Golden Circle Strategy Development

Golden Circle Strategy Development

Does your company have a strategy or does it only have a strategic goal? This simple question can reveal the strategic thinking process in an organisation. In some companies strategies starts with defining a number that will generate a nice bonus for senior management and a number that will preserve status quo. The number is carved up into business unit numbers, into group numbers and eventually into individual numbers. From that a myriad of actions plans are developed in support of the divine number and execution starts. Exceeding numbers will be rewarded, failing to meet numbers punished - a strange kind of logic given the strategic goal often is the result of wishful thinking. Selecting the divine target number did not change anything in the company or its competitiveness.

Defining Strategy

Although many different definitions of strategy exists, there is consensus that Strategy is about the future, it is about winning and it is about creating sustainable competitive advantage. The financial goal is not a strategy - it is an outcome of a strategy. So the key strategic question is not how much, the key question is why.

The relentless focus on financial return to shareholders has resulted in many companies forgetting why they exist? Why the where founded in the first place. This purpose of the corporation is focused on creating value for one or more of the corporation’s stakeholders. When this purpose is forgotten and not honoured, the corporation loses a significant source of motivation, not only for employees and customers but also for other stakeholder groups.

Simon Sinek’s golden Circle

The best communication strategies to stakeholders are using Simon Sinek’s golden circle: People don’t buy what you make, they buy why you make it. Communication should be created from the inside out of the circle.

Rather than using communication and marketing to create a favourable (but often distorted) image of the corporation to persuade customers to buy, it is better to change the corporation into the desired image.

Leaders should spend less time creating a favorable image of their corporations and more time transforming the corporation into that image.

A useful way of creating a strategy that will be easy to communicate to all stakeholders is to use the Golden Circle for strategy development.

Start with “Why”

It is important to start the process not by focusing on shareholders or value for the corporation - nobody will buy from you just to make you prosperous.

The most important element of the strategy is to try and answer the Why question. Why do you exist?  What is the purpose of the strategy? What kind of value will the strategy create for what stakeholders? If many stakeholders can benefit from the same strategy you have what Tom Gardner of the Moetly Fool calls a super-aligned strategy and what he has identified as resulting in superior returns. If you believe that you can create value for others and be able to monetize it above and beyond cost – then you have a viable strategy. The viability analysis has to be late in the process or you will limit your thinking. You can also choose to ignore viability which Google is known for doing: Make it radically useful and we will figure out money later.

The “How” is going to important for implementation

The next stage of the strategy development has to have a high degree of focus on implementation. Most often senior managers go to a nice place and pull the plug to the world while they develop a boxed plan that later will be presented to the stakeholders. Most people don’t enjoy being told without the ability to influence so not surprisingly most large strategies fail to deliver the intended results. How you develop the strategy is going to be a lot more important that what you actually do. Open up the dialogue to a significant stakeholder groups and allow their representatives to be part of the strategy development, this will ensure that even if their needs are not met, they at least feel heard. Expanding the group will also increase the expertise that the possibility of a more innovative strategy that create value for more stakeholders at the same time. The participants will keep their groups informed and act as ambassadors. You will also be warned about what could be unacceptable to stakeholders and avoid potential trouble. Being part of something creates significant engagement.

“Don’t confuse people’s resistance to change with their resistance to be manipulated.”

The “What” - what you are already doing well.

Delaying the normal wolf pack fight over prey or organisational development as some like to call it will increase the probability of a successful strategy and implementation. You cannot remove managers beliefs that they need to have most power, assets and people reporting to them. However if the why is crystal clear and many representatives has been involved in the process, it is much less open for interpretation. The strategy will also have many fans that can help take corrective actions should it be hit by unforeseen trouble.