Creating Strategy: A Guide for Leaders
Why Strategy Matters for Your Business
A good strategy isn't just a plan. Rather, it's a coherent, carefully developed hypothesis about what actions will overcome a significant challenge, defeat a competitor, or help you catch a wave of change in your industry. Strategy is a form of problem solving and the hypothesis for success at the core of a strategy must be tested and adjusted during implementation.
Here is an example strategy:
Western Motor Corp. Context: WMC is an automobile maker that is a household name in the US, Canada and Australia with a range of top selling SUVs and utility (ute) vehicles that use internal combustion engines. It now faces significant challenges in the global transition to electric vehicles. In the electrification of its range, it lags behind its competitors in acquiring battery technology and design electric vehicles. It also faces the emergence of agile, lower cost Chinese brands that are producing a range of vehicles vehicles, including SUVs, of significant quality with advanced battery and electric motor technology. Management predict that while current profitability is satisfactory, the company will face steep decline in sales in 3-5 years as the new entrants become accepted.
Strategy: WMC will continue to offer the existing range of ICE vehicles in order to preserve revenue but will accelerate its EV product roadmap, access to supply chain and advanced manufacturing capability by acquiring a Chinese automaker. It will also evolve its marketing and brand to extend beyond SUVs to include smaller style-orientated cars that appeal to young urban customers. It will combine its market expertise in western markets with the battery electric knowhow and lower production costs of the acquisition target.
Research shows that companies with effective strategies guiding their actions perform significantly better than those without. Well-defined objectives and implementation plans enable organizations to more effectively utilize their resources and navigate uncertainty.
The Strategic Planning Process: a Practical Approach
The sections below are presented in sequential order. However, the nature of strategy work means you can expect to return to sections and revise them as you progress through subsequent sections. Strategy work isn't linear — it's an iterative process.
1. Gather the Right Team
Assemble a team with the required skills, expertise and attitude to diagnose your challenges and formulate strategic options. A collaborative approach ensures you leverage all available knowledge and perspectives because there is rarely one hundred perfect certainty when it comes to strategy work.
The leadership team should be involved in the work. Leaders not only shape strategy but help the rest of the organization understand and implement it.
2. Diagnose What’s Happening Now
Diagnosing your organization’s challenges is vital for creating strategy. Given strategy is a form of problem solving, you cannot solve a problem you haven’t defined or analysed. In fact, the most profound strategic changes are often brought about by a change in the diagnosis of a business’s situation.
Can’t think of any challenges? That’s okay - strategy is also highly applicable to situations where there is a major opportunity or where the industry is evolving rapidly with a great deal of uncertainty.
What to do:
Identify key challenges facing your organization, they can be internal and external. In fact, around half strategic challenges are internal to the organization
Choose which challenges among many to address
Cultivate a shared understanding of the key challenges among the team
Assess Your Competitive Landscape
Next, assess your competitive environment. This will provide insight on the dynamics at play among your suppliers, customers, and competitors. The insights may directly relate to your challenges or they may reveal limits of your control and possible actions.
At ciclo we use Porter’s Five Forces approach to assessing competitive landscape, a well established methodology for identify strategic opportunities, constraints and options for positioning your organization for maximum advantage.
What to do:
Define your industry (this could be by products/services and/or geography)
Analyze customers bargaining power
Examine competitive rivalry between existing players in your industry
Evaluate supplier power
Assess entry barriers
Identify substitution threats
Evaluate Your Business Model
After identifying the key challenges you will be focusing on and analysing your competitive landscape and what it means for your business, the next step is to take a closer look at how your business works. This will help you in formulating your strategy and the actions you will take.
A business model outlines how value is created by the organization. We use the business model canvas method which encompasses key parts like value creation, customers, revenue generation, costs and resources.
No business model remains effective indefinitely, so regular review is essential. As a result of the challenges you face, your business model may need to change as part of a strategy.
What to do:
map your current business model using the business model canvas approach and specify the following:
customer groups (including how you create value for them, and how you generate income from them)
how interaction with customers occurs and the channels you use
key assets and processes used in delivering value
important external partnerships
major costs
Identify the changes needed to advance your strategic objectives. This may range from changes to particular parts of the business model through to a major re-design of it.
3. Define Your Overall Strategic Goal
After diagnosis, the next step is to identify the actions that will be taken to address the challenge.
Articulating your overall goal provides direction to the strategy work and narrows down the many possible courses of action.
The goal expressed here does not have to be the final agreed one - in fact it is expected to change during the course of the various steps. Strategy is not a linear process, but rather an iterative one.
Having an overall goal at this stage, even a provisional one, helps anchor the other sections and provides an initial basis of alignment and direction.
Furthermore, well-crafted goals (and targets) force crucial trade-off decisions about resource allocation, helping your organization focus on what truly matters rather than spreading efforts too thinly across competing priorities.
What to do:
Identify the most important goal (max of 3) you want to achieve overall. These can be provisional goals subject to refinement as you work through the various sections.
Are the goals achievable?
