This is the third post out of four, in this 4 week Christmas Challenge. We are building a small-scale strategy toolbox for small companies.
The first two weeks/posts in this Strategy for Christmas series were about the strategic analysis. In bigger companies, a lot more analysis needs to be done than what we just did. But in small-scale strategy toolboxes for smaller companies, the SWOT and the “Opt-in/Opt-out” are the two most important ones and also sufficient.
Next step is to do the strategic development. We will be drawing the overall strategic lines this week and dig down in some more tactical tools next week, to make sure that you know exactly what to do when this Strategy for Christmas series is completed.
Your THIRD tool
All strategies need some sort of a hierarchy in the way they are build. We usually start from the top with the Vision of the company, then we define the mission, the values, the targets, the objectives and the actions.
Building a small-scale strategy for smaller companies, we need (like in the strategic analysis) to pick the most important and value adding things out of this process and use them to build something proper for smaller companies with few or only one employee. For that purpose I use what I call the SOS framework. That is actually a great name for it, as it will save you from the extreme stress of trying to do everything for everybody, which is beginners mistake number one when doing strategies! – and a mistake that you don’t want to be doing, trust me!
“For that purpose I use what I call the SOS framework. That is actually a great name for it, as it will save you from the extreme stress of trying to do everything for everybody”
SOS is short for:
S = Statement
O = Objectives
S = Strategy
This framework is specifically targeted smaller businesses as it ensures, that your activities are organized in support of each other and all heading in the same direction. Without this cohesion between your activities, you risk losing sight of your purpose and targets for the business, and on top of that you might lose your motivation (and money).
There is so much to do on a daily basis that it is easy to forget about the plan and get lost in the details of the daily routine. This is a dangerous mistake for any business or organization to make. When the daily activities that take up most of your time are no longer aligned with the vision that you have for the future of the business, you are going to have a hard time reaching your goals. Staying on track requires a close connection between long-term goals and short-term activities.
Like the the two preceding weeks, Santa Claus has given permission for us to use his input as an example:
The tool is meant to work from the top down on the three bullets, starting with the Statement. With each successful point becoming a little more specific as it goes. However, in practical implementation it works better if you see the process as an iterative one. Meaning, you can and will start with what you know, go to the next phase and then go back to a previous one, as you develop your thoughts and get a better idea of the content of the different elements.
Let’s take a quick look at each of the three elements of the SOS framework to better understand how they can drive your company forward. But before we begin, revisit your “Opt-in/Opt-out” ideas from last week. Because this week, we will be building on those.
To see how, please download the PowerPoint file and follow the instructions. Get it here:
To develop your statement, look at page 9 of the presentation.
We will build the statement with building bricks from your vision. Your vision is the initial idea and dream you had, when you started your company. It needs to be your dream, but it must also be realistic, credible and attractive to your business.
The statement, on the other hand, is the main purpose of the strategy we are developing. It is the top-level, overall reason to do this strategy and tells what you want to accomplish during the period (e.g. three years). The more specific that you can be when defining your statement, the more success you will have later on trying to define the remaining points within the tool.
A good guideline is making sure that at least you mention the concept/product/service, to whom you will sell it and how exactly will you be different from your competitors doing that.
I you have absolutely no idea of how to differentiate, take a sneak peak in the strategy element section already now.
To work with the objectives, look at page 10 in the presentation. Copy your statement from before into the slide.
Your objectives are one step down from your statement. Think of these as a collection of individual goals that will add up to reaching your overall statement. Just like with the statement, objectives should be specific enough to guide your decision making and planning for the future. With your statement in place, it should be relatively easy to develop a list of a few objectives.
Be aware, that your objectives need to be SMART!
S = Specific, well defined, clear and unambiguous
M = Measurable, with specific criteria that measure your progress
A = Achievable, Attainable and not impossible to achieve
R = Realistic, within reach and relevant
T = Timely, with a clear defined timeline, including a starting date and a target date
To continue with the strategy, look at page 11. Copy in your “Opt-in” from last week and your statement from before.
Also, look at the matrix to the right. As we want to complete the SOS picture to hinder you from the extreme stress of trying to do everything for everybody, I will give you one really helpful tool more for your toolbox.
This tool is one of the classics from within the theory of strategic development and it is called Porters Generic Strategies. Michael E. Porter is an American academic known for his theories on economics, business strategy, and social causes – and one of the world’s leading authorities on competitive strategy and international competitiveness. He is mostly credited for creating “Porters Five Forces”. Five Forces is a model for competitive analysis in bigger companies and therefore not included in the small-scale strategy toolbox.
Going back to the matrix on page 11 in your strategy toolbox. Find out if your company is the best among its competitors to produce/serve at low cost and sell at low price. If not, I would usually say that you need to really differentiate your company from the competitors. In Porters theories, only the cost leader should go for a cost strategy.
As most companies need to differentiate, this choice of strategy is also what we will be working on next week.
Next step is to find out whether you want your company to serve the entire market or only a part of it. As this Strategy for Christmas is targeted smaller companies, I assume that you are going for part of the market. Meaning you will probably end up with a Differentiation Focus Strategy just like Santa Claus.
The purpose of bringing in Porters Generic Strategies to our toolbox, is for you to start thinking about how you want to do business different from your competitors. Next week we will do a lot more work down this road, but to get you thinking, find out which generic direction you want your company to pursue. And please don’t fall into the trap of trying to do everything!
Concluding on the process
There is a cohesion between each step along the SOS framework that is important and should be considered carefully. One step builds on the next, and that consistency is what makes this a valuable tool. Many organizations get lost somewhere between the statement and the tactics of the strategy, so do a careful review of your processes to make sure that you don’t fall into that trap. As long as you are able to outline a logical progression for your business from one step to the next, the end result should keep you pointing in the right direction.