10 Sanity Tests for Strategy Development (PowerPoint PPT Slide Deck)

DESCRIPTION

This product (10 Sanity Tests for Strategy Development) is a 23-slide PPT PowerPoint presentation slide deck (PPT), which you can download immediately upon purchase.

Strategy is a way of thinking. It is not a procedural exercise or a set of framework.
Our company normally does not focus on the frameworks, tools, and approaches that generate our strategies.

1. Our company develops our strategy in many different ways, often idiosyncratic to our organization, people, and market.

2. Many strategies emerge over time rather than from a process of deliberate formulation.

This presentation will introduce our company to the Ten Tests that will guide us to think strategically. The ten tests will help us assess the strength of our strategies and focus on testing the strategy itself.

These tests of a good strategy are timeless. But the need to pressure-test a strategy is timely now. A shift towards shorter planning cycles and decentralized strategic decision making are increasing the utility of a common set of test.

This deck also includes slide templates for you to use in your own business presentations.

This PPT provides a structured approach to evaluating your strategy's robustness through ten comprehensive tests. Each test is designed to challenge different facets of your strategic plan, ensuring it can withstand market pressures and internal biases. From assessing market competitiveness to examining the granularity of your strategic focus, these tests offer a rigorous framework for strategic validation.

The presentation also includes practical examples and templates to facilitate immediate application within your organization. The tests cover critical areas such as competitive advantage, trend alignment, and execution readiness. This resource is indispensable for executives aiming to refine their strategic initiatives and drive sustainable growth.

Source: Best Practices in Strategy Development PowerPoint Slides: 10 Sanity Tests for Strategy Development PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting

PPT SLIDE DEEP DIVES

Evaluating Strategic Market Positioning Effectiveness

This PPT slide outlines a critical evaluation framework for assessing a company's strategic positioning in the market. It begins with a fundamental question: "Will your strategy beat the market?" This question serves as the cornerstone for understanding how a company can achieve economic surplus amidst the competitive pressures from customers, suppliers, and potential market entrants.

The text emphasizes that to outperform the market, a company must identify and leverage imperfections within the market dynamics. These imperfections, which the company can control, are framed as its unique advantages. The narrative suggests that markets tend to revert to mean performance over time, indicating that strategies must be robust and adaptable. As best practices become widespread, they lose their effectiveness as differentiators.

The slide also highlights the importance of distinguishing one's strategy from direct competitors. It asserts that to truly beat the market, a company must maintain significant advantages that can withstand external pressures. The example provided illustrates this concept through the historical context of the US tire industry, where an initial surge in competitors eventually led to market consolidation. After 2 decades, only a few producers remained dominant, showcasing how strategic decisions regarding location and technology can shape market outcomes.

Overall, the slide serves as a reminder that successful strategies must not only be innovative, but also resilient against the evolving market forces. Companies should continuously evaluate their strategic positioning to ensure they are not just following trends, but actively shaping their market presence.

Translating Strategy into Actionable Execution Steps

This PPT slide presents Strategy Test 10, which emphasizes the necessity of translating strategic plans into actionable steps. The core question posed is whether the strategy has been effectively transformed into a concrete action plan. It begins by outlining the need for clarity on the current state and the desired future state regarding the company’s business model, organization, and capabilities.

Two critical elements are highlighted for successful execution. First, there must be a detailed understanding of the shifts required to facilitate the transition. This involves identifying specific changes needed in processes, structures, or resources. Second, the slide stresses the importance of pinpointing individual executives who will be held accountable for these shifts. This accountability is crucial, as it ensures that leadership is aligned and energized to drive the necessary changes.

The slide also notes that the overall transformation represents a significant organizational change, requiring a robust action plan. It suggests that senior management should rely on sound advice regarding change management to navigate this transformation effectively.

A key takeaway is the emphasis on aligning ongoing resource allocation with the strategic goals. The slide advises leaders to assess where their top talent and budgetary resources are directed and be prepared to make substantial adjustments. This alignment is presented as essential for ensuring that the strategy is not just theoretical, but is actively supported by the necessary resources. Overall, this slide serves as a reminder that successful strategy execution hinges on clear planning, accountability, and resource alignment.

Evaluating Strategic Positioning Against Emerging Trends

This PPT slide presents Strategy Test 4, which evaluates how effectively a company's strategy positions it ahead of emerging trends. The text emphasizes the inevitability of new trends, whether driven by regulatory changes, shifts in consumer demand, or technological advancements. While some trends can trigger rapid industry shifts, many develop gradually, requiring a proactive strategic response from the company.

