Strategy Item guidance

Guidance overview

This guidance covers:

  1. Prioritising a strategic direction - Setting a priority for your strategy.

  2. Strategy Item overview - Capture the options you have to implement your strategy.

  3. Granularity of Strategy Items - Making sure your items aren’t too big or small.

  4. Pre-filtering Strategy Items - Making sure your items are achievable.

  5. Strategic Direction in detail - An overview of each possible direction, including overall guidance on how to use each one.

Prioritising a strategic direction

Before we start considering what to do, we should prioritise a strategic direction. This helps us avoid wasted effort. For example, if I have very high levels of customer churn, it will be unwise to look for new product opportunities. To do this, follow the process in the Strategic Direction stage of the framework, which contains instructions on how to do this. Strategic direction consists of the following options:

Strategy Item Overview

After we have our direction, we can shape options at a high level, ready for prioritisation. These options are known as Strategic Items. Strategy Items contain a high-level structure that is further built out when a strategy is selected. When they are selected, they will become either a Strategic Area or, where relevant, a new product using the New Product Generator Canvas.

  • Problem to solve - Perhaps the most important factor of all. You could be considering solving a problem for a customer or your organisation. Where possible, quantify this.

  • Solution summary - A very simple overview of how to solve this. It is not a list of technical options.

  • Investment period -

  • KPI this impacts (optional) - KPI stands for Key Performance Indicator. You may be reducing the churn rate or the Customer Acquisition Cost (CAC rate). This helps you directly link to a metric and can be used where it is not obvious.

  • Work purpose - This maps to a strategic direction. In the example, we can see a Strategy Item linked to Protect market position.

Granularity of strategy items

When creating strategic items, consider:

  1. Investment period - How much time you expect to invest to achieve your expected benefits. 3 or 6 months is a typical starting point.

  2. Impact - Impact represents the size of the problem you are solving.

We have a strategy to make a large, measurable impact on the organisation. Making many small changes and assessing their individual impact makes this difficult to see. Also, with too many small items, we don’t get enough feedback on whether the overall strategy is working.

Below are examples to guide this:

Example 1 - Too granular

  • I have a signup screen that is poorly designed. Fields don’t adhere to visual standards, and error-handling messages are unclear.

  • Investment period = 1 week.

  • Impact = Low.

This doesn’t mean you can’t just get on with fixes like these, but it is far too low-level to prioritise.

Example 2 - Too broad

  • I have UX inconsistency across my whole product, leading to low customer satisfaction.

  • Investment period = More than 1 year.

  • Impact = High.

You should typically split up items like this. Look for key areas to target that give you the most impact. The issue and investment period indicate there is a problem with the size of this. Now, you could decide to proceed, but be aware of the cost. Most importantly, you would want to release incrementally, avoid waiting a year for a release! You may still require a significant investment for new complex features.

Example 3 - About right

  • An idea for a better way of querying data using AI.

  • Investment period = Potentially a large change. Three months of initial investment is recommended.

  • Impact = High.

This high-impact strategy item carries significant risk and requires testing and development time. An initial investment of 3 months is provided. However, this work can be stopped if the technology doesn’t work well.

Pre-filtering strategy items

This step is very important to avoid flooding your prioritisation discussions.

Initial assessment

You shouldn’t filter out high-risk items with potentially great rewards. We don’t want to remove all our innovation opportunities. When deciding on whether or not to add a strategic item, consider the following questions:

  • Desirability considerations - Evidence customers want this:

    • Do we have evidence that this solves a big enough problem for customers? (Ideally, quantified).

    • Is the type of solution or level of differentiation very new in the market?

    • Do we have evidence customers want the solution and will switch from current solutions?

  • Feasibility considerations - Evidence we can build and run this:

    • Do we understand the technical design, including the ability to build it and ensure it will scale to customer demand?

    • Do we understand the service design, including the ability to run it and ensure it will scale to customer demand?

    • Do we have any major risks that could lead this to fail or greatly increase in cost?

  • Viability considerations - Evidence this will generate a profit:

    • Do we know which pricing model we will use and that its target price point is competitive?

    • Do we have evidence customers will pay?

    • Do we understand the costs, including build, customer acquisition and running the service?

    • Do we know the break-even point for investment and how long to achieve a good Return on Investment (ROI)?

Filter based on team capacity

Consider the number of strategy items being discussed based on:

  • Aiming for each team to have one strategy to work on.

  • The number of teams you have. For example, having 3 teams and evaluating 30 potential strategies will be a waste of time and effort.

  • Amount of investment period left on their current strategies.

  • Likelihood of their current strategy being continued (see below).

Current strategies

Options for teams with a strategy in progress:

  1. Continue to invest in the strategy - Option to set a new timeframe for them.

  2. Pivot their current strategy - Keep the same strategy but change the solution.

  3. Stop their current strategy - Ensure there is time to release / tidy up current work.

You don’t have to create a new strategy for every team each time you prioritise.

Strategic direction in detail

Mandatory work

This can include work that your own organisation needs and that of your clients need. For example, your customers need to show they are GDPR compliant.

  • Keep the lights on - Essential change to ensure business continuity.

  • Legal and compliance - Adherence to regulatory requirements.

Reduce costs

  • Remain competitive - Prevent lower prices from competitors from impacting business viability.

  • Increase profitability - Increase profit margin from improved efficiencies.

Protect market position

In this strategy, we are specifically focused on reducing sales loss and churn. This also applies when we have high-future risks. For example, a competitor is about to release a new version of their product that is significantly improved.

  • Churn - Minimise the loss of existing customers due to dissatisfaction with a product or service.

    • Loss of these customers to competitors to no solution.

    • Loss of these customers to competitors.

  • Sales loss - Address factors that cause you to lose.

  • This strategy includes the risk of churn and sales loss. For example, if you have strong competition and a very poor Net Promoter Score (NPS), it is likely that you will see these trend poorly.

Increase market share

Increase your market share with your current product and Ideal Customer Persona (ICP).

  • Low-risk improvements - This includes aspects like experience innovation, where you improve the User Interface (UI) and User Experience (UX). For example, simplifying the number of process steps required to complete a task.

  • New differentiators - Developing features to stand out.

  • Remove barriers to expansion, such as capacity limitations with internal team processes.

New markets/products

There are three options, as shown in the Ansoff Matrix below:

Market development - You will change your Ideal Customer Profile (ICP). Reduce risk by finding new customers that are the same or very similar to existing ones. For example, being in a different country. This strategy can be significantly lower risk than expanding a product.

Product development:

  • New product - Reduce risk by releasing similar products to those you know. For example, if you have a product that monitors and improves data quality for universities, perhaps you could create another product for schools.

  • New product type - If you are responding to a new type of product, you can utilise your existing customer relationships to gain a competitive advantage. For example, if your industry is being disrupted by AI, you could create a similar product and directly sell it to your existing customers.

  • Extending your product - You may be extending your product to create a more end-to-end solution for customers. Here is an example using a university customer journey. You extend to cater for Alumni services, perhaps convincing ex-students to come back and study more.

  • Chargeable features - In this case, we have evaluated a university customer journey stage and determined that we can gain a competitive advantage by offering a comparison tool. Perhaps we could charge universities a small finder’s fee for successful recommendations.

Diversification - This can be a high-risk strategy. Use the market development and product development risk reduction strategies together.