Three-to-five year targets
These targets guide long-term direction. Having measurable 3-5 year targets transforms abstract aspirations into tangible milestones that enable you to track progress, make course corrections, and maintain accountability for results. These targets bridge long-term vision and practical planning.
What to do:
Transform your strategic goals into measurable milestones in the 3-5 year time horizon
Set targets that span multiple dimensions (eg, financial, customer, internal, growth)
Assess whether the targets connected to the overall goal
4. Formulate Your Strategy
Now, formulate a hypothesis about the specific actions that will address the challenges and result in achievement of your goals. Take into consideration your competitive environment and business model in thinking about what actions are practical and necessary.
For example
A powerful strategy summary guides people in their work and helps them make aligned decisions when facing choices. It is crucial that the final strategy be clear and provide guidance to people in making decisions. The strategy summary can be thought of as “the strategy” for general understanding and communication purposes.
The next step is to identify strategic options for the organization having regard to all the information and then decide which ones to move ahead with.
Strategy involves making hard choices. You are likely to have to prioritize which options to pursue given the resources, time and risks involved. Furthermore, you are likely to need to decide which current activities have to stop given the new strategic direction and priorities.
What to do:
List the various practical actions that you believe will address the challenges and result in achievement of the goals
Crique the actions for feasibility, relevance to the challenge and completeness.
Create a precise and understandable summary of your strategy
Ensure it clearly identifies your most critical challenges and your distinctive approach to addressing these challenges
Test whether this summary helps people in your organization decide between competing priorities
5. Define Your Vision and Values
Good strategy isn't just about the "what" and "how" - it's also about the "why." Your vision describes what your organization aspires to achieve long-term. It should be ambitious yet authentic to your organization's purpose and unite people around a shared direction.
On the other hand, values are the core principles and beliefs that guide behaviour and decision-making within your organization. They underscore the many decisions made in circumstances where detailed strategic guidance isn't possible.
Strategy translates vision into action. There must be coherence between vision, values, and strategy. Vision and values are easy to overlook in strategy work.
What to do:
Assess whether the current vision is still relevant. If not, create a simple, bold vision statement (1-2 sentences). Make it aspirational, inspiring, and memorable - extending 10+ years from now
What values currently guide your organization and do they support your goals? If not, articulate the values needed to achieve your goals - there will be work needed to cultivate the new values
6. What are Your Targets?
Annual targets and key performance indicators
Breaking down targets into manageable timeframes helps track progress and allows for timely adjustments. Focus on measures that are genuinely "key" to avoid diluting attention.
What to do:
Identify annual and quarterly targets to track progress
Identify Key Performance Indicators (KPIs) that directly measure strategic success. Aim for a mix of leading and lagging indicators
7. Analyze All Information
The previous seven steps will yield a lot of insights that are relevant to your strategic position and options.
Take a moment to step back and consider everything as a whole - take time to reflect and digest the various insights and output. The power of strategy comes from this analysis - when all the key aspects of your organization are taken into account in formulating strategic options and making decisions.
What to do:
Analyze the outputs from the previous sections. Are they consistent and support one another or are there contradictions or gaps? You may need to go back and amend one or more sections to bring everything into line.
Formulate strategic options that address the core challenge and overall goal. These options also need to take into consideration the vision, values, business model and competitive landscape
Select the option that best achieves the objectives and which is achievable. You may need to adjust the option and other elements to ensure that there is alignment and coherence
8. Confirm Objectives, Targets and KPIs
Now that you have selected your strategy, it is useful to take a moment to review the objectives, targets and KPIs developed in section 4 to make sure they align with the strategy. Make any further revisions as necessary to achieve maximum alignment.
Implementation: Turning Strategy into Reality
Strategy without implementation is merely aspiration. Once your strategy is completed, you can start on implementation with the following broad steps.
Create a prioritized plan
Specify the work required to progress your strategy - this is not only what is required to achieve your goals and KPIs but also to fill any capability gaps and cultivate desired values
Address capability gaps by planning out how they will be filled
Categorize work initiatives as "Now," "Next," and "Later"
Focus on relative priority rather than rigid deadlines ie, focus on the “Now” work
Ensure flexibility to adapt as conditions change
Identify key actions for immediate implementation
Break down "Now" initiatives into specific, critical tasks
Assign clear ownership for each of these tasks
Create a visual tracking system to monitor progress (eg, a Kanban board)
Review regularly (at least monthly)
Establish a monitoring and adaptation system
Create regular review cadences (eg, meetings) for the team to review progress against the plan and adjust based on learnings and progress
Set up robust monitoring using the KPIs
Be prepared to adapt the strategy as you learn
Conclusion
Remember that strategy is not a one-time exercise but an ongoing process. The best strategies provide clear direction while remaining flexible enough to adapt to changing circumstances.
By following this structured approach, you can develop a strategy that addresses your most pressing challenges, aligns your organization, and creates sustainable competitive advantage.
This guide was created by Ciclo Strategy. Our software helps businesses create strategy, execute on it, and track performance, turning brilliant plans into flawless execution.
