Work it through: Do We Actually Have a Strategy?
A sequence for the document on the wall: test whether it contains a diagnosis, a policy and coherent actions or just goals, find which of your capabilities is a genuine advantage, choose deliberately how you compete, then translate the choice into measures that will keep it alive after the away day.
Seven steps, in the order the playbook gives them. Your work stays in this browser until you save it to a file.
Your ducks
Start with what the people believe, what the paperwork says and what actually happens. The issues where your ducks disagree are the ones to carry into the homework.
You have not filled in the ducks sheet yet.
The homework
What has to be found before any of the four frameworks is worth running. Put a name and a date against each one, and tick it when you have it in your hands.
The ducks
For Rumelt's Kernel of Good Strategy
For VRIO Framework
For Porter's Generic Strategies
For Balanced Scorecard
Step 1 of 4: Rumelt's Kernel of Good Strategy
Hold what you have up against the three parts: a diagnosis that names the critical challenge, a guiding policy for dealing with it, and a set of coherent actions that carry the policy out. Most documents fail at the first. They list ambitions without ever saying what, specifically, is in the way, and without a diagnosis the rest is decoration. Write the diagnosis in one paragraph, in plain words, and be prepared for it to be uncomfortable; that discomfort is the sign you have found it.
Watch forA diagnosis that is really a goal in disguise. "We need to grow" names no challenge; "our three biggest customers are all in a shrinking sector" does.
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What comes out, and how to read it
A short statement of strategy in three parts: the diagnosis of the critical challenge, the guiding policy chosen to deal with it, and the coherent actions, with resources attached, that will carry the policy out, plus an honest verdict on whatever document the kernel replaced.
- Read it backwards: each action should trace to the policy, and the policy to the diagnosis. A break in that chain means decoration has crept in.
- Test the guiding policy by negation. If no serious competitor would ever adopt the opposite, the policy says nothing.
- Check what has been excluded. A kernel that stops nothing has concentrated nothing.
- Hold the diagnosis lightly: it is a judgement about a moving situation, and the strategy is only as good as the diagnosis is current.
Step 2 of 4: VRIO Framework
A guiding policy has to rest on something you have that others do not. Run the four tests on each capability the room is proud of: is it valuable, is it rare, is it hard to copy, and are you organised to exploit it? Most fail at rare. The things a firm thinks make it special, its service, its people, its relationships, are usually what every competitor says too. What survives all four tests is short, and it is the only honest foundation for the policy.
Watch forTesting what you would like to be good at. The tests apply to what you have now, evidenced; aspiration goes in the actions.
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What comes out, and how to read it
A resource-by-resource verdict on the VRIO ladder: which resources confer sustained competitive advantage, which yield temporary or unexploited advantage, which buy only parity, and which are costs in disguise, with the organisational gaps that must close for value to be captured.
- The tests are sequential and conjunctive: a resource must pass all four for sustained advantage, and the first failed test tells you exactly what kind of problem you have.
- The most actionable finding is usually a 'yes, yes, yes, no': an advantage-grade resource the firm is not organised to exploit, because organisation is the one test management can change directly.
- Expect a short list. If most of the inventory passes all four tests, the analysis was flattery rather than analysis.
Step 3 of 4: Porter's Generic Strategies
Now make the choice. Compete on cost or on difference, broadly or in a niche, and say which, because the firms that refuse to choose end up in the middle, where margins go to die. The choice feels like giving something up, and it is; that is what makes it a strategy. The VRIO result tells you which choice you could actually sustain, which is usually not the one the sales team would prefer.
Watch for"Both" as the answer. A firm can be cheap or distinctive and occasionally, briefly, both; a strategy that depends on both is a strategy that has not chosen.
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Step 4 of 4: Balanced Scorecard
A choice nobody measures does not survive contact with a busy year. Translate the policy into a handful of linked objectives and measures across the four views, financial, customer, internal process, and learning, so the things that drive next year's results are watched as closely as this year's numbers. The scorecard is how the strategy stays in the room after the facilitator has gone home: a short list that the monthly meeting opens with, and that would make it obvious if the firm had drifted back to the middle.
Watch forA scorecard built before the choice. Without a strategy to translate, it becomes a wall of KPIs that measures everything and steers nothing.
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What comes out, and how to read it
A one-page scorecard of objectives, measures, targets and initiatives across the four perspectives, ideally accompanied by a strategy map making the assumed cause-and-effect chain explicit, plus the review rhythm that keeps both honest.
- Read it as an argument rather than a dashboard: learning and growth enables process performance, which drives customer outcomes, which produce financial results. Then look for where the argument is failing.
- Watch the lead indicators for the future and the lag indicators for the past. A scorecard that is all lag is a rear-view mirror with extra rows.
- Persistent green in one perspective alongside persistent red in the next is the interesting finding: either the initiatives are wrong or the causal link is imaginary.
- Count the measures. If the scorecard has sprawled past roughly 25, it has stopped expressing choices.
The review date
Set the date you will come back and ask whether it worked. Put it in your diary; this site will not remind you.
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