Whether your company is a Fortune or a $50 million operation, in order to be successful, you must operate from a simple strategy. Now, let’s not confuse the word simple with easy; at times simple is very difficult to achieve. Yet, if a strategy is not simple enough that every employee of a company can not only understand the strategy, but knows how the strategy guides their day to day activities, it will be difficult.
According to Dr. Chuck Bamford the end result of strategy development need not be more complex than a one page map containing five key elements: Value Drivers, descriptions of Stakeholder Experience, Critical Success Factors, Must Do’s and Metrics. The map also includes a Mission Statement based on the strategy elements. In this article, I would like to give a brief illustration of each element.
To illustrate I will use the example of a well known company, Starbucks. Although Starbuck’s performance has not been stellar the last couple of years, no one can deny that in building the Starbuck’s brand the company succeeded brilliantly. Starbuck’s Mission Statement is, “To inspire and nurture the human spirit— one person, one cup, and one neighborhood at a time”. What follows is my own decomposition of their Mission Statement to illustrate the strategy elements.
A Value Driver is a short statement that expresses how a company will create value for their client. The statement is based on the resource capabilities that the company possesses and utilizes for their client. A possible Value Driver that could serve as one piece of the foundation of Starbuck’s Mission Statement might be, “Feeling at home”.
The Stakeholder Experience consists of a series of statements that represents the stakeholders’ view of the value driver in action. The statements are what the company hopes to hear from their stakeholder to confirm that the value driver is correct, and also if the company is executing on the value driver. Some examples of statements that Starbuck’s might seek are: “At my Starbuck’s, they know what I want before I ask” and “The Starbuck’s staff are like my friends”.
Critical Success Factors
Critical Success Factors are the first crucial link between strategy and operations; the company must get the factors right in order for the Stakeholder Experience to happen. Critical Success Factors for the Stakeholder Experience described above might be, “Staff Knowledgeable about products”, “Staff Knowledgeable about customers” and “Staff well trained on drinks, able to engage customer”.
We should note, at this point, that when a strategy map is developed for a company, the first three elements that we have outlined above are the same for every employee of the company, from the CEO on down. In contrast, the next two elements may change for different functions within the company.
Must Do’s are the activities that each function within a company must perform in order to create the Stakeholder Experience. These could vary depending on the function. For example, in order to have employees who are able to prepare drinks quickly and correctly, the training department must create effective training programs.
In order to motivate employees, Human Resources must hire the right kind of people and put in place a structure that will motivate. At Starbuck’s “baristas” must be outgoing and friendly and know their clients well. Starbuck’s also has different levels of certification; have you ever noticed the different color aprons on Starbuck’s employees?
The final element, Metrics, does not change for different functions within the company. The collected metrics are studied to see how well the company is performing and give the company the ability to change operations quickly if performance is not where it should be. For example, metrics that could support the “Feeling at Home” Value driver might be to conduct a count in different Starbuck’s that determined how many customers came through in a period of time, and of those customers, how often did the employees know what the customer wanted before they even ordered.
A simple strategy is clear, easy to understand and creates direct links between operations and strategy. If you would like more information on creating strategy, I highly recommend Dr. Chuck Bamford’s most recent book, Strategic Management: Value Creation, Sustainability, and Performance, published by South-Western College. In addition, Dr. Bamford will have an edition for Entrepreneurs titled Entrepreneurship: A Small Business Approach to be published in January 2010.