Why It's Time to Complete a Strategic Review
Plus, steps for the review itself
You’re the CEO. You’re supposed to be the strategy expert. How do you feel about that? Nervous?
Most CEOs spend 99% of their time (sometimes 100%) on execution. Perhaps they’ve been fooled by consultants who shout, “It’s all about the execution!” Execute what? Most have never been trained on how to create a new strategy. Many never will. If your strategy is working, you’re achieving great results and you don’t foresee your competitive environment changing; Why would you change it?
However, many of you aren’t confident that your current strategy will continue being successful. You’ll be disrupted by technology, changing market requirements, customer preferences or perhaps government regulations.
What do you do?
You cannot anticipate all bad (or good) things, but you can anticipate much change and identify how you’ll win in the future environment if you peer into the fog.
To start, complete a strategic review. Gather your senior team and go through the below activities. When you’re finished, you’ll either gain confidence or scare yourself into action (e.g., recrafting strategy). Both can be good.
No. 1: What will our business environment look like three years from now? (Pick your own time frame.)
This one will take a while. First identify all the major levers that pertain to your business, such as:
- Interest rates
- Employment issues
- Consumer preferences
- Natural resources
- Government regulation
- Manufacturing capabilities
- Product design
- Top competitors
Assign each major factor to one of your senior people and ask them to return in a month with their best thoughts on that factor’s future and why they believe that. They should look at current trends, adjacent industries, historical information and emerging thought.
Reassemble your team and create a complete picture of the future. Does your current strategy and business model best serve this picture? If not, you have work to do.
No. 2: Is our return on invested capital above or below our industry’s mean? Could we get a much better return elsewhere? If so, there’s a problem.
No. 3: Are we seeing our most profitable customers jumping ship? Look at evidence, not your sales team’s opinions.
No. 4: Design a company that would eat our lunch. If the result is a credible competitor, you may want to become that organization, because someone will!
I’ve seen too many talented CEOs ignore the strategy issue and ruin their career. Don’t be that person. Ask the tough questions!