DEVELOPING

ACTIONABLE
STRATEGY
A great strategy does not assure marketplace success unless it is
accompanied by a clear action plan which can be communicated and
implemented throughout the company. Andreas Birnik and Richard Moat
believe that it’s critical to have everyone involved in managing strategy
reading off the same page. Literally.

ow many businesses slip or fall even though

H
strategy frameworks and tools, developed while
they had a great strategy? In other words, working for Orange subsidiaries of France Telecom
how much business potential has been lost in Denmark, Romania and Sweden. During this
because business leaders fail to convert a good time, we were exposed to the fads and fashions of
strategy into productive actions? strategy as a result of our own reading and
Our sense is that the number is embarrassingly interaction with consultants and colleagues. As a
high. Developing a relevant and actionable strategy consequence, when involved in planning and
is a key challenge for most management teams. executing a strategy, we have used strengths-
Success never comes easily, as most people running weaknesses-opportunities-threats (SWOT) analysis

Best practice
a business know all too well. Instead, it is rather to create a snapshot of our situation. We have also
common to hear managers talk about “paralysis held off-site workshops around scenario planning
through analysis” – so much time spent developing to understand how our environment is evolving.
(or understanding) a new strategy that implementing We have carefully analyzed our market positioning.
it is either an afterthought or the execution effort is We have assessed our valuable resources and
either sloppy, half-hearted, or off target. We’ve capabilities. We have drawn up detailed
heard managers attest to such business sins too strategic plans to try to ensure linkages
often to count. Comments of this nature indicate between strategy formulation and
that there is still scope for innovation in the strategy implementation. We have
field to provide frameworks and tools that can help created companywide
practitioners develop strategy that really matters to road shows to
their organizations. More than that, we feel that communicate and
what is most needed is a structured process embed the strategy.
aimed at capturing key strategic insights and And we share all this
condensing the business strategy into an now because we want
actionable one-page summary: if you will, you to know that we truly
into a “strategy grid”. have “been there” when it
comes to all the latest fads
Dedicated followers of fashion in strategy development.
Our creation of a strategy grid to help However, despite the use of
managers execute their strategy a variety of different strategy
comes from real-life experience. approaches, we often found it
Our proposed approach is the challenging to convert the
result of five years of elegance of strategy formulation
experimentation with a into a relevant and actionable
range of different set of initiatives and options.
Thus, while these strategy
exercises have been
intellectually stimulating,
we have often →
 → concluded strategy events somewhat dissatisfied. levels we will deliver across our different segments,
We felt, as others surely did, that while we may the percentage of total revenues that we will
have experienced a great discussion about strategy, generate from new data services, convergence
it was (more often than not) alarmingly unclear what opportunities and the overall potential for organic
anyone should do differently as a result of the day’s growth compared to merger and acquisition
thinking and what we should communicate to the alternatives. We thus build up a high-level, but
rest of the organization in terms of executing the fairly comprehensive, overview of the base case
new strategy. After much thought, we concluded that serves to align key stakeholders within the
that what was needed most is a bottom-up/top-down company; this case can be used for discussions
strategy process reinforced by a strategy grid – all with managers at headquarters.
designed to make strategy actionable.
Stress test
Bottom-up/top-down Having achieved this overview, the next step in the
The strategy process we now recommend follows process consists of stress-testing the base case by
two parallel tracks, which we call bottom-up and identifying limitations and issues. To the greatest
top-down. These two different starting points for extent possible, we try to structure limitations and
analysis and strategy development provide an issues according to the same format as the base
opportunity to tease out important conclusions that case. After completion of these steps, we have found
might otherwise have remained hidden from view. that a number of key strategic imperatives typically
Best practice

become evident. Based on this, we then seek to

The bottom-up process takes its starting point in a identify “must have” initiatives as well as potential
solid micro-level articulation of the current base case strategic options that address the identified
for the business. We have found that while the budget limitations or issues with the base case.
process usually achieves a shared understanding Some of the “must have” areas to address in the
regarding metrics (such as top line financial numbers past have included the need to increase the
or key performance indicators), there is often a lack geographic reach and capillarity of our distribution
of a clear overview around the key initiatives and network; to increase both network capacity and
activities forming the base case. Given this, we have coverage in specific locations; to spend more on
found it useful to articulate the base case across advertising relative to competition; to diversify our
dimensions such as business scope, marketing, sales advertising agency resources to improve the

