Strategy’s most important component—by far—is the organization’s vision. To be clear, strategy should not be confused with anything happening before the next three years; or how any short- or long-term goals are to be accomplished. Strategy is about what your company is in the future; and with that vision is the anchor that brings a strategy to life. As a leader, it is your sole responsibility to make sure the vision of your company is strong. To achieve that, you must install your vision vividly like a movie producer/director creating a great motion picture. The setting for your movie is three to five years into the future, and the protagonist is your organization.
The mistake most leaders make in creating the vision for their organization is they don’t spend enough time thinking through its robustness and validity. If it’s created at all, it’s created in a short segment of a two-day strategy retreat that happens maybe once a year. Although I applaud the effort to at least create a vision, this isn’t nearly enough time to spend in the creation of your company’s most important work. Like directing a major motion picture, the key to a vivid, compelling vision is in the details. I suggest a three-cycle approach to your strategy creation.
The First Cycle: Macro-Environmental
In the first cycle, focus is on macro-environmental factors. This is the environment you have little or no control over like politics and the economy. A mnemonic to remember the different macro-environmental categories is PESTEL; which stands for political, economic, social, technological, environmental, and legal. This is good place to start; however, it behooves you to discover the categories that are most relevant to your organization. For instance, with the recent surge in corporate social responsibility, some companies have modified this mnemonic to STEER, which stands for socio-culture, technological, economic, ecological, and regulatory. Use what works for you.
With your categories and your strategic time frame (e.g., three years) determined, do your absolute best to create your macro-environmental future as realistic as possible. Start the language of your vision screenplay with the target date (i.e. the end date of your strategy) and use the present tense. For instance, “It is October 1st, 20xx, and the political environment…” Continue with what you believe the macro-environment will look like. Make this picture as vivid and detailed as possible. The overriding theme for this cycle of creating the vision is realism. This is what makes your vision believable. Use whatever tools you have at your disposal to make accurate projections of how each category will contribute to your vision of the macro-environmental future. Resources that will make a difference here include outside experts, a culture of creativity and problem-solving, and a good information strategy. You’ll want to complete this cycle, by painting your organization in on the assumption that no strategic changes are made. Of course, we won’t stop here, but it’s a useful reference point for what your company will become if it stays on its current course.
The Second Cycle: Competitive Environment
In the second cycle, focus on your competitive environment, unless you’re pursuing a blue ocean strategy (i.e. you are not anticipating any competition—this is a topic for another discussion). Consider who your key competitors are and how they will respond to the macro-environmental factors you created in the first cycle. Consider what their likely moves will be on what they will offer (products, services, relationships), and what markets they will offer it to. Consider how your mutual customers will respond. Also consider the possibility of new competition and how easy or difficult it is for new companies to compete for your customers. Consider your suppliers, what kinds of pressures they will be under, and how they will react to the future environment. Finally, contemplate whether are not any substitute offerings will come into the marketplace, affecting your customer base. At this point revise your vision screenplay. It should be getting clearer. Again, a good information strategy that includes accurate competitive information can certainly help.
The Final Cycle: The Organization
In the last cycle, focus on your organization. Paint a picture of what your organization will be on the target date specified by your strategy. This is where it’s important not to forecast from today, but project into the future and work your way back. Describe in detail the products, services, and relationships that you have created; and the markets that you’ve captured. You should be bold and confident in your vision, and in some cases unrealistic. The boldness of your organizational picture against the reality-backdrop of your macro-environmental projections will inspire you and your organization to great things. Make adjustments to your competition in this cycle, showing how your acumen and prowess have diminished their position in the marketplace. Make sure to capture the attitudes and behavior of your new organization, and describe your new culture as you’ve built out necessary capabilities to support your future.
At the completion of the third and last cycle, you should have a vivid, detailed, compelling, mega-budget motion picture production of your future that you can use to inspire and lead your organization. This is an exercise that takes more than a few hours, but less than a few weeks. Take some time to organize this effort today; and tomorrow your organization will be a blockbuster hit.