Stage Two - Document Your Business Strategy

You can’t hope to integrate your IT strategy with the business strategy if you can’t first demonstrate a clear understanding of the business strategy. In this stage you will analyze your organization’s background, mission and core values as well as the environment in which your organization competes.

• Step 1 – Describe the Company and its Background
• Step 2 – Conduct an Industry Analysis
• Step 3 – Document Vision, Mission, and Core Values
• Step 4 – Define Core Business and its Boundaries
• Step 5 – Create a Financial Picture
• Step 6 – List Strategic Objectives
• Stage Summary – Document Your Business Strategy

Step 1 – Describe the Company and its Background

The key to this section is to develop an appreciation of your organization from a business perspective. Begin with historical information and documents about your organization.

Consult existing organization documents (e.g. business plans, financial statements, annual reports). Members of your steering committee should also be able to supply this information. In a public organization, the easiest place to start is the most recent annual report.

The aim of this stage is to build a structured profile of your company. You may be surprised to find that, while everybody feels they know why the company exists, there is no consistent written understanding of where the company came from or where it is going. By focusing on your vision of the company you will better be able to focus on the technologies and policies that will help it succeed.

Step 2 – Conduct an Industry Analysis

Every organization operates in at least one market with at least one product. Depending on the complexity of your customers and products, you probably have several distinct customer sub-groups and product groups. Most importantly, your organization may operate in different industries. Each industry has different dynamics, levels of competitiveness and levels of profitability.

Conducting an industry analysis and understanding industry drivers will help you better understand your corporate mission and strategy. The background to this stage (found in the hardcopy of this methodology) includes additional information about Industry Lifecycles, Porter’s Five Forces Model, and PEST (Political, Economical, Social, and Technological) analysis. These are standard management theories that will help you in your analysis.

Step 3 – Document Vision, Mission, and Core Values

Your organization operates on a set of values that guide strategic planning and organization direction. Core values guide our day-to-day behaviors and collectively create the desired culture of the organization. Sometimes called “beliefs” or “philosophies”, they meet the following criteria:

• They are shared by a majority in the organization. While individual values can be different, an organization as a whole requires shared values.
• They determine the norms or standards of acceptable behavior concerning how to approach your work.
• They are enduring and consistent over time. They are traits your organization will never give up (even in difficult times).
• They are driven by, and crystallized from, the top leadership in the organization.

More than likely, your organization has both a vision and a mission statement. Use these statements to fill out this section. Don’t worry about finding the perfect wording for either the vision or the mission statements. For now, just get the key concepts down on paper.

A vision statement describes an image toward which your organization is striving. Most organizations’ visions say things like “to create an organization with which customers line up to do business and for which employees can’t wait to come into work."

If your organization does not have a mission statement, use the Mission Development Triangle to develop a working statement.

Step 4 – Define Core Business and its Boundaries

Part of defining your core business is also drawing a boundary as to what falls outside your core business. In contemplating this section, many managers often realize that they spend an inordinate amount of time on activities related to ancillary business rather than focusing on making improvements to the core. For example, a car manufacturer’s core business may be designing engines. Tire design and manufacture would not be included in the car maker’s core business.

Once you have defined the core, determine what customers, channels, and competitors are within the boundaries. Although you may already have an intuitive sense of what falls within and what falls outside of your core business, putting it down in writing should solidify your understanding.

Step 5 – Create a Financial Picture

Financial information is one of the few ways you can make a real ‘apples to apples’ comparison of your organization to the rest of the industry. If you work for a publicly traded company, financial information about your organization is public record and should be easy to find.

Private companies are not obligated to furnish financial information to either their employees or the general public. In most private companies, financial information is provided on a need-to-know basis only. Talk to your finance department and senior management.

You should still attempt to obtain some, or all, of the following information because it will give you a sense of how well your organization is doing financially and how strong you are relative to other companies in your industry.

Once you have collected information about your own organization, do some research using either the Internet or industry association’s to find out how you compare to others in the industry.

Step 6 – List Strategic Objectives

An organization strategy can take many different forms and timeframes. It may consist of financial targets, such as revenue and profit growth, increase in share price, or a decrease in levels of inventory. It may also consist of other, non-financial goals, such as number of new product launches, improved brand recognition, or additional partnership arrangements.

Businesses operate towards a set of business objectives. Depending on the organization, these may or may not be properly defined. The point of this section is to clarify your organization’s strategic business objectives.

Read back through the work you have completed and tie it together into one powerful document outlining your business objectives. We suggest using point form and listing no more than ten objectives.

Compare the business objectives you determined with the ones listed in your organization’s business plan or annual report. Companies’ stated intentions are often very different from the forces actually driving the organization.

Keep your list of business objectives close at hand and refer back to it when completing subsequent sections.

Stage Summary – Document Your Business Strategy

You should now have a set of descriptions of your organization that can be used to compare with your IT strategy in order to promote alignment. In a few PowerPoint slides, you should be able to tell an audience where your company comes from, what its primary objectives are, and how it fits in the market in which it competes. This is foundational information for building strategy.

The following chart shows the progress of developing the plan after Stage 2 of the engagement.