Key questions are posed to guide strategic analysis. The slide prompts strategists to consider the actions of early adopters and a select group of consumers who are often ahead of the curve. It also encourages examination of small, innovative entrants in the market and the potential impact of technologies currently under development. This approach underscores the importance of understanding not just the trends themselves, but also the behaviors and strategies of those who are leading the charge.

The slide further stresses the need for a thorough assessment of how these trends might affect the company's financial position. It suggests that decision-making should be framed differently based on the certainty of outcomes, indicating a need for flexibility and adaptability in strategy formulation.

An example provided highlights the implications of an aging population as a trend. It raises critical questions about changing consumer behaviors, affected product lines, and the overall impact on the profit and loss statement. This example illustrates the practical application of the strategy test, reinforcing the necessity for companies to align their strategic priorities with evolving market dynamics.

Assessing Bias in Strategic Decision-Making

This PPT slide presents "Strategy Sanity Test 8," which focuses on the potential biases that can affect strategic decision-making. It emphasizes that strategy often relies on flawed logic, particularly when extrapolating future outcomes from current observations. This reliance can lead to 2 significant inference problems: attribution error and survivorship bias.

Attribution error occurs when decision-makers fall into the "halo effect," where they mistakenly believe that replicating the successful actions of another company will yield similar results. This is a retrospective view that overlooks the unique contexts and variables that contributed to those successes. Survivorship bias, on the other hand, highlights the dangers of analyzing only successful cases, which can distort understanding by ignoring failures that provide critical insights.

The slide advocates for a structured approach to mitigate these biases. It suggests developing multiple hypotheses and potential solutions to create a more robust decision-making framework. This involves building a solid fact base to validate hypotheses, which is essential for informed decision-making.

Additionally, the slide underscores the importance of incorporating diverse perspectives into the decision-making process. It encourages fostering a culture that values dissent and critical thinking, as this can help identify blind spots and challenge prevailing assumptions. The slide concludes with practical steps to de-bias the decision-making process, such as specifying objective criteria in advance and being open to the possibility of error. This comprehensive approach aims to enhance strategic robustness and ensure that decisions are grounded in reality rather than flawed assumptions.

Assessing Sources of Strategic Advantage

This PPT slide focuses on evaluating the sources of advantage within a company's strategy, emphasizing 2 key concepts: positional advantages and special capabilities.

Positional advantages are described as rooted in structurally attractive markets. These advantages create an asymmetry between entities inside and outside the market, suggesting that certain market conditions can provide inherent benefits that are not easily replicable by competitors. This implies that understanding market dynamics is crucial for leveraging these advantages effectively.

On the other hand, special capabilities refer to unique resources that a company possesses, which confer distinct benefits. These capabilities can include specific competencies that the organization excels in, such as innovation or stakeholder management. The slide highlights that while these capabilities are powerful in creating an edge, they are not easily traded or shared, making them a vital asset for the company.

The slide stresses the importance of these special capabilities being abundant within the organization, but scarce in the external environment. This duality is essential for ensuring that the company can maintain its edge over competitors.

Additionally, the slide suggests that bundling activities together can create a more complex advantage that is harder for competitors to replicate. This complexity adds a layer of protection against competitive pressures.

The example provided illustrates a successful discount grocery retailer that redesigned its business system, making it difficult for competitors to copy the entire system. This reinforces the idea that a well-thought-out strategy can create significant barriers to imitation. Overall, the slide serves as a reminder that a dynamic view of strategy is necessary, as competitors will always seek to exploit vulnerabilities.

Framework for Managing Strategic Uncertainty

A key focus of this slide is on understanding and managing uncertainty within strategic planning. It emphasizes that organizations must make decisions now, even when future conditions are unpredictable. This PPT slide outlines 4 distinct levels of uncertainty that companies may encounter, ranging from a clear view of potential outcomes to total ambiguity where even the distribution of outcomes is unknown.

The first level, a clear view of the future, suggests that there are identifiable outcomes that can guide decision-making. The second level acknowledges that while some outcomes are identifiable, they may not be exhaustive. The third level introduces the concept of probability distributions, indicating that outcomes can be represented statistically rather than as fixed points. Finally, the fourth level highlights total ambiguity, where the lack of clarity extends to the very distribution of possible outcomes.

To navigate these uncertainties, the slide proposes a structured approach comprising 4 strategic steps. First, it suggests listing variables that could influence decisions and prioritizing them based on their impact. The next step involves ruling out impossible outcomes, which helps to narrow focus. The third step emphasizes using economic analysis to identify outcomes that are either mutually reinforcing or unlikely. The final step advocates for applying tools like scenario analysis to address remaining uncertainties, which are crucial for effective strategy formulation.

This framework not only helps in recognizing the uncertainties faced, but also provides a systematic method to manage them, ultimately serving as a measure of strategic effectiveness.