Strategy frameworks

Strategy Frameworks

Porter's Five Forces

Assesses industry attractiveness and competitive position.

Force	Key Questions
Threat of new entrants	Capital requirements, switching costs, brand loyalty, regulatory barriers
Bargaining power of suppliers	Supplier concentration, switching costs, importance of input
Bargaining power of buyers	Buyer concentration, price sensitivity, switching costs
Threat of substitutes	Relative price-performance of alternatives, switching costs
Competitive rivalry	Number of competitors, industry growth rate, product differentiation

Output: Rate each force (Low/Medium/High) → determine overall attractiveness → identify strategic moves.

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Blue Ocean Strategy

Move from red oceans (fierce competition) to blue oceans (uncontested space).

ERRC Grid (Eliminate-Reduce-Raise-Create)

Eliminate: Which factors the industry takes for granted should be eliminated?
Reduce:    Which factors should be reduced well below industry standard?
Raise:     Which factors should be raised well above industry standard?
Create:    Which factors the industry has never offered should be created?

Four-Action Framework

1. Eliminate factors that no longer add value
2. Reduce factors over-engineered beyond customer needs
3. Raise factors underserved by the industry
4. Create new value drivers customers have never been offered

Value Curve

Plot your strategy canvas: x-axis = competitive factors, y-axis = level of offering. A compelling blue ocean has a distinct curve vs. competitors.

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BCG Growth-Share Matrix

Portfolio analysis tool for multi-business companies.

                  High Market Share    Low Market Share
High Growth  |      Stars          |    Question Marks  |
Low Growth   |      Cash Cows      |       Dogs         |

Stars: Invest to maintain leadership; may become cash cows. Cash Cows: Maximize cash generation; fund other units. Question Marks: Decide invest-or-divest based on strategic fit. Dogs: Divest or harvest unless strategic rationale exists.

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Ansoff Matrix

Growth strategy framework.

                   Existing Products    New Products
Existing Markets |  Market Penetration | Product Development |
New Markets      |  Market Development |   Diversification   |

• Market Penetration: Increase share in existing markets. Lowest risk.
• Market Development: Enter new segments or geographies. Moderate risk.
• Product Development: New products to existing customers. Moderate risk.
• Diversification: New products, new markets. Highest risk; needs clear rationale.

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Balanced Scorecard

Translate strategy into operational terms across four perspectives:

1. Financial Perspective

• Revenue growth rate
• Profit margins (gross, EBITDA, net)
• Return on invested capital (ROIC)
• Cash flow generation

2. Customer Perspective

• Market share
• Customer satisfaction (NPS, CSAT)
• Customer retention rate
• Customer lifetime value (LTV)

3. Internal Processes Perspective

• Operational efficiency metrics
• Product development cycle time
• Quality defect rates
• Time-to-market

4. Learning & Growth Perspective

• Employee engagement
• Skills gap closure rate
• Innovation pipeline (new ideas → implemented)
• Technology infrastructure investments

Cascade: Corporate BSC → Business Unit BSC → Team OKRs → Individual goals

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SWOT Analysis

Internal        | Positive        | Negative
                | Strengths       | Weaknesses
----------------|-----------------|------------------
External        | Opportunities   | Threats

How to use SWOT strategically (TOWS Matrix):

• SO (Maxi-Maxi): Use strengths to capture opportunities
• WO (Mini-Maxi): Overcome weaknesses by pursuing opportunities
• ST (Maxi-Mini): Use strengths to mitigate threats
• WT (Mini-Mini): Defensive tactics to minimize weaknesses and avoid threats

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Strategic Planning Process

Annual Cycle

Q4 (Oct-Dec): Strategic review → Q1 (Jan-Mar): Plan finalization + OKR setting
Q2-Q3: Execution + quarterly business reviews (QBRs)
Q3 (Jul-Sep): Mid-year strategic refresh

Strategic Planning Steps

1. Environmental scan — PESTLE + Porter's 5 Forces
2. Internal assessment — Core competencies, resource audit
3. Strategic options — Generate 3-5 strategic directions
4. Strategic choice — Evaluate options; select 1-2
5. Strategy articulation — Write the strategic narrative (1-page)
6. Cascade — OKRs, resource allocation, roadmaps
7. Monitor — Quarterly business reviews (QBRs), strategy checkpoints

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Scenario Planning

Used when high uncertainty makes single-path forecasting unreliable.

Steps

1. Define the focal question — e.g., "What is our market position in 5 years?"
2. Identify driving forces — macro forces affecting the focal question
3. Rank by impact × uncertainty — select top 2 critical uncertainties
4. Build 4 scenarios — 2×2 matrix with the two critical uncertainties as axes
5. Name and narrative — Give each scenario a vivid name and story
6. Test strategy — Does your current strategy survive all 4 scenarios?
7. Early warning indicators — Define signals indicating which scenario is unfolding

2×2 Scenario Matrix

         High [Uncertainty A]
         |         |
         | S3      | S1
High [B] |---------|--------
         | S4      | S2
         |         |
         Low [Uncertainty A]

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Strategic Narrative (One-Page Strategy)

Template:

Where we play:        [Target market/segment description]
How we win:           [Value proposition / differentiation]
Capabilities needed:  [3-4 core capabilities required]
Management systems:   [Metrics, cadences, incentives]
What we must stop:    [Activities that don't fit the strategy]

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Strategy Pitfalls to Avoid

• Strategy as aspiration: "Be the best" is not a strategy. Strategy requires choices.
• Boiling the ocean: Trying to pursue too many strategic directions simultaneously.
• Ignoring implementation: Great strategy + poor execution = nothing.
• Analysis paralysis: Strategy needs enough data but also conviction.
• Strategy as a document: Strategy lives in decisions and resource allocation, not PDFs.

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Strategy Review Checklist

• Does the strategy make clear choices about what NOT to do?
• Is the differentiation specific and defensible?
• Do resource allocation decisions reflect the stated strategy?
• Are OKRs directly derived from strategic priorities?
• Is the strategy communicated in a way the team can act on?
• Does the strategy account for the top 3 competitive threats?
• Is there a clear link between strategy and financial targets?