ Strategy Maps: A Guide for Getting Started, Aleksey Savkin, 2014,
http://www.bscdesigner.com/strategy-maps-guide.htm
7. ^ Why most KPIs don’t work and what to do about this, Aleksey Savkin,
2014, http://www.bscdesigner.com/sound-approach-for-kpis.htm

Related Articles

Info Graphic: From Strategy Definition to Execution

3 Generic Strategies That Need to Exist in Any Business
A Journey From a Bad KPI to an Excellent Strategy
Strategy Maps in Government Sector
About Aleksey Savkin

Aleksey Savkin is a business performance expert at BSC Designer. His areas of

expertise are Balanced Scorecard, KPIs, Business Performance Management.
Aleksey is the author of a number of articles and books on Balanced Scorecard.