Are the words “strategic review” welcome in your business? If not, you might need to rethink why and how you’re conducting them.
Whether it’s triggered by a new market opportunity, a change in leadership or if it simply serves as an annual benchmark, a strategic review provides an opportunity to step back from day-to-day operations, assess the foundations on which a business is built and chart a roadmap for its course now and for the future.
But all too often, competing internal priorities and a lack of cross-functional support result in strategic reviews that fall short. Without a clear, well-thought out approach, reviews drag on for months and waste time on irrelevant research. In the end, they risk being little more than a rehash of existing information with a recent cut of the financials and a ‘cookie-cutter’ strategy thrown in for good measure.
When done well, however, strategic reviews can bring new, innovative ways of looking at your business. Not only are there direct financial benefits that come with improving performance but also a chance to improve alignment between employees and senior management teams and provide clarity on the future of the business.
There are a number of ways to avoid the potential pitfalls and complete a robust, data-driven strategic review – even within four weeks.
Start with the answer
Businesses face considerable pressure to find answers quickly and efficiently. That means it’s important not to waste time on research or analysis that won’t make the final cut.
Leading strategy firms adopt a hypothesis-led approach to strategy formulation including McKinsey’s Decision Tree or Bain’s Answer First approaches. Focus on gathering the preliminary data that will enable you to start mapping out a potential solution and identify gaps and areas in which additional analysis is needed. This, then, becomes the basis of a focused work plan for the remainder of the project.
A short time frame means maintaining focus on what’s going to deliver the greatest benefit. While four weeks is not long enough to undertake a major primary research campaign, a short online survey or series of telephone interviews with key customers can nonetheless achieve a lot in a short space of time and help to bring the recommendations to life.
An 80/20 mind-set is particularly important when it comes to financial modelling. The model must be stripped back to the smallest set of core assumptions that enable alternative strategic scenarios to be assessed and compared to an underlying base case. A detailed analysis of working capital or tax liabilities is rarely necessary at this level of analysis.
Allocate dedicated project resources for the review
The team is a critical component of an effective strategic review. Although there is no ‘one size fits all’ solution, the core team should generally include a few key roles. A project lead
should be full-time and supported by one or more analysts or modellers, depending on the scale and complexity of the review.
A project sponsor, ideally a member of the senior management team, is also needed to oversee the review and resolve any internal roadblocks. Additionally, where the review involves a new market or product opportunity, advisers with expertise in the relevant area can add significant value.
Allow enough time to produce a good report
You should not underestimate the time required to distil complex strategic analysis into a clearly presented and logically structured report. It is good practice to start planning well in advance of the final week.
In the case of a four-week timeline, that means having an initial draft outline of the report developed by the end of week one. Having the end output in mind early on also helps to maintain an 80/20 focus across the project team on the key analysis that is required.
Build in time to think about the implementation
A strategic review is a waste of time unless it is accompanied by a clear call to action and plan of attack. As well as making clear and logical recommendations, it must also set out how those recommendations would be implemented.
Within a four-week timeframe, it is not possible to set out a detailed implementation plan. Nonetheless, a high-level view of the implementation roadmap, detailing the key initiatives to be implemented and expected timeframes, helps to bring the strategy to life and can form the basis of a more detailed program plan.
Conducting a strategic review requires the coordination of a range of analytical activities, financial modeling, stakeholder management and report development. Regardless of how long you have to complete the work, a disciplined approach underpinned by a clear logical framework and a pragmatic analytical approach can significantly increase the success of the process.