In one sense, strategy is very complex. As discussed in my previous article, strategy consists of no less than ten elements that are all related, constantly changing and even complex in and of themselves. Gaining good insights into these elements and their relationships, managing them and changing them is a real challenge, especially in today’s VUCA market conditions.
In another sense, however, strategy is also very simple. As argued in another recent article, strategy is an organization’s unique way of sustainable value creation. If that is the core of strategy, then every strategic move, activity, project or step you make should contribute to just that: creating unique sustainable value. Given that value creation is defined as creating value for customers, this means that every strategy and every strategic initiative should answer the following single question:
Does it improve the way I create value for my customers?
Organizations create value through their value proposition (or through multiple value propositions). It is for this reason that the value proposition is at the core of the Strategy Sketch. It is this single element that defines the contribution of your organization and its core reason to exist. If you don’t offer at least one value proposition that is appreciated by some customers, your organization simply serves no purpose. And if it doesn’t offer a value proposition that is at least in some way distinct from others, your organization has nothing to add that is not already there. Whether it is price, location, color, size, distribution channel, options, or any other aspect of the value proposition, if there is no distinctiveness in it at all, there is no real point in having it.
The key start and end point for every strategy, therefore, is its value proposition. This means that all other elements of your strategy need to align with or contribute to your value proposition. And this means that defining, evaluating, monitoring and managing strategic initiatives in practice can be quite straightforward—despite all the complexity. Of course there are various factors to take into account such as cost, time, and resources. However, deciding which strategic initiatives should be carried out boils largely down to the question as to which of them contributes most to your organization’s value proposition.
So, for every strategic initiative that you want to take—embracing a new technology, training your employees, relocating, restructuring, and so on and so forth—you evaluate whether and how it contributes to improving your value proposition, and thereby to value creation for your customers.
In a next article I will explain in some more detail how this can be done and how you can define your value proposition in a useful way. But for now it is enough to apply this simple rule. If something does improve the way you create distinct value for your customers, this is good and you go on with it. And if it doesn’t, you reconsider and probably want to spend your time, money and effort on something else.
This post was published earlier here on my forbes.com page.
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