Seven Strategy Questions

“The most serious mistakes are not being made as a result of the wrong answers. The truly dangerous thing is asking the wrong questions.” – Peter Drucker

Executing a successful business strategy often requires making tough, sometimes uncomfortable choices. But we frequently avoid making choices in the mistaken belief that we can have it all. Robert Simons, Professor of Business Administration at Harvard Business School, addresses this issue in his latest book, Seven Strategy Questions: A Simple Approach for Better Execution. He identifies what he calls the questions that will “stress test your strategy”. The goal of this seven strategy questions is to help marketers identify the weakest parts of their business strategy in order to understand where confusion and inefficiency lie.

Simons presents the seven strategy questions you and your team must regularly explore together:

  1. Who is your primary customer? Have you organized your company to deliver maximum value to that customer? This question determines how to allocate resources. Maximize resources to your primary customer and minimize the resources devoted to everything else.
  2. How do your core values prioritize shareholders, employees, and customers? Is everyone in your company committed to those values? There is no right or wrong choice. Each choice is based on a different theory of value creation. But making one and communicating it effectively is essential.
  3. What critical performance variables are you tracking? How are you creating accountability for performance on those variables? Effective managers monitor only a small number of performance variables, specifically those that could cause their strategy to fail. What gets measured, gets done, so that performance management system should both reflect and reinforce the business priorities and key accountabilities.
  4. What strategic boundaries have you set? Does everyone know what actions are off-limits? Be specific with employees on what not to do to ensure your strategy and business won’t go off course. As Peter Drucker noted, effective strategy involves ‘systematic abandonment’ i.e. the conscious decision not to engage in particular behaviours, pursue certain initiatives, and so on.
  5. How are you generating creative tension? Is that tension catalyzing innovation across units? To spur innovation, motivate your employees to think and act like winning competitors (e.g. assign stretch goals). This includes attacking complacency through stretch targets, promoting internal competition where required, and so on.
  6. How committed should your employees be to helping each other? Are they sharing responsibility for your company’s success? Although you want your employees to achieve their personal best, they must also work together toward shared goals. This is not just a matter of platitudes about teamwork. Issues like relative compensation and incentives for cooperation across divisions also play an important role.
  7. What strategic uncertainties keep you awake at night? How are you riveting everyone’s attention on those uncertainties? To adapt successfully, you must constantly monitor the uncertainties that could prove false assumptions underlying your current strategy. As Intel’s Andy Grove observed, sometimes a degree of paranoia about what might put you out of business can concentrate the minds of senior managers.

By posing these seven strategy questions, managers identify critical gaps in the strategy execution processes, focus on the most important choices must make, and understand what’s at stake in each one.

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