Key terms in strategy and what they mean
This glossary sets out to be a knowledge-base of latest thinking on strategy-related terms and concepts. Originally produced as a final section of The Strategy Manual, it is now on-going work-in-progress, where new sources, new insights and, occasionally, long-overdue realisations are added.
The ability to think or move quickly, easily or nimbly in order to respond at pace to either the need or opportunity to change. Being agile in relation to strategy means being ready and able to make innovative changes to the strategic plan in response to new circumstances.
AMP Model of Good KPIs
A model proposing that a good Key Performance Indicator (KPI) is one that is Actionable, Measurable and Purposeful.
Boundary Model of Strategy
This model assumes that strategy is about the management of transformational change over a long period of time (typically years). It proposes that an important early decision about any new strategy is what proportion of the organisation’s resources are to be allocated to strategic initiatives, as opposed to the maintenance of business-as-usual. The ‘boundary’ is the dividing line between the resources allocated to strategy and business-as-usual, respectively.
Binary Star Model of KPIs
In astronomy a binary star system is a pair of stars locked in orbit around each other. This concept is used to explain the interdependence of the two main types of strategic Key Performance Indicators (KPIs): Success-Defining KPIs and Critical-to-Success KPIs.
A best-practice approach to creative thinking, informed by research. Creativity is most effective and most valuable when constrained to the right extent; too tightly constrained and creativity is stifled, too few constraints and creativity is too unfocused and, usually, not relevant enough to the challenge that the creativity is trying to address.
A set of ideas contending to become the new strategy. If the mediated assessment protocol (MAP) is to be used to decide on the new strategy, it requires more than one candidate strategy to be compared.
Cascade Model of Goal Prioritisation
Cascade Model of KPIs
Proposes that wherever you have a strategy map, you can cascade Key Performance Indicators (KPIs) over that map, thereby revealing the logical connection between the individual KPIs. A well-constructed KPI cascade will ensure that achieving all of the KPIs for a given set of sub-goals leads to the achievement of the KPI for their parent goal.
The people, across your organisation, who make the changes happen that are necessary for strategic success.
Often thought of as simply selecting the best or the correct idea produced during divergent thinking. This, however, is an over-simplification. Part of convergent thinking, as the name suggests, is the bringing together, the combining, the hybridisation or the synthesis of multiple individual ideas – this is creative convergence and is much more than simply idea-selection.
One of two types of strategic Key Performance Indicator (KPI) (the other being success-defining KPIs). Critical-to-success KPIs define the target performance thresholds for all goals in a strategy map that are critical to the success of the entire strategy. They are, therefore, a lot more numerous than success-defining KPIs.
The ideas, customs, attitudes and social behaviour of particular people or society (see also Organisational culture).
From the word diverge, meaning to move apart, divergent thinking is the ability to think of lots of ideas. It is one of the two stages in creative thinking, the other being convergent thinking.
How you make good use of resources. Efficiency can be defined as ‘doing the thing right’.
Enforcement principle of governance
One of two principles shaping the working governance of strategy, the other being the engagement principle of governance. The enforcement principle recognises that rules and formalities need to be imposed, complied with and enforced, as part of the management of strategy. Mechanisms of enforcement include organisation design, the line management relations inherent in that design, policies and standards and managerial decisions about the allocation of budget.
Engagement and commitment
Active interest in, and a willingness to commit to strategy, brought about by high levels of consultation, influence and autonomy being afforded to individuals and teams across your organisation. (See also Working governance of strategy).
Engagement principle of governance
One of two principles shaping the working governance of strategy, the other being the enforcement principle of governance. The engagement principle recognises that for strategy to succeed, individuals and teams across the organisation need to co-create, engage with and commit to strategic goals, and a set of norms and conventions for pursuing them.
Executive governance of strategy
Ensures the board and senior leadership are working effectively together towards strategy success. This requires the board and senior leadership to work together to serve the best interests of the organisation. (See also Governance).
Formalisation of authority
A systematic approach to working governance employing organisation design, RACIs (definitions of who is Responsible, Accountable, Consulted or Informed about a decision-making process), policies and standards, budget distribution and performance measurement against defined targets. The formalisation of authority is how the enforcement principle of strategy governance is applied. (See also Working governance of strategy).
A convergent thinking process designed to select, refine and combine the creative ideas generated for a new strategy (typically by frame-stretching). (See also Framing).
A technique used in the creative loop of the strategy development process. It stimulates the divergent thinking component of creativity by frame-stretching and then the convergent thinking component of creativity by frame-setting.