Another good test of the quality of the grid is to ask how

valuable it would be if a key competitor were somehow to
obtain it.

and distribution, customer service and technology. creativeness of our marketing communications; to
This essentially serves to provide an answer to the upgrade our billing system to be able to offer new
question of what we currently perceive the business tariff plan structures; and to improve our CRM
to look like, across different areas, if we execute systems to enable us to up-sell services to our
according to current constraints, intentions and plans. existing customer base. How useful is such a
To develop this view of the base case, we use the process? We have seen it make a real difference. In
budget for the current year, our business plan for terms of new business opportunities, this process
the next four years and our operational programme has led us to realize that we have not had
plan that lists all major approved initiatives across competitive propositions in place to address some
the business. Examples of areas that we focus on fast-growing market segments, that we have been
when articulating the base case include the product missing out on new data and convergence product
and segment markets for which we will have areas, that we may have been too cautious in terms
competitive propositions guided by needs-based of roll-out plans for wireless broadband solutions
segmentation, the size and capillarity of our and that we have not done enough to monetize our
distribution network, the coverage of our network substantial customer base through partnership
(outdoor and indoor), the brand metrics we are opportunities for cross-selling.
likely to achieve with our current level of advertising Overall, the benefit of the bottom-up process is
expenditure and the overall customer experience we that it creates a shared understanding around the
provide. We also focus on the customer service base case in terms of what we must do versus what

30 Business Strategy Review Spring 2008 © 2008 The Author | Journal compilation © 2008 London Business School
 Bottom-up process Top-down process

Base case Assumptions and drivers

Articulate current Identify fundamental
base case and identify assumptions and driving
limitations forces

Base case imperatives Initiatives and Options Top down imperatives

Identify strategic Outline base case Identify strategic
imperatives based on initiatives for imperatives based on
base case implementation and assumptions and driving
strategic options for forces
evaluation

Disruptions
Identify and track
potentially disruptive forces
and other risks

Best practice
Figure 1. The top-down / bottom-up strategy process

we might do. The advantage of this process is that Following from this alignment around
we typically get highly actionable initiatives and fundamental assumptions, we then focus on the key
options as output. The drawback is that the clear forces affecting both our core business and shaping
focus around the base case might trigger a form of adjacent or emerging business areas. We structure
strategic myopia with too much focus on short-term, this into columns spelling out the driving forces, the
operational issues. To remedy the risk of becoming implications and the strategic imperatives. In the
myopic, we also conduct a top-down process. telecom industry in which we worked, we discovered
the need to shift from a heavy focus on customer
The top-down process starts at the other end of the acquisition towards retention and up-selling as
micro-macro continuum by trying to tease out the markets mature. Increased maturity of telecoms
fundamental assumptions about the business markets also inevitably leads to commoditization of
environment in order to provide a foundation for the basic services with downward pressures on price
strategy. This part of the process is drawn from and thus an imperative to focus on cost control.
some prior experience with Shell’s famed scenario To escape from the “commodity trap”, there was
planning model. It thus seeks to isolate certain also a need to explore new emerging business
factors called “TINA” (There Is No Alternative). opportunities for data and converged services. This
TINA could include factors relating to required new capabilities beyond basic voice and
demographic evolution, economic growth, messaging services and the ability to better segment
competitive intensity, level of industry regulation both the overall market and existing customers based
and entry into trade blocs such as the European on an in-depth understanding of customer needs.
Union. We don’t mean that these factors may never The top-down process is also especially useful to
change, simply that it is unlikely that a different identify the emergence of new disruptive technologies
trajectory will emerge before the end of the current and to explore opportunities for acquisitions.
strategy horizon. In a turbulent and rapidly Similar to the bottom-up process, this top-down
changing world, we have found that it provides an process thus typically yields some initiatives that we
element of comfort to seek to anchor – and track – should take and a set of strategic options worth
the strategy in a set of fundamental assumptions. In further consideration.
our case, such fundamental assumptions required
us to check and verify such factors as the declining A broad look
overall population size, the entry of Eastern After having completed the first iteration of both
European countries into the European Union, shift the bottom-up and top-down processes, we take a
from double-digit to single-digit growth rates as broad look at potential disruptions that might affect
mobile markets mature, increased competition due the business and articulate those so that they can
to the introduction of new telecoms licenses or be further evaluated and tracked. We do this
virtual operators and increased customer churn due without specific consideration to bottom-up or top-
to the introduction of number portability. down thinking. This could include one of our →

