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Five Essential Elements of Strategy

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Lauri Jutila
Lauri Jutila

The document outlines the five essential elements of strategy: objective, necessary condition, success metric, target value, and means. It defines each element and provides examples to illustrate how they fit together to form a strategic plan. Specifically, it shows how setting an objective requires determining necessary conditions, then devising success metrics with target values, and identifying means to move the metrics toward the targets to achieve the objective. The overall process involves iteratively applying the five elements to break down strategies into understandable, actionable components.

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Essential Elements of 5 STRATEGY A deck prepared by @ljuti. For more, follow @StrategyMasters
Organizational strategies often get stuck to a very high level and vague concepts
You can break them down to understandable, down-to-earth actionable pieces with the five essential elements of strategy
the elements OBJECTIVE NECESSARY CONDITION SUCCESS METRIC TARGET VALUE MEANS
1 OBJECTIVE
Strategic OBJECTIVE a defined objective that an organization must achieve to ultimately reach its vision and strategic goals DEFINITION Saad Faruque, Flickr (CC)
Revenues increase. EXAMPLE EXAMPLE #1 : OBJECTIVE
EXAMPLE #2 : OBJECTIVE Customers can buy solutions derived from R&D program results. EXAMPLE
objectives can be categorized into different perspectives CUSTOMER MARKET OFFERING CAPABILITIES PEOPLE DEVELOPMENT FINANCIAL SHAREHOLDER … and more Altug Karakoc, Flickr (CC)
NECESSARY CONDITION 2
NECESSARY CONDITION a discrete element whose presence is required for success DEFINITION also known as critical success factors (csf)
EXAMPLE EXAMPLE #1 : NECESSARY CONDITION Revenues are maximized from existing customers.
EXAMPLE #2 : NECESSARY CONDITION R&D program is complete. AND/OR Solutions can be developed from R&D program results. EXAMPLE
necessary conditions can be either external or internal EXTERNAL Imposed from outside the organization. “Compliance with environmental laws.” INTERNAL Organization imposes upon itself. “Excellent people and technology.” Bosc d’Anjou, Flickr (CC) Quasic, Flickr (CC)
SUCCESS METRIC 3
SUCCESS METRIC a defined way of measuring and demonstrating the presence of a Necessary Condition DEFINITION
EXAMPLE #1 : SUCCESS METRIC Renewal rate of existing customer contracts EXAMPLE
EXAMPLE #2 : SUCCESS METRIC EXAMPLE Number of new solution blueprints or prototypes based on R&D program results
