The third post about the PLAN phase of the Building Blocks for the New-Era Business revolves around strategy. In the previous posts (listed below), we took a look at tools to develop a business model and a financial model in order to help define the market and financial viability of your ventures. In this post, we will look at the basics of strategy and talk about our own Strategy Kit that we developed to facilitate strategic thinking.
If this is the first post that you have read in regards to the new-era business, then it’s important to explain what the new-era business is all about – shaking things up. Rather than operating businesses on old-world principles that lead to the same disastrous results (on a societal level), we are focused on reinventing the way businesses are formed and building brands that matter (see post #BBTM Build Brands that Matter). The Strategy Kit is an experimental tool, created to help formulate strategies in a creative and collaborative manner.
While the business model will help you define what you want your venture to become, and the financial model will help forecast its financial viability, the strategy is the how. How do you intend to move your venture into the market? That’s the fundamental question we want to answer.
The theory that underpins our Strategy Kit is taken from the book Blue Ocean Strategy. The Blue Ocean Strategy was introduced in B-School, along with several other strategy theories. The problem with strategy theories is that like economic models, it is very difficult to prove their validity, meaning that the majority tend to fall out of favor over time (ie. Porter’s Five Forces). But the Blue Ocean Strategy, while theoretical and academic in certain ways, does take a fundamental approach to strategy that is hard to argue with – find blue oceans.
‘Blue oceans’ is a metaphor that represents uncontested market space where the competition is somewhere between minimal and non-existent. The people who developed Blue Ocean Strategy analyzed the strategies of many big companies over the course of several years and found that the most successful companies moved into uncontested ‘blue oceans’ and stayed away from the bloody and highly-competitive ‘red oceans.’
What we like about this theory is that it encourages entrepreneurs and companies to focus themselves directly on the market rather than the competition. Dictating a strategy based on the competition is a fatal practice, which is why Blue Ocean Strategy is so useful. We incorporated aspects from Blue Ocean Strategy with our own strategic principles to create the following strategy process:
1) Map your Environment
Look at your external environment and identify the most important external factors that shape it.
2) Take a Direction
Boldly move in the direction that feels right (based on a mix of factors). It’s better to put your energy into one strategic move rather than diluting yourself across many different paths.
3) Look at Scenarios
Despite your best efforts to map out the environment, take a direction and put a plan in place, there will always be unforeseen events or variables that throw the whole plan out of whack. Therefore, it is essential to conduct a scenario analysis.
Along with briefly explaining each of these principles, we also created a set of seven key questions. We developed these key questions because we think the best approach is to analyze the assumptions that underpin the strategy rather than the strategy itself. It is purely a judgment call as to whether a strategy will work or not, as one could argue that many of the best business strategies are intuitive. But someone can very quickly breakdown a strategy’s chance at effectiveness if they can take a look at the assumptions the ‘strategist’ has made.
Additionally, the key questions will also help you analyze your own strategy if you are accustomed to making your strategic decisions solo. They provide a certain level of perspective, forcing you to ask yourself questions that you might not otherwise be asking. The beauty is that if you need help with your strategy, you can easily share the answers to your questions and solicit feedback in any areas you are unsure about. We are all about collaboration : )
Overall, the Strategy Kit is an experiment. Essentially, it was created with two ideas in mind:
- that businesses need to redefine the value curve and find uncharted waters
- that the best way to analyze a strategy is by asking key questions
The other tools for the PLAN phase, the business model and the financial model, have been tested and are known to be effective. The business model canvas (developed by Alex Osterwalder) can be downloaded from our site (click here), while the financial model is available on a donation basis. The Strategy Kit, on the other hand, is completely new and experimental. (No longer being released)
+ Download a copy of the business model canvas (click here)Tweet