Management consultant Tim Lewko has sat through countless long presentations on company strategy. When he looks around the room at people struggling to give their full attention, he’s reminded that strategy often works best when it is stripped back to basics.
“It’s kind of like the old saying: if you really can’t look at something on one page, or explain it on one page, how well can you understand it?” he explains.
Creating a Simple Strategy Is as Easy as 1-2-3
With this in mind, he’s developed an approach to help leaders create a strategy that fits onto just three pages. In his new book, ‘Making Big Decisions Better,’ he explains how to achieve this, and keep your strategy relevant and vibrant.
Assumptions and Implications
Each of the three pages represent one strategy tool. The first is about assumptions and implications. On this page you should include the top three to five most significant external forces that might affect your organization.
“On the left-hand side is the outside world. So things that are unfolding, that will impact, or could impact, the business. [Leaders make] assumptions about what they believe will unfold during a certain timeframe,” Lewko tells me, in our Expert Interview podcast.
“The other side of that is then, if these things are going to unfold, what are the choices we need to make relative to products, markets and capabilities to serve our customers and to differentiate ourselves in the marketplace? So, it’s really an ‘outside-to-in’ approach, which gets people out of the weeds and it makes sure that they understand what the drivers of success in the marketplace really are.”
Products, Markets and Capabilities
At the center of his three-tool approach, both figuratively and metaphorically, is the PMC Engine. PMC stands for Products, Markets and Capabilities. This is “the purpose of the business on one piece of paper,” Lewko clarifies.
“You have products across the top, and markets – whether it’s geographies or customers – down the side. So those are your choices and you get to see the purpose of the business when you look at it. But importantly, within those choices, we attach the financials. What are the revenues for product one in market one? What is the volume?”
He says that his clients are often surprised at the effectiveness of this simple one-page tool.
“You can understand which products are performing and why, which customer and why, and if resources need to be allocated, how do we allocate them? So it’s priorities and focus, one page,” he says.
Goals and Gaps
The third and final tool is about goals and gaps, and again, it’s all about paring down to the essentials. The process concentrates on just three goals: one concerned with financials, one to do with products or markets, and one about capabilities.
The “gaps” happen when specific targets fail to be met. Why are sales up 20 percent in one market? That’s great news, so it’s tempting to just celebrate and focus effort elsewhere. But, according to Lewko, if you do this you may miss out on potential opportunities. If leaders want sustainability, he says, they need to know why they’re winning in the marketplace.
Create a “Living” Three-Page Strategy
And on the subject of sustainability, Lewko stresses the importance of checking and tweaking these three pages regularly – every quarter at least.
“Many companies have quarterly meetings for operational performance, but they don’t necessarily have a strategic window teed up,” he notes.
Assumptions change along with the external environment. Products perform inconsistently and, as a result of both these things, goals need to be amended to make sure that they are realistic and achievable. The result is a “living,” three-page strategy document which includes fresh, updated information that can provide strategy guidance until the next quarterly review.
Many people think that strategy is confined only to realm of the C-suite. But Lewko believes that everyone in the organization has a stake in it and a responsibility to help deliver it.
In this clip from our Expert Interview podcast we discuss how team members up and down the organization can play their part in forming and executing strategy.
What are your top tips for developing and executing strategy? Join the discussion below!