OBJECTIVE data-driven COMPOSITE combines multiple sources DELEGATED someone else measures it SELF-ASSESSMENT your own opinion 4 types of metrics Josep Ma Rosell, Flickr (CC)
TARGET VALUE 4
TARGET VALUE the desired value on a Success Metric that demonstrates a Necessary Condition has been attained DEFINITION
EXAMPLE #1 : TARGET VALUE Renewal rate is 95% by the end of the year. EXAMPLE
EXAMPLE #2 : TARGET VALUE EXAMPLE One solution prototype based on R&D program results
HITTING THE TARGET VALUE MEANS YOU’VE ATTAINED THE NECESSARY CONDITION TO REACH THE OBJECTIVE Emilio Kûffer, Flickr (CC)
5 MEANS
MEANS DEFINITION a set of activities that will “move the needle” of Success Metric towards Target Value
EXAMPLE #1 : MEANS EXAMPLE Chart contracts up for renewal. Determine customer satisfaction. Ensure there are no active complaints before renewal. …
EXAMPLE #2 : MEANS EXAMPLE Create a program to develop ideas into blueprints and prototypes. Ensure appropriate resources and capabilities for prototyping. Install rewarding system for ideas. …
MEANS CAN BE EITHER TEMPORARY Projects, one-off tasks, temporary practices, etc. “Business Development Project in Malaysia.” PERMANENT Culture, practices, ways of work, habits, etc. “Continuous evaluation of customer engagements.” Chris Lott, Flickr (CC)
Synthesis Putting it all together ∞
LET’S PUT THE ELEMENTS TOGETHER IN ATTEMPT TO SEE THE WHOLE Lawrence Rayner, Flickr (CC)
the process is simple and straight-forward begin finish SET OR PICK AN OBJECTIVE DETERMINE NECESSARY CONDITIONS DEVISE A SUCCESS METRIC DEFINE TARGET VALUE FIGURE OUT MEANS TO MOVE THE NEEDLE Marc Wathieu, Flickr (CC)
OBJECTIVE Revenues increase.
REVENUES INCREASE NECESSARY CONDITION NECESSARY CONDITION NECESSARY CONDITION Revenues are maximized from existing customers. New customers are acquired and secured. Highest gross margins from sales are realized.
OBJECTIVE MAX EXISTING NECESSARY CONDITION NECESSARY CONDITION SUCCESS METRIC TARGET VALUE Renewal rate of existing customer contracts. Renewal rate is 95% by the end of the year.
OBJECTIVE NECESSARY CONDITION NECESSARY CONDITION NECESSARY CONDITION RENEWAL RATE 95% MEAN MEAN MEAN Chart contracts up for renewal. Determine customer satisfaction. Ensure no active complaints before renewal.
NOW RINSE AND REPEAT. (YOU’LL HAVE TO DO IT ONLY ABOUT A HUNDRED TIMES) tripleigrek, Flickr (CC)
THE GAME IS EASY TO PLAY. COMING UP WITH THE RIGHT IDEAS IS THE HARD PART. Cary Bass-Deschenes, Flickr (CC)
BUT EVENTUALLY YOU’LL HAVE IT ALL FIGURED OUT Son of Groucho, Flickr (CC)
NOW GO OUT THERE AND GIT ‘ER DONE! Sergey Galyonkin, Flickr (CC)
THANKS! This deck was prepared by @ljuti For more on strategy, follow @StrategyMasters