© 2008 The Author | Journal compilation © 2008 London Business School Business Strategy Review Spring 2008 31
 → local competitors being acquired by a major regarding the relative balance between actions
international player, new licences being issued or seeking to exploit or improve the core business
further regulation on a national or European level. versus initiatives of a more exploratory nature.
At this stage in the process, we have found it Once the grid is complete, the single-page overview
beneficial to take stock of where we are and try to is useful to facilitate discussions of where these
get an overview of the insights we have reached so initiatives would take the company in terms of its
far. We have found it quite useful to dust off and market position; it also assists in developing valuable
use SWOT analysis as a tool to provide a helicopter resources or capabilities toward the desired direction
view and summary. Rather than being a mechanistic of the company. After using the grid several times,
ritual, we have found that conducting a SWOT we have learned to challenge ourselves regarding
analysis takes on a deeper significance after we have whether or not we have managed to achieve the right
been through both the bottom-up and top-down balance between exploitation and exploration. We
processes. The next step in the process consists of have found that we typically tend to place too much
trying to visualize the actions and options emerging emphasis on the bottom-left corner in the model,
from the strategy process. which represents exploitation and improvement of
the familiar terrain of our core business.
The strategy grid Thus, while we may find too little space (for our
The strategy grid is a framework that can be used to sense of what needs to be emphasized) in the
summarize key initiatives and potential strategic bottom-left corner, we have noted that, too often,
Best practice

moves emerging from the strategy process. While we other boxes on the strategy grid might be empty or
find it useful to follow the bottom-up and top-down only sparingly addressed. In short, we have learned
processes, the strategy grid can be used to to correct our own misuse of the grid. From that
summarize the output of strategies developed insight, we iterate our strategy process until we feel
through other processes as well. that we have managed to achieve an appropriate
The X-axis of the strategy grid is based on the balance in our strategy as depicted in the grid.
insight (popularized by James March of Stanford
University) that a business needs to strike an The action imperative
appropriate balance between exploiting the In addition to striving for balance, we also try to
potential of its core business and exploring new ensure that the initiatives are actionable. We have
business opportunities. We have further subdivided found that the best way to do that is to develop a
the latter into the pursuit of adjacent opportunities high-level programme plan in parallel with
that serve to extend the core business versus more milestones for each initiative. If an initiative or
exploratory entry of new business areas. target is phrased in such a way that it is difficult to
The Y-axis seeks to make clear what future put a milestone against it, we change the
actions and objectives are included in the base case formulation into something that is more actionable.
versus potential strategic moves that need to be Another good test of the quality of the grid is to
assessed further. We have found it useful to divide ask how valuable it would be if a key competitor were
the potential strategic moves into organic growth, somehow to obtain it. Discussing this far-fetched
alliances and partnerships along with mergers and “what if” tells all involved whether the grid is indeed
acquisitions. something that indicates solid, competitive actions.
To complete the strategy grid, we go back to the Asking this question can lead to the sharpening of
findings generated from the bottom-up and top- the key initiatives underpinning the strategy.
down strategy processes. Apart from minor Initiatives on the strategy grid can also be colour-
discussions regarding in which box a particular coded into clusters that would take the business in
action or strategic move belongs, we have found it a specific direction. This can be used to distinguish
quite easy to insert key findings into relevant cells between different evolutionary paths for the business.
of the grid. We have also noted that a very clear As an example, we have often distinguished
separation between strategy and objectives is not between strategic options targeting new market
always very helpful. Based on our experience, we segments or entering new product markets.
think it is fair to have a mix of objectives and Once the strategy grid has been developed, it
actions (though we stay clear of purely financial should remain a living emblem of the strategy and
targets in the strategy grid and instead focus on thus be continuously updated. This means that the
business drivers). grid can be used as a framework to discuss the fit of
The beauty of the grid is that it summarizes key new incremental initiatives and options that emerge
objectives, actions and strategic options coming out of outside of the formal strategy process. The grid can
the process and separates those into what is already also be used together with scenario planning to test
included in the base case versus potential strategic how well the company will fly under different future
moves. The framework also provides an overview environments.