A divergent thinking process designed to come up with new ideas about what could potentially be included in the new strategy. The creative thinking about new strategy ideas is prompted by a variety of models (e.g. SWOT analysis or Value Proposition Design) that are placed at the centre of the frame to stretch the imagination into new ways of thinking about strategy. Typically followed by frame-setting. (see also Framing).
Goal Adoption Support Model
A model showing the eight ways that each strategic goal can be supported in order to ensure that strategy is effectively adopted across your organisation: Authority; Policies and standards; Resources; Goal ownership; Goal connections; Strategic purpose; Meaningful progress; Performance targets.
An individual to whom a goal (in the context of strategy, typically a strategic goal) has been delegated.
The means by which your organisation: i) structures and delineates authority, and thereby defines strategic roles; ii) sets goals (e.g. strategy) and the rules by which these goals can be pursued (e.g. policies, compliance) and iii) establishes reporting and enforcement mechanisms. (See also Strategy governance; Executive governance of strategy; Working governance of strategy).
Hallmarks of Good Strategy Model
Proposes there are five hallmarks of good strategy: strategy is about change; strategy is about choice; strategy is about coherence; strategy is about challenge; strategy is about cascade. These hallmarks provide a way of checking whether your draft strategy is a ‘good’ strategy prior to launch.
‘H’ Model of Strategy Adoption
Proposes that, if strategy is to be adopted effectively across an organisation, senior leadership needs to secure the engagement and commitment of individuals all the way through to front-line teams. The ‘H’ Model (as depicted in ‘The Strategy Manual‘) illustrates how this is enabled by adoption conversations, that ensure front-line teams understand the intentions and aspirations of the new strategy and senior leaders understand the front-line context in which strategic change must take place.
Hourglass Model of Strategy Governance
Illustrates (as depicted in ‘The Strategy Manual‘) the relationship between executive governance of strategy and working governance of strategy and how formalisation of authority needs to work together with engagement and commitment within the working governance of strategy.
House of Strategy Model
Provides the foundation, walls and roof within which your new strategy is going to live. It shows graphically how vision, mission, values and strategy come together for your organisation. It can be used to audit an existing, or create new, vision, mission, values and strategy.
Iceberg principle of strategy scoping
Uses the metaphor of an iceberg, most of which is invisible under the surface of the sea, to explain that strategy scoping needs to acknowledge that most of the forthcoming strategy cannot possibly be visible during strategy scoping (as depicted in ‘The Strategy Manual‘). The part that is visible, however, can, and indeed should, be described as meaningfully as possible.
Signals showing what type of organisation you are, what you stand for and what you aspire to, such as your vision, mission, values, strategy and brand.
A visual representation of the rule of thumb for innovation management first proposed by Sergey Brin of Google, suggesting 70% of resources are spent on maintaining business-as-usual, 20% on refining and augmenting the way you do business-as-usual and 10% re-inventing how you will do business-as-usual in months or years to come.
Illustrates how good investment decisions set out to balance the different risk and return profiles of different types of investments. The pyramid shape reflects typical investment advice to keep the majority of your investment assets in low risk, low potential return investments, and a minority in high risk, high potential return investments.
Key Performance Indicator (KPI)
A critical measure of progress towards an intended outcome (see also Strategic Key Performance Indicator).
A depiction of how a Key Performance Indicator (KPI) is expected to change over time and hence how interim targets over the course of the strategy need to be set.
Lagging and leading indicators
Two different types of Key Performance Indicator (KPI). A lagging indicator is a measure of output or impact; usually the impact you seek to bring about (e.g. did your strategy result in the increased revenue you sought?). Such measures of impact commonly take some time to take effect and be measurable – hence ‘lagging’. A leading indicator is a measure of input (e.g. marketing expenditure) that often causes the impact we seek to bring about and is available quickly – hence ‘leading’.
Mediated Assessment Protocol (MAP)
A structured process for committing to a new strategy late in the strategy development process. It involves having more than one candidate strategy to decide between, defining how they will be assessed in advance, having the assessment done independently by multiple people and making the final evaluation after all the mediating assessments are complete.
One of the identity marks for your organisation (vision, mission, values and strategy). Mission is a statement of the core purpose and focus of your organisation. It provides a sense of identity for employees, customers, suppliers etc. It is about NOW! Why do you exist, right now?
The creation of roles, processes and structures to enable an organisation to achieve its objectives. An important output is organisational structure, which defines the line management relationships between individuals across the organisation.
