8 steps to audit your strategy
Few days ago we published an infographic regarding the reason for auditing strategy based on different changes in business (full infographic here). Today, we learn more about the methodology and the ways how to audit your own business strategy. Before that, let's agree on two issues:
Auditing strategy helps us to figure out two things:
A) Is the company on the right track?
B) Are all sections and departments aligned with the big picture and organizational strategy?
To start, we can follow these steps:
1. Objectives. Organizational objectives must be reviewed from time to time. Businesses are happening in a very alive atmosphere and the speed of changes is huge. Therefore, it is possible that we would decide to revise our objectives based on a new situation.
2. In case our objectives are changed or modified then we need to re-study KPIs and targets accordingly. Specifically, when it comes to external factors and changes.
3. VOC - Voice of Customer. Basic questions we should have in mind are "Are our customers satisfied?' and 'What do they really want?' The next level is going beyond these questions and thinking about what will they need in the future. Is there any way how to predict it? Is there any factor measuring their needs in future? Can we create that need by innovating approach?
In our previous article earlier this month we wrote about Mothercare and their problems, which led to closing 79 stores across UK (read the full article). On another hand, similar retailer, Primark is opening 19 new shops due to high demand and profit (click here to know more).
So how come one brand is closing and another one is in high demand?
The difference is in listening to the customer!
People, specifically in the UK are not a fan of Mothercare anymore. They think that they can find the same products cheaper while Primark is still growing because they are giving people what they need - acceptable quality for competitive price.
Based on this example, check if your KPIs and objectives are brining enough news about your customers. It is not only about quality satisfaction. It is about sales process, sales technology, understanding changes and predicting and creating needs.
4. VOP - Voice of Process. Simply, it's about controlling waste by Lean and six sigma techniques. Measuring internal processes to minimize waste is critical for any business.
5. VOE - Voice of Employee. Are they happy? Is their happiness enough? Great companies are making people happy and helping them to grow. If we wish to be ahead of our customers' needs, we should develop our capabilities.
Capable organizations are the ones whose people are very well developed by training and freedom of work to try and experience new ways and also these organizations have well-designed processes to find problems and solve them in a fast and flexible way.
6. VOB - Voice of Business. Are you financially doing well? Is your CFO happy with the cash-flow system and financial health situation? How much risk can you take? How is the financial ROI going on? Are you only focused on short-term profit or you consider long-term investments too?
7. VOR - Voice of Risk. We all know that "No risk, no gain" but we also know that we must determine risk in our organization. Find out our risk appetite and also the threshold to compare them and find the optimized investment.
8. ESG - Environmental, Social and Governance. We already spoke about the importance of ESG. (read full article here). Companies that don't care about ESG will lose their business sooner or later. Employees, investors, and society care a lot about these factors. Nowadays, businesses are not set only based on their financial situation, profit and loss bars and their ethical approach matters a lot.
All the above solutions may take time but as long as we are not sure that our strategies and actions are aligned, we cannot guarantee the success.