Late fall is that time of year when many organizations refine and finalize their budgets for the next fiscal cycle. Budgets always reflect strategic decisions and assumptions and this process can be extremely helpful in clarifying questions like:
- What are your plans for growth?
- Where are you going invest?
- What resources are needed?
However, I believe the line of questioning needs to go deeper.
As I reflect on our own strategy, and the strategies of the organizations we work with, there are basically three (3) strategy-testing questions that help identify which ideas are winners and which are not. Every strategy doesn’t have to answer all three questions, but it should answer one very well and have rationale on why the others are not being prioritized. These questions are my interpretation from a great lecture by Professor Eric Morse at the Ivey School of Business at the University of Western Ontario:
- How are you creating more value for customers? Every good strategy needs to look at your product or service and ensure that it (or your organization) is delivering real value. Are you investing to improve the delivery, experience or results for your target audience? Are you improving the value chain to save costs and increase efficiencies? Are you focused on the opportunities that will have the greatest impact on the results you’re striving for?
- How will you attract more customers? Increasing the velocity of a product on the shelf or attracting new clients is usually a key priority for any organization. My executive coach recently quipped that “a growing top line covers a multitude of sins”. Business development or sales is the lifeblood of an organization and a positive influx can make up for operational inefficiencies. Every strategy needs clear plans, people and actionable items to ensure business development is implemented well.
- How will you expand your reach? Growth strategies always require expansion. You can expand through increased distribution, entering new markets, adding a new product or service, or expanding current facilities etc. This is the hardest question to answer as it usually involves the greatest amount of investment and therefore risk. Christine Day, former CEO of lululemon athletica, noted at a CEO roundtable discussion recently that “it’s prudent to build demand in the desired space or market prior to expansion”. I couldn’t agree more. Be great at the first two questions… then answer this last question.
A leader is ultimately responsible for the strategies the organization pursues in order to create the desired results. I encourage you to ask your team these questions, to ensure the focus is clear and that you’re spending your time and resources in the areas that will matter most.
Have a great day!
– Braden