A measure of progress towards an intended outcome.
A graphical representation of your products and your competitor’s products showing how they compare on two axes of a scatter-graph: price and some measure of the value delivered to customers.
Prioritising Risk for Strategy Model (PRiSM)
A systematic and structured way for scoring risks and then calculating a relative risk priority number so that different risks can be compared and decisions taken on which to take action on. PRiSM is adapted from the well-established risk prioritisation tool in engineering called Failure Modes and Effects Analysis (FMEA).
Pyramid Model of Strategy Adaptation
A graphical depiction of the three activities needed for strategy adaptation (sense-making, decision-making and change-making) as well as the three underlying capabilities needed to make these activities effective (surveillance capability, commitment capability and responsiveness capability).
A means of defining working relationships in terms of who is Responsible, Accountable, Consulted and Informed.
A repeating pattern-within-a-pattern. It occurs in biology (e.g. trees branching repeatedly with ever-smaller and smaller branches) in mathematics and computer science. Russian dolls that nest inside one another are a physical example of recursion. The concept of recursion applies to strategy mapping where the method of one goal is the purpose of the goal below it.
Acronym for Software as a Service, describing a business model where software applications are developed and hosted by the business and licensed to customers on a subscription basis.
SaNity Check Model
Checks both the sufficiency and necessity of goals in a strategy map. Once the entire strategy map has been checked for the sufficiency and necessity of all of its goals, the strategy map is considered to be validated.
Separation Model of Strategy
Proposes that strategy and strategic planning need to be forced apart so they can serve their different purposes within the organisation. Whilst strategy provides a compelling vision of the future, strategic planning devises the transformational change programme to get there. Whilst strategy is all about destination and path, strategic planning is all about people, priorities, resources and deadlines. Perhaps most critically, strategy doesn’t change, but strategic plans can, and usually do, change.
Is part of strategy scoping and reviews the current situation of your organisation in preparation for strategy development. The House of Strategy Model can be useful for situation analysis.
Six Elements of Strategy
Six different things strategy is claimed to be: analysis, choice, positioning, design, storytelling and commitment. These elements are used to synthesise a coherent view of what strategy is.
Strategic Key Performance Indicator
A critical measure of progress towards the change specified in a strategy.
A transformational change programme, initially designed to achieve strategic success and then adapted to cope with changing circumstances for the rest of the strategy lifespan.
A process that translates high-level, organisation-wide strategic goals into the actionable goals that front-line individuals and teams can achieve, and identifies priorities, timescales and targets for strategic success. The outcome from strategic planning is a completed strategic plan.
Strategic Risk Adaptation Plan
A way of analysing and describing how you could adapt to the uncertainties posed by strategic risks. The strategic risk adaptation plan is derived from the pyramid model of strategy adaptation.
Strategic Risk Model
Illustrates how to recognise the risks standing in the way of strategy success, understand the nature of the underlying uncertainty, and decide how to mitigate any harm or exploit any opportunity arising from that uncertainty.
Strategic Risk Register
A way of analysing and describing strategic risks, to identify the underlying ‘uncertainty’ that a risk introduces and then explore the potential harm and exploitable opportunities available as a result of that uncertainty. The strategic risk register is derived from the Strategic Risk Model.
A state (identified by success-defining KPIs) aspired to and moved towards throughout the strategy lifespan.
Strategy acceptance criteria
(A term used during strategy production): one or more factors used to evaluate whether the strategy under development is good enough to be signed-off and launched.
One of the three stages in the strategy lifecycle (Produce, Adopt, Adapt), during which a strategic plan is adapted to cope with changing circumstances. Strategy adaptation focuses on both strategic resilience and strategic agility.
Strategy adoption gap
The challenge of turning the intentions of strategy, originally owned by senior leadership, into actions driven by front-line teams that lead to strategic success.
The moment when the commitment to produce a new strategy becomes official, at the end of strategy scoping and prior to the start of strategy development. The strategy announcement is usually marked by some sort of announcement event.
Part of the strategy scoping process to identify what you, as an organisation or as leaders of that organisation aspire to in the forthcoming new strategy.
The process of elaboration and aggregation by which strategic choices at the top of the cascade set the context for the choices below, and choices at the bottom influence and refine the strategic choices above.
Strategy Design Model
A model comprising eight interlinked elements that good strategies should be designed to feature: destination, methods, alignment, innovation, priority, performance, adaptability and adoption.
The desired future state for your organisation, identified in your completed strategy and defined by your success-defining Key Performance Indicators (KPIs).
