Top 25 Models & Theories – Part 4

Here are 5 basic strategy models or tools that you should be familiar with (and using) as a leader.

 1. SWOT Analysis – leading off, an old stand-by tool that is a terrific assessment framework. Most of have used this at one time or another to analyze a market, product or competitor. The SWOT analysis is a four quadrant assessment of Strengths, Weaknesses, Opportunities and Threats.   Strengths and Weaknesses are internal factors that can build or destroy value, and Opportunities and Threats are external factors that can create or erode value. By brainstorming a complete SWOT picture with the team, the leader is better prepared to leverage competitive advantages or combat potentially negative forces. When was the last time you did a SWOT analysis for your team’s major deliverables?

2. Strategic Intent – this concept was popularized by Gary Hamel and C.K. Prahalad in a 1989 HBR article by the same name. I’m a big Hamel fan; he’s consistently pushed the envelope in his career, and is one of the thought leaders in the management and strategy fields. The authors describe Strategic Intent as an ambitious and compelling dream that energizes the organization, one that is meant to stretch the company’s resources and capabilities. They cite three general attributes as being part of your Strategic Intent: Sense of Discovery, Sense of Direction, and Sense of Destiny. There are recommended steps to the process that flesh out these attributes. If you really want to get to the heart of your vision and communicate it clearly, read more about this concept.

3. 7-S Framework – this is a McKinsey model that describes seven factors necessary for organizing a company in a holistic and effective manner. The 7-S model was first mentioned in a 1981 article called “The Art of Japanese Management” by Richard Pascale and Anthony Athos, and identifies seven factors as being critical to organizational success: Strategy, Structure, Systems, Style, Staff, Skills, and Shared Values. The 7-S framework is typically represented as a spider-web with shared values connecting all the other factors, and can be a useful diagnostic model when forming or evaluating teams to determine if all the parts are in place for success. It is also a useful model for determining if your group’s strategic focus is on target – have you considered all the variables?

4. Balanced Scorecard – this tool was developed by David Norton and Robert Kaplan in 1992, and was featured in their 1996 book. Now a classic model and process, the Balanced Scorecard was a best-selling concept in the mid-90’s. The idea, of course, is that a firm’s success is due to more than just financial performance, and that the traditional way of keeping score needs to be expanded to account for four primary perspectives: financial, customer, business process, and learning & growth.  The tool is focused on current performance, yes – but also advocates diligent measurement of how the organization is positioned to perform in the future. The concept of a balanced scorecard grew from here, and now has many variations – the main point is that you need to focus your monitoring efforts on a number of key factors, to see the big picture of how your system is operating.

5. Five Forces – the final model is from Michael Porter, and may be the most famous strategy framework going today. Five Forces is an outside-in business strategy tool that is used to make an assessment of the attractiveness (value) of a particular industry. Porter advocates the analysis of these five forces: Competitors (how easy or difficult is it to enter the market?); Substitutes (how easy or likely is it that competing products or services can be developed – especially cheaper ones?); Buyers (how strong is their position, and what is their bargaining power?); Suppliers (what is their bargaining power?); Industry Players (is one dominant, and what is the rivalry like among the existing competitors?). Sometimes a 6th element is added (Government or Regulation) depending on the industry. Are you studying all of these factors as you lead your team?

Coming next, in our last column in this War and Peace style saga (whew!) – 5 miscellaneous models and frameworks that I think you need to know to as a leader.