Preparing the Strategy Message with Design Thinking- Valutrics

Strategy is about choices. Communicating strategy is about making these choices transparent and describing how they lead to superior performance and value for all stakeholders. Preparing the strategy message is about content. Telling the story is about the form. When preparing the strategy message, it is important to clearly separate between the strategy, that is, the target state, and the implemen tation, that is the path to the target state. Otherwise, receivers of the message may fall into the so-called lost-in-translation trap.

So far, numerous insights into the strategy of the firm have been developed. Key insight gained are
– the industry in which to compete,
– the strategic focus identifying the primary dimension along which to excel and differentiate,
– a description of the firm’s detailed business model, describing targeted customer segments, value propositions, capabilities, and a financial plan, as well as how these components interact,
– the competitive advantages that will allow the firm to successfully compete, and
– game plans on how to react to moves by competitors.

The Traditional Strategy Message
Traditional strategy communication focuses on five key elements:
(1) A mission statement, describing the firm’s purpose and identifying the scope of its operations.
(2) A vision statement describing the firm’s high-level objectives and how it wants to be perceived.
(3) A set of values that describe the believes on which the vision and mission statements are based.
(4) A prose description of the key aspects that will lead to success.
(5) A set of quantified key performance indicators (KPI) that a firm wants to achieve and that help measure success.

The main challenge with this approach to communication is that it is abstract and subject to interpretation. Many managers and executives have a hard time understanding what these statements, especially the mission, vision, and value statements, mean for their decision-making process. This leads to the primary focus being put onto the tangible KPIs. But KPI-based approaches fall short of addressing the challenges faced in a changing environment. They even sometimes lead to managerial decisions aiming at gaming the strategy, focusing on achieving specific KPIs rather than implementing the strategy in its entirety.
If choosing to rely on the traditional strategy message structure, that is, a mission-vision-values based approach, it should be relegated the end of the communication process, that is, as a summary, rather than beginning the strategy message with it.

Crafting the Strategy Message with Design Thinking
Crafting a successful strategy message relates to using the insights gained during the strategy design process by answering seven key questions while taking a stakeholder perspective:
(1) Who are the targeted customer segments and who is explicitly out of scope?
(2) What value propositions will the firm offer to their targeted customers?
(3) Why should customers choose to do business with the firm, rather than with its competitors? What are the firm’s distinguishing characteristics that are hard to copy?
(4) Why will the firm be able to live up to the promises made to its customers? Which unique capabilities (resources, knowledge, capital) does the firm possess and exploit?
(5) What will change with the new or revised strategy and what will remain the same over time? How does the firm ensure that existing customers, which remain in scope, are not lost?
(6) Why will the strategy allow generating and/or increasing profits over time? How is the financial viability ensured?
(7) Why are the goals set with the new or modified strategy realistically achievable?
The answers to these questions should be short and concise. There must be coherence among the answers. The answers should be such that they can be used as a decision support tool during strategy implementation.
The answers to the seven strategy message questions may be used to define the firm’s mission (based on answers to questions 1 and 2), its vision (based on answers to questions 2 and 3), and its values (focusing on answers 3 and 4). The mission-vision-values statements must never be perceived as a replacement for the overall strategy message.
We illustrate possible answers to the strategy message questions for a manufacturing firm competing through innovation, that is, implementing a differentiating strategy along the offerings strategic focus, in the automotive parts supplier industry, focusing on the affected employees’ audience.

Typical answers to the seven strategy message questions for an innovative automotive parts supplier focusing on the affected employees’ audience
Question Answer
(1) Who are the targeted customer segments and who is explicitly out of scope?
− We target the ten largest car manufacturers globally, allowing them to be innovative by using our offerings
− We will only work with those manufacturers that also want to be perceived as being innovative and invest significant capital in innovation
(2) What value proposition will the firm offer to its customers?
We will offer, at any given point in time, the most innovative automotive parts for being used in new cars, focusing on safety and comfort, as primary innovation drivers
(3) Why should customers choose to do business with the firm, rather than with its competitors?
We have shown over the years that we can be one of the most innovative companies in the automotive parts industry
Going forward, we will explicitly focus on safety and comfort and collaborate with customers to help them be innovative by using our innovative offerings
(4) Why will the firm be able to live up to the promises made to its customers?
− We will collaborate with universities active in research on automotive safety and comfort. By doing so, we ensure being able to identify innovative technologies early on
− We will continue to implement agile processes ensuring that academic insights can quickly be translated into innovative automotive parts, supporting innovation for the car buyer

− We will heavily invest in research and development around safety and comfort, that is, at least 5% of our revenues
(5) What will change with the new or revised strategy and what will remain the same over time?
− We will focus our offering on innovations that support safety and user comfort. We move away from quantity towards quality of products offered
− We will increase our collaboration with car manufacturers to help them get the most out of our innovations. To do so, we will introduce agile product development and roll-out processes
− Out typical product lifespan will be reduced to around 3–5 years, from the current 10–20 years
(6) Why will the strategy allow generating and/or increasing profits over time? By being perceived as an innovative part supplier that puts the innovation capabilities of the car manufacturers at the forefront, we will be able to build lasting relationships that are valued higher than automotive parts providers that primarily compete on price
(7) Why are the goals set with the new or modified strategy realistically achievable? We have shown in the past that we are able to design and deliver high quality innovative products. By taking a more focused approach and implementing a closer collaboration with our customers, chances are increased that our products are valued by our customers over offerings from competitors. In addition, focusing on safety and quality, will allow reducing costs by limiting the number of products offered

Telling the Story
Once the content of the strategy message has been defined by answering the seven key questions, it must be put in a form that is tailored to the target audience. Depending on the audience, more or less details may be included. It is important to get the trade-off between qualitative and quantitative statements right. For example, employees focus on understanding the meaning of the strategy for themselves, whereas analysts and investors prefer quantified and comparable assertions. In all cases, the message should be explicit and compelling.
Storytelling must translate the key properties of the firm’s strategy into a compelling and accessible narrative that connects the past with the future in a cohesive way . Telling the strategy message story focuses on the three dimensions inspiring, educating, and reinforcing. To do so, it may either rely on quotes or on metaphors. One possible way of structuring the storyline is to follow the five steps in process .
Process —Telling the Story

1 Setting the stage by creating a burning platform which describes the challenges faced

2 Describing where the firm wants to be with respect to
– customers,
– offerings,
– capabilities,
– financials, and
– competitors

3 Explaining why the strategy as described is
– desirable,
– feasible,
– viable, and
– distinct

4 Illustrating what is different this time and why this will lead to a superior outcome

5 Finishing the storytelling by focusing on what is in it for the audience targeted by the message
Depending on the communication channels used, different media may be employed to support the delivery and customization of the storytelling.

A great strategy message story must show seven characteristics:
(1) It must be collaborative, engaging multiple stakeholders in sharpening the narrative and delivering the message.
(2) It must be engaging, taking the audience on a journey to the future.
(3) It must be structured, allowing the audience to follow the reasoning behind the strategy message.
(4) It must be performative, using multiple media and relying on dramatic techniques, including tempo and timing.
(5) It must be tangible, illustrating the strategy message using prototypes, case studies, or demonstrations.
(6) It must be fun, engaging the audience into the message delivery, for example, through workshops, games, or simulations.
(7) It must be real, focusing on plausibility and applicability by operationalizing abstract concepts.
The story behind the strategy message must establish a purpose and connect with the audience.