32 Business Strategy Review Spring 2008 © 2008 The Author | Journal compilation © 2008 London Business School
 Exploitation of Core Business Opportunities Exploration of New Business Opportunities
and Business Improvement Initiatives
Extension of Core Enter New Areas

Mergers and
Acquisitions
● Consolidate market by acquiring company X or Y ● Acquire company in ● Acquire company
● Extend geographic footprint by acquiring competitor X adjacent and fast with strong R&D
● Acquire distribution chain for product line X growing industry X capabilities in area X

● Find systems integration partner for product line X

Partnerships
Alliances/ ● Enter into partnership ● Partner with company in
● Find distribution partner for product line X in market Y with company X for industry X to leverage
● Partner with insurance company to provide extended cross-selling of product our distribution and
warranty option X with product Y marketing capabilities

● Rollout additional shops in areas X and Y to improve ● Launch new product ● Invest in R&D for
sales capillarity line X area X
Organic
Growth

● Launch next generation product line X based on new ● Introduce lifestyle

technology Y accessories for product
● Increase share of wallet for product line X line X

● Generate at least x% of revenues from product line X ● Launch new product ● Develop offer for

Best practice
● Streamline operations by outsourcing area X line based on annual segment X previously
● Implement new segmentation model and CRM tools subscription rather not targeted
than product purchase ● Build prototype in
● Increase sales through controlled channels to X%
● Introduce new online area Y
● Consolidate production from X to Y locations
ordering and ● Conduct market
● Reduce customer churn levels from X% to Y% fulfillment system research to assess
● Ensure purchase intention of at least X% ● Offer customers the potential of products in
● Improve overall customer satisfaction from X% to Y% option of on-site repair area x
● Reduce working capital by X% and maintenance ● Build new organizational
● Improve customer service performance for high value within 24h capabilities in solutions
customers from X to Y selling
● Implement new ERP system before end of year X
● Revise recruitment and promotion process to improve
consistency and transparency

Figure 2. The strategy grid

The strategy grid provides an action-oriented acquisitions. By taking an activity-based view,

output of the strategy process by summarizing the the focus shifts from the notion of a single-point,
strategy via a one-page overview listing both unidirectional strategy toward a more helpful
planned initiatives and potential strategic moves. perspective of a portfolio of ongoing initiatives
The strategy grid is also a useful tool to ensure and potential strategic moves. For, in the end,
that the strategy is balanced between exploitation your real strategy is not what your management
and exploration – and between organic growth team thought; it’s what your company actually
and growth derived from partnerships or did. ■

Andreas Birnik ([email protected]) is a Visiting Fellow at the National University of Singapore’s

Business School.

Richard Moat ([email protected]) is currently the CEO of Orange in Romania.

London Business School

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London NW1 4SA
United Kingdom
Tel +44 (0)20 7000 7000
Fax +44 (0)20 7000 7001
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A Graduate School of the University of London

© 2008 The Author | Journal compilation © 2008 London Business School Business Strategy Review Spring 2008 33