More Related Content

Five Essential Elements of Strategy

  • 1. Essential Elements of 5 STRATEGY A deck prepared by @ljuti. For more, follow @StrategyMasters
  • 2. Organizational strategies often get stuck to a very high level and vague concepts
  • 3. You can break them down to understandable, down-to-earth actionable pieces with the five essential elements of strategy
  • 4. the elements OBJECTIVE NECESSARY CONDITION SUCCESS METRIC TARGET VALUE MEANS
  • 6. Strategic OBJECTIVE a defined objective that an organization must achieve to ultimately reach its vision and strategic goals DEFINITION Saad Faruque, Flickr (CC)
  • 7. Revenues increase. EXAMPLE EXAMPLE #1 : OBJECTIVE
  • 8. EXAMPLE #2 : OBJECTIVE Customers can buy solutions derived from R&D program results. EXAMPLE
  • 9. objectives can be categorized into different perspectives CUSTOMER MARKET OFFERING CAPABILITIES PEOPLE DEVELOPMENT FINANCIAL SHAREHOLDER … and more Altug Karakoc, Flickr (CC)
  • 11. NECESSARY CONDITION a discrete element whose presence is required for success DEFINITION also known as critical success factors (csf)
  • 12. EXAMPLE EXAMPLE #1 : NECESSARY CONDITION Revenues are maximized from existing customers.
  • 13. EXAMPLE #2 : NECESSARY CONDITION R&D program is complete. AND/OR Solutions can be developed from R&D program results. EXAMPLE
  • 14. necessary conditions can be either external or internal EXTERNAL Imposed from outside the organization. “Compliance with environmental laws.” INTERNAL Organization imposes upon itself. “Excellent people and technology.” Bosc d’Anjou, Flickr (CC) Quasic, Flickr (CC)
  • 16. SUCCESS METRIC a defined way of measuring and demonstrating the presence of a Necessary Condition DEFINITION
  • 17. EXAMPLE #1 : SUCCESS METRIC Renewal rate of existing customer contracts EXAMPLE
  • 18. EXAMPLE #2 : SUCCESS METRIC EXAMPLE Number of new solution blueprints or prototypes based on R&D program results
  • 19. OBJECTIVE data-driven COMPOSITE combines multiple sources DELEGATED someone else measures it SELF-ASSESSMENT your own opinion 4 types of metrics Josep Ma Rosell, Flickr (CC)
  • 21. TARGET VALUE the desired value on a Success Metric that demonstrates a Necessary Condition has been attained DEFINITION
  • 22. EXAMPLE #1 : TARGET VALUE Renewal rate is 95% by the end of the year. EXAMPLE
  • 23. EXAMPLE #2 : TARGET VALUE EXAMPLE One solution prototype based on R&D program results
  • 24. HITTING THE TARGET VALUE MEANS YOU’VE ATTAINED THE NECESSARY CONDITION TO REACH THE OBJECTIVE Emilio Kûffer, Flickr (CC)
  • 26. MEANS DEFINITION a set of activities that will “move the needle” of Success Metric towards Target Value
  • 27. EXAMPLE #1 : MEANS EXAMPLE Chart contracts up for renewal. Determine customer satisfaction. Ensure there are no active complaints before renewal. …
  • 28. EXAMPLE #2 : MEANS EXAMPLE Create a program to develop ideas into blueprints and prototypes. Ensure appropriate resources and capabilities for prototyping. Install rewarding system for ideas. …
  • 29. MEANS CAN BE EITHER TEMPORARY Projects, one-off tasks, temporary practices, etc. “Business Development Project in Malaysia.” PERMANENT Culture, practices, ways of work, habits, etc. “Continuous evaluation of customer engagements.” Chris Lott, Flickr (CC)
  • 30. Synthesis Putting it all together ∞
  • 31. LET’S PUT THE ELEMENTS TOGETHER IN ATTEMPT TO SEE THE WHOLE Lawrence Rayner, Flickr (CC)
  • 32. the process is simple and straight-forward begin finish SET OR PICK AN OBJECTIVE DETERMINE NECESSARY CONDITIONS DEVISE A SUCCESS METRIC DEFINE TARGET VALUE FIGURE OUT MEANS TO MOVE THE NEEDLE Marc Wathieu, Flickr (CC)
  • 34. REVENUES INCREASE NECESSARY CONDITION NECESSARY CONDITION NECESSARY CONDITION Revenues are maximized from existing customers. New customers are acquired and secured. Highest gross margins from sales are realized.
  • 35. OBJECTIVE MAX EXISTING NECESSARY CONDITION NECESSARY CONDITION SUCCESS METRIC TARGET VALUE Renewal rate of existing customer contracts. Renewal rate is 95% by the end of the year.
  • 36. OBJECTIVE NECESSARY CONDITION NECESSARY CONDITION NECESSARY CONDITION RENEWAL RATE 95% MEAN MEAN MEAN Chart contracts up for renewal. Determine customer satisfaction. Ensure no active complaints before renewal.
  • 37. NOW RINSE AND REPEAT. (YOU’LL HAVE TO DO IT ONLY ABOUT A HUNDRED TIMES) tripleigrek, Flickr (CC)
  • 38. THE GAME IS EASY TO PLAY. COMING UP WITH THE RIGHT IDEAS IS THE HARD PART. Cary Bass-Deschenes, Flickr (CC)
  • 39. BUT EVENTUALLY YOU’LL HAVE IT ALL FIGURED OUT Son of Groucho, Flickr (CC)
  • 40. NOW GO OUT THERE AND GIT ‘ER DONE! Sergey Galyonkin, Flickr (CC)
  • 41. THANKS! This deck was prepared by @ljuti For more on strategy, follow @StrategyMasters