How you analyse, synthesise, imagine and commit to a new strategy, and how you write it and prepare it for dissemination throughout the organisation, following strategy launch.
Strategy development log
Documentation that logs each key step in your thinking and decision-making throughout strategy development.
The means by which your organisation exercises authority to make a concentrated and coordinated effort to achieve strategic success. (See also Governance).
Strategy governance charter
(A term used during strategy production): a characterisation of the likely ambitions for the strategy under development, as far as can be seen at the present moment in time.
The moment when the strategy officially begins, usually heralded by some launch event to publicise the new strategy and its aspirations. The strategy launch is also a key moment marking the start of strategy adoption.
Strategy Lifecycle Model
The model used in ‘The Strategy Manual‘ depicting the strategy lifecycle as having three stages: produce, adopt and adapt.
An interconnected cascade of goals that link actions to their purpose or purposes. It systematically connects the strategic aspirations of senior leadership to the tactical actions of front-line teams, and can facilitate strategic innovation, strategy adoption and strategic planning.
A process of connecting goals together using why-how logic to link methods and purposes in a validated map. It can be used to systematically connect the strategic aspirations of senior leadership to the tactical actions of front-line teams, and can facilitate strategic innovation, strategy adoption and strategic planning.
One of the three stages in the strategy lifecycle (Produce, Adopt, Adapt), during which a new strategy is produced, and, at the end of which, the new strategy is launched. This stage is comprised of two processes: strategy scoping and strategy development.
Strategy Review Model
A representation (as depicted in ‘The Strategy Manual‘) of the summative review process that happens at the end of the strategy lifespan (or earlier, if it is decided to terminate the strategy early and develop a new one). This review should include look-back (what happened? why did it happen? how could it have worked better?) and look-ahead components (what lessons from this strategy could make the next one better?).
One of the processes within the strategy production stage of the strategy lifecycle. Strategy scoping defines what you can see of the new strategy from where you are standing right now.
Strategy scoping log
Documentation that logs each key step in your thinking and decision-making throughout strategy scoping.
Strategy success criteria
One or more factors that will be used to judge the ultimate success of a strategy.
A (usually graphical) depiction of key events, processes and outcomes across the lifespan of a strategy.
One loop of the triple-loop model of strategy development, which sets out to check if the strategy is fit-for-purpose by evaluating it against 1. the strategy acceptance criteria devised during strategy scoping and 2. the hallmarks of good strategy. Strategy validation also refers to the process of checking the final strategy map that underpins the strategic plan, using the SaNity check model.
Sets the threshold at which your strategy will ultimately be judged to have succeeded or failed.
Triple-Loop Model of Strategy Development
A visual representation (as depicted in ‘The Strategy Manual‘) of the three activities that occur iteratively during strategy development: create, inform and validate.
Triple-Loop Model of Strategy Scoping
A visual representation (as depicted in ‘The Strategy Manual‘) of the three activities that occur iteratively during strategy scoping: horizon scoping, development scoping and acceptance scoping.
Represents four stages in a continuum of decreasing understanding and increasing unpredictability about the future (as depicted in ‘The Strategy Manual‘, developed from the previously published VUCA model). Volatility is where you know what will happen but not when, nor for how long. Ambiguity is where there are a few possibilities. Complexity is where there are lots of possibilities. Uncertainty is where anything is possible. Representing unpredictability in this way prescribes what to do in response; e.g. in volatile situations, have better sensors, whereas in complex situations, get more or better knowledge and expertise.
Who benefits and how. In the Value Model of Strategy, value refers to a value exchange between you and the world.
Value Model of Strategy
A model representing strategy in terms of the three key defining features of strategic action: value, effectiveness and efficiency.
A picture of the potential of your organisation. An audacious dream of your future. Intended to inform, inspire and energise everyone to realise that shared vision. Vision is the counterpoint to mission – it is not where you are now, but where you want to be.
Working governance of strategy
Ensures that strategy is effectively adopted across the organisation. This requires senior leadership to ensure that people and teams across the entire organisation know about the strategy, are committed to it and empowered to contribute to its success. Working governance encompasses the formalisation of authority and engagement and commitment. (See also Governance).
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Author of 'The Strategy Manual', Goal Atlas founder and Director, Mike Baxter, is a renowned strategy expert, keynote speaker and thought leader. He publishes regular articles on all aspects of strategy and strategic planning and frequently shares his ideas and expertise via the Strategy Distilled newsletter, LinkedIn, Twitter and other invited presentations.
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