The Guide on How to Write a Strategy (Part 1)

TLDR: A strategy document has to focus an organization and at the same time has to provide background for alignment. Both are difficult per se and the combination carries the risk of trading one for the other. To avoid this, it is helpful to have a segmented drafting approach. Also, it is very advisable to have strict rules around the format and communication of the strategy.

This text is about the drafting of a business strategy document. It will be more comprehensible after you’ve read this blog post about what a business strategy is first.

In order to focus a company’s efforts, a strategy must lead to a concentrated allocation of resources and talent on a macro level. But also it must align the (operational) decision-making in the company on a micro level. Both are necessary. Without alignment, a concentrated deployment of talent and investment is meaningless (well-deployed people doing random stuff). And if the operational decision-making is aligned but talent and investment are not deployed in a concentrated way the strategy lacks impact (people doing the right stuff but not enough of them).

Unfortunately, achieving focus while ensuring alignment can be tricky. Focus is generally achieved by less. The clearer and more single-minded a thought is the better it focuses. One sentence focuses better than two. Alignment, however, works the other way around. Because understanding is the key to alignment: the better you can explain something the better you can give the “why” to a decision, the more you can illuminate its background, the better you will be able to align the thinking and decision-making of others.

And so you want to be as concise as possible on the course set. But as comprehensive as necessary on its rationale and background. To do both at maximum clarity, it is helpful to separate the parts where you set the focus from the ones where you provide background for alignment when drafting a strategy document.

Similarly, you always want to separate strategy and planning (read more here). But also you want to connect the strategy with the planning as this is a key to alignment. This is particularly important when planning artifacts are not owned by a central function (e.g. the financial planning) but generated and owned by different areas and teams within the company (e.g. the marketing plan or a product roadmap). Helping these to connect with the strategy requires a bridging effort because there is a chasm between the abstract, long-range focus setting of strategy and the concrete and current goal-setting of planning.

And so it is desirable to have yet another section in the strategy document that particularly serves this purpose.

And with that, our strategy document has the following structure:

The three parts of the strategy document

This makes the drafting of a strategy document a multi-layered effort. But it’s worth it because it helps not to mix things up and it can be done in a logical progression that is easy to understand and follow.

The first thing to tackle is the core strategy. The core strategy contains the root guiding decisions for the company, namely (1) in which market you choose to be competitive and what you want to achieve there, (2) what you’ve identified as the core success mechanism in this market, and (3) what you believe are the most important things to focus on to reach your goal (faster than your competition). This part is abstract - all it does is document the 3 strategic decisions made. It does not try to connect them to any concrete steps. It defines what matters not how it will be applied. The core strategy is all about focus and it is short. A couple of sentences only. But a lot of thought has gone into these. We’ll get to how to craft the core strategy in more detail in Part 2 of this series (coming soon).

Next is the narrative. This section gives reason and background to the decisions set out in the core strategy: This is why we believe this is the right market. This is why we have chosen this core revenue driver over others. This is why we’ve set this competitive focus. The Narrative looks at the world and the market and makes sense of the strategy before this background. It can include thoughts on similar markets, revenue drivers, or competitive focus points that also seem relevant and argue why these are less important than the ones you have chosen. But like the core strategy, it does not look at concrete ways to implement or apply the strategy. The narrative helps alignment but it does not add anything to the focus. It is about ½ a page.

And finally the bridge. The bridge closes the gap between the strategy and the realities of the next planning phase of a company. It takes the strategy and applies it to the necessities, opportunities, and threats at hand. It is a guide on how to apply the strategy in real life over the course of the next planning phase. The purpose of the bridge is to help alignment. It can taper the focus or narrow it to certain aspects and activities within it but not add to it. It can, however, rebalance the strategic efforts against business necessities for some time. The bridge is still an aspect of strategy and not a part of planning. This means it still looks at the organization as a whole in a coherent way and it does not set concrete goals or KPIs. It should be no longer than 1 page. You will feel inclined to put more into it but try to refrain from that.  We’ll talk in more detail about the bridge and the narrative and also the relation between strategic efforts and business necessities in Part 3 of this series (also coming soon … after Part 2).

Essentially with the strategy document, we are guiding the organization through three discreet steps: this is what we do - this is why we do it - and this is how we will go about it in the next x months given how things are right now. Keeping the three separate and cascading allows us to start with the focus and use it to frame everything that follows. This way can achieve alignment without weakening the focus.

Less is more

This structure helps, but to really achieve focus and alignment we need to do more: we need to draft the strategy in a way that leaves as little room for interpretation as possible. This sounds very strict but it is really important. Nothing is more damaging to focus and alignment than vagueness or ambiguity. I would much rather have something not mentioned at all in a strategy document than give rise to different interpretations of it. Because the former usually plays out much better than the latter. People love to do the things they want to do. And they shape their perception of reality to fit their desires. All of us do this. Pretty much all of the time. So, if someone in your organization wants to do something that is clearly not covered by the strategy, they will probably want to talk about it. And that discussion will make everybody wiser. But if on the other hand, the strategy is so open to interpretation that everybody can reasonably believe that whatever they want to do is covered by it they will do it and feel good about it.

Truth be told I have made this mistake myself. At that time I had responsibility over an organization which I believed was too hesitant to take on responsibility and I felt that it needed a lot of freedom in choosing how to advance our goals in order to get going. This felt good and “agile” but in hindsight, I have combined these freedoms with too little alignment. During that time we had a strategy that included wording along the lines of “We want to be the best product in the market”. While this sounded nicely ambitious, it was incredibly stupid. Because with this wording literally anything that was somewhere, somehow an improvement, even for the smallest user group, was “on strategy”. Don’t repeat my mistake.  

