In my previous article, I asked the overly pretentious question “What Does Strategy Really Mean?” and I answered this question by giving the following definition: an organization’s strategy is its unique way of sustainable value creation. This definition tells you that a strategy explains how an organization creates value for its customers in a way that is distinct from its competitors, and so that it can maintain this for a while.
This definition gives a bit of direction in understanding and generating your strategy. It helps focusing your attention and resources on value creation and on finding ways of doing that in a unique and sustainable way. That is important and it tells us what strategy should lead to. But this is hardly enough because it doesn’t say anything about what strategy is composed of. So, it defines strategy from the outside, but doesn’t open up the black box to see what is the inside strategy.
To make strategy practical and executable that is exactly what we need to do: open up the black box and look at strategy’s ingredients. The research I did for The Strategy Handbook revealed that there are exactly ten core elements of strategy. As it turns out, with less elements you miss out on some important parts, and adding more makes it unnecessarily complex. In brief, they comprise the following:
- Value Proposition: What products and services you offer, how you offer them, and what added value they have for the customer.
- Customers & Needs: The organizations and people you serve and which needs of them you fulfill.
- Competitors: Others that your customers will compare you to in deciding whether or not to buy your products or services.
- Resources & Competences: What you have, what you are good at, and what makes you unique.
- Partners: Who you work with and who makes your products and services more valuable.
- Revenue Model: What you receive in return for you offer, from whom, how, and when.
- Risks & Costs: What financial, social, and other risks and costs you bear and how you manage these.
- Values & Goals: What you want, where you want to go and what you find important.
- Organizational Climate: What your culture and structure look like and what is special about them.
- Trends & Uncertainties: What happens around you that affects your organization and what uncertainties you face.