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flevyblog
The Flevy Blog covers Business Strategies, Business Theories, & Business Stories.
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Editor's Note: Take a look at our featured best practice, Complete Guide to Business Strategy Design (51-slide PowerPoint presentation). Summary: This document provides a framework to design your business strategy. A key question that every business needs to able to answer is "What is our strategy?" 'Strategy' is part of everyday business language and is often used in the wrong context (e.g. 'Operational [read more]
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Due to organizations having limited resources (e.g. talent, capital, time, etc.), the focus of Strategy Development is often the optimization and prioritization of said resources to maximize the potential to reach its strategic objectives. But what if that weren’t the case? This is the thinking behind Blank Check Strategy.
The blank check approach takes a contrarian viewpoint. The fundamental question then becomes, what if resources were not a constraint? This compels managers to think big and not worry about resources.
A blank check is a metaphor the freedom of a team or business is given to determine for themselves the resources they need to achieve a set of agreed-upon goals within a defined timeframe.
The issue with working with confined resources is that it not only limits your plans, but also limits the creative potential of people. In other words, by removing the resource restraint, we also removing an invisible restraint on creativity and imagine.
Through this approach, business leaders, instead of defining budgets and resources, focus on defining ambitious goals. Then, they leave it to their managers and teams to request for resources needed to achieve these goals. Many organizations that have embraced this approach managed to achieve astounding results.
When teams decide their own budgets, they feel more accountable, empowerment, and ownership. They are thus inspired to achieve more ambitious, stretch goals.
It is critical to under that a blank check is not a license to spend without restraint, guidelines, or consequences. To effectively apply the blank check approach, there are several important principles that should be followed. In other words, blank checks offer freedom within a framework. There are still rules to ensure these initiatives remain aligned with our Strategy and product results.
One of the most important important guiding principles is to seek to drive the Virtuous Cycle of Growth. What this means is a blank check initiative needs to have the potential to produce sustainable, continuous, profitable growth.
The Virtuous Cycle of Growth follows 5 key phases, as captured on this slide below.
Each phase of the cycle emphasizes an outcome and the means to achieve the outcome. These phases must be followed with rigor to ensure that the blank check initiative does not veer off course and achieves sustainable growth.
The Virtuous Cycle of Growth is based on the foundational premise that the more you grow revenues and reduce costs, the more resources you then have available to invest in future growth. In other words, growth generates resources that drive further growth.
To achieve sustainable growth that drives a virtuous cycle, the selected initiative needs to be gross-margin accretive. Margin expansion can be derived from increased revenues, cost reduction, or productivity improvements.
To effectively launch a blank check initiative, we should follow the 5-phase approach to Blank Check Strategy:
Interested in diving deeper into the Blank Check Strategy? We have a developed a framework presentation on Blank Check Strategy, which elaborates on all the guiding principles, pillars to success, as well as discusses each of the 5-phases to Blank Check Strategy implementation in further depth. It is a fully editable PowerPoint presentation and also also includes slide templates for you to use in your own business presentations. This, and 100s of other similar business framework presentations, are found in the FlevyPro Library.
You can download in-depth presentations on Strategy Development and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
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These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.
