Effective strategic planning is essential to the success of any business. It is the process that senior executives use to think about how the business will win in the future. Without it, the organization is most-likely doomed to failure.
But however good your strategy is, it will fail if people don't understand it. They won't know where the organization is going, or how to help you get there. They'll probably get frustrated and confused; customers may feel dissatisfied; and other stakeholders may lose their faith in your organization's ability to deliver.
So your business needs both effective strategic planning and good communication of strategy. And just as a map is usually more effective than a list of directions, so a graphical description of your strategy can often communicate your strategy more effectively than a weighty document.
One popular technique for communicating strategy graphically is called "the Pyramid of Purpose". It is called this because it describes the elements of strategy graphically.
There are many ways of describing strategy. One approach, which also illustrates the hierarchical structure well, thinks of business strategy as answering the following questions:
Answering these questions can help you articulate your strategy very comprehensively, covering the key ingredients that are generally needed in a strategic plan:
A hierarchy of questions emerges: In order to answer question 4, you need to answer question 3; to answer question 3, you need to answer question 2; and to answer question 2, you need to answer question 1.
The high level elements of organizational values, the mission and the vision (the "why"), flow through the business and permeate every aspect.
Likewise, the objectives and goals (the "what") flow down to determine the actions and approaches that are necessary (the "how").
And these planning elements all need certain resources (people, systems and so on), to get them done (the "who").
This can be represented in a pyramid like the one in figure 1:
The starting point for your Pyramid of Purpose is to explain the "why", which will draw on values, mission statement and vision statement for the organization.
The way you do this depends on your audience: What exactly do you need to communicate and who to? And so you must explain each element of your strategy in a way that suits that audience and the messages you wish to convey.
If the purpose is to communicate strategy to customers and stakeholders of your organization (an external audience), a good place to start your pyramid is with a vision statement. For an internal audience, the "why" level might focus on the mission statement, or indeed include both vision and mission statements in your pyramid. Our article on Vision and Mission Statements explains the distinction between the two, and will also help you create a vision or mission statement for the "why" level of your Pyramid of Purpose.
Once you have described the "why", the next steps of building your pyramid must define the "what", then the "how" and finally the "who". And you need to do this in a way that clearly explains your strategy to your specific audience.
An entrepreneur must explain the strategic plan of his fledgling business to potential investors. He uses a Pyramid of Purpose to communicate the key points of his strategic plan:
To delight and enthrall parents and children alike with beautiful, collectable, wooden toys and games, and in so doing, become the nation's leading retailer of high quality, wooden toys and games.
Prove the concept by launching a pilot store and reaching profitability within 18 months.
The Pyramid of Purpose is a graphical depiction of an organization's strategic plan. By putting the various elements of a good strategic plan into a pyramid form, it is easy to see the "big picture" and relationships between different elements of the plan in a form that is easy to understand: The purpose shown at the apex cascades from one level of strategy to the next.
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