According to Wikipedia a strategy is a “a plan of action designed to achieve a specific goal. Strategy is all about gaining (or being prepared to gain) a position of advantage over adversaries or best exploiting emerging possibilities”. So from a business perspective we can define strategy as an integrated set of decisions that a company takes for better results and positioning in the long term (3 to 5 years, although the current trend is to reduce this time due to the unstable economic and business enviroment we live).
A company strategy is usually developed through a document called Strategic Plan. This plan has three very distinct parts: where we are (diagnosis), where we want to go (vision) and how we're doing (action plan) . Do not forget that this is an exercise based on the deep knowledge of our business and competitive environment, but it is also intuitive to the extent that the vision and plan of action are necessarily subjective.
Usually we tend to define a strategic plan when we consider that we must make any substantial changes in the course of our business. However, in my opinion, any company or organization, no matter the size, must have a strategic plan to guide its actions and decisions. As the philosopher Seneca used to say "if one does not know to which port one is sailing, no wind is favorable".
Where we are (diagnosis)
This is perhaps the most objective part of the strategic plan, as it is based on research and data collection about current situation of the business (competitive environment, commercial offering, organizational structure, marketing policies, processes, etc..). It usually includes both an internal and an external analysis developed through a tremendously helpful tool: SWOT.
It is also important to consider the major market trends with local or global effect (what John Naisbitt calls "megatrends") that are being sighted at the time of planning but may have a definite impact on our products or customers in the upcoming years. We are talking about such ambiguous concepts as globalization or the universal low-cost concept but also about issues much more attached to the new consumer habits like the rise of electronic commerce, the electric vehicles or the healthy diets.
It is very important to do a good job of analysis and diagnosis. However it is also essential to limit the time and resources we dedicate to this chapter. The temptation to go into too much detail level is very high. If this happens the strategic plan can be too cumbersome or even do not end up seeing the light.
Where we want to go
This is the favorite part for people who like strategy. It is time to define who we want to be, how we want to position our company and what are our values. It is without doubt, the most poetic of work but also, admittedly, the most difficult and necessary.
There is some consensus in academia and business to address this issue with three main concepts: mission, vision and values.
Mission. Acording to some authors the mission statement consists of three essential components: the key market (target audience), the contribution (products or services) and the distinction (whay make you unique). A good example of this could be McDonalds mission statement: “To provide the fast food customer food prepared in the same high-quality manner world-wide that is tasty, reasonably-priced & delivered consistently in a low-key décor and friendly atmosphere." However I think like Phil McKinney that “mission statements needs to be aspirational. They empower teams to create raving custom fans by doing whatever it takes to meet the mission”.
A great example of this approach is the Spanish hotel chain Room Mate: "we create welcoming and different spaces that surprise all who visit with their design, but most of all, for the treatment received, since more so than a client you are treated as a buddy, our friend, our room-mate”.
Vision. It's a very specific statement of intent. This is like a “picture” in a given time horizon that express the company position we are trying to achieve. Sometimes it is expressed in terms of goals. An example might be: "We aim to become the French market leader in the manufacture of solar panels in 2016, with a turnover of 23 million euros and 28% market share." A definition of vision that is not expressed in terms of figures, dates and relevant milestones is not worth to the extent that it does not give a clear and definite goal to reach.
Values. This is a set of principles that determine the behavior of a business corporation as a whole. Somehow a code of conduct that commits the organization to follow and incorporate into all production processes and business to achieve the vision, and make it be different from other brands. An interesting example is FedEx where people, service, innovation, integrity, responsability and loyalty are their brand values.
There are at least three major strategic models to add value to clients that have proven fully effective. It is at this point that we have to choose what is best for our company and commit to it as it will determine the decisions we make from here on out. Recall that the coherence and consistency are two key ingredients in building a brand positioning.
At this point we move from strategy to operational action. This Strategic Plan chapter defines all actions we take to achieve the goals we have set for our company. This section will include things like trade policy, the marketing and communications plan, the financial and human resources plans, etc. We also have to define key metrics and indicators (KPI) that will give us the information we need to be sure we are working in the right direction. Therefore, it can be very useful at this point to define a scorecard to help us make the proper monitoring of the plan.
Finally, let me remind you that the process of strategic thinking is alive. Although we can have developed a Strategic Plan 2012-2016 it is very important to periodically review its progress and scope. As indicated earlier, there can be regulatory, economic and technological changes that can recommend the reformulation of the plan. This tool is a guide that helps us to remember where we want to go and not blur our positioning, but it should not become an element of inflexibility that can lead us to disaster.