Less is more is relatively easy for the core strategy but it’s a battle for words for the narrative and the bridge. Try not to define or explain more than is strictly necessary and do not include things in the narrative or the bridge that do not substantially add to the understanding of your core strategy.

But there is another perspective to “less is more”: a strategy must leave appropriate space for execution. Everything that you believe is likely to change within the next 6-12 months is much better dealt with in a planning artifact than in the strategy document. This is particularly true for goals and KPIs. Changing a plan is a lesser effort, can be done locally, and can be much more specific than changing the strategy. Adapting to the day-to-day challenges of your market is the job of the people working in your company. It is not the job of the strategy. And so the strategy document should give the necessary alignment guardrails without unnecessarily taking away from the operational decision space in your company.

Getting the wording right, particularly the cutting-away part will take time and effort. But the strategy will be the most-read text in your company (at least if you do what I will suggest in the next section) and it’s worth every bit of your focus and energy. In my experience, you will need at least the same amount of time that you’ve needed to come up with the core strategy to get the wording of the narrative and the bridge right. Updates only to the bridge take less time but also here give yourself a week or even two to nail it. If you intend to have multiple feedback rounds within the drafting process you will need more time still. Plan your strategy process accordingly.

Look ahead but focus on the now

Despite its fundamental nature, a strategy is not about the long run. A strategy must be applied and be applicable now to achieve its purpose. And a strategy must be changed when its underlying assumptions become outdated. Think of a strategy as an everyday tool. A notebook in your pocket, not a stone tablet high on the wall.

But how far should a strategy look ahead? Eric Schmidt (back then the Executive Chairman of Google) said that you should “work very, very, very hard to figure out what the world looks like in 5 years”.[1] That is good advice … to a degree. Part of what he says is: don’t look inward. Don’t make your products and capabilities the center of your thinking and extrapolate from them. Be very mindful of possible changes to your market and customer behavior. This part is 100% correct. But should you really base your strategy on your assumptions of a 5-year future? I don’t think so. It’s already hard (and error-prone) enough to assume what your customers want now. Assuming what they’ll want in 5 years and building towards that assumption is not only over-the-top-risky. It also assumes that you’ll be able to survive for that long without meeting your customer’s demands in the present.

Now, to give Eric Schmidt credit - his perspective was that of a (former) CEO of a company that already has a core product with a perfect product-market fit and huge profitability. And if that is your situation, then I believe what he said is right for you too. But if you still need to find a product-market fit that ensures financial stability you must focus on the present. Think ahead but word your strategy for the now.

Format & having a SSOT

Now that you’ve spent so much energy on drafting your strategy document for maximum focus and alignment, you need to make sure that it is the single source of truth. Unfortunately, it is easy to lose what you’ve just worked so hard for if you are not very careful now. But fear not, for you’ll have my pro tips:

Regarding format, I would strongly advise to have the strategy document in text only. If you need to add drawings and schematics the chances are very high that you try to include something into the strategy that does not belong here or that your reasoning lacks clarity. Also, drawings give much more room for interpretation than words. And please do not use PowerPoint. Your strategy must be convincing through its logic and not through its looks. Spend every second that you have on the wording and none on the layout.

I would suggest not splitting the strategy document up (even though the 3 parts may require updates at different points in time) because having all three parts in one document means they can always reference each other and be read in connection with each other.

Publishing your strategy documents is best done as a .pdf file as this prevents unwanted changes to the document and embodies dependability. The name of the document should carry a date (in my mind YYMMDD works best). This way it is unlikely that people refer to a wrong or outdated document by mistake.

Last but not least think about how the document can be most easily found for everybody in the company. For example, if you have an intranet always have an above-the-fold link to the most current version on the homepage. If you have any security concerns, educate your people about the sensitivity of the document and mark it as “confidential”. But don’t make it hard to reach.

This is a good starting point for having a dependable SSOT. Now we need to keep it that way. And this will require a couple of rules that feel awfully narrow-minded. But they make a huge difference.

You will have all-hands and team meetings to introduce (updates to) the strategy. In these meetings if at all possible only refer to the strategy document and do not use additional slides to make your speech more entertaining. And if you really, really feel that you need some slides in the background than make sure they are unavailable for your company and any questions are always referred to the strategy document. In my experience, slides are much more likely to circulate through your company than the whole strategy document and that will always entail the risk that parts of the strategy are read without context. Also if you change your strategy at some time the chances are high that the old slides still circle around.

Make sure that everybody knows that creating derivatives of the strategy document is not wanted. Any discussion about strategy should always and exclusively be based on your strategy document. Citations are possible but they must be according to scientific standards – i.e. without change and complete. I cannot overemphasize this: you would be amazed how quickly derivates of a strategy document can develop in a company. And not through any bad will at all. A teamlead takes some element of the strategy and makes a presentation for their team where they have transformed the original wording into a drawing or a slightly different wording that they believed was more relevant or palatable for their team. Or they have taken one bit out of the strategy but have not included all of the wording in the bridge that was to guide the implementation. Etc. All of this weakens the alignment and focus that the strategy is here to provide. And ultimately it weakens the trust of the organization in the reliability and the binding force of the strategy itself.

If you introduce the rules around keeping the strategy document the SSOT be generous with your time. Explaining with conviction why these rules are necessary not only takes away the smell of small-mindedness it is also a great way of improving the understanding of what that strategy document does for the organization and why this is important. Also, make this part of your company’s onboarding process.

Admittedly, it is impossible to prevent misunderstandings about the strategy with just the right wording and handling of the strategy document (you will need to have processes to monitor what is done to advance it) but you can give yourself and your company a headstart if you are aware of the risks and strict in the implementation.

[1] https://www.youtube.com/watch?v=Qqzjrwnfq7M