While there are dozens of strategy development tools you can use as part of the strategic planning process, the following five strategy development tools have proved remarkably successful in helping a company develop strategy:
Let us take a closer look at each one in turn.
A mission statement will define the purpose of a company and why it exists. It is an internal way to measure the success of a business. It is designed to help the leaders of a company and the stockholders/stakeholders measure success. Although a vision statement may sound like a synonym, it is slightly different. This statement focuses on what the organization hopes to achieve. It is more about subjective criteria related to quality rather than objective criteria related to quantity. It guides employees and builds trust with customers. For in-depth information on mission and mission, download our white papers, Mission Statements: A How To and The Strategic Importance of Vision Statements.
As far back as the 1960s, Albert S. Humphrey invented the SWOT Analysis. It was useful then, and it remains useful now. In a leadership meeting, it can be used to either jump start the conversation or be used as a strategic planning tool in its own right. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. By analyzing these four criteria, a company can get a better understanding of how it interfaces with the marketplace. For this reason, it is sometimes referred to as an Internal-External Analysis tool, a SWOT Matrix, or an IE Matrix. Strengths and Weaknesses are internal and within the company’s control. Opportunities and Threats are external and beyond the company’s control. For more information on SWOTs, check out our tutorial, What is a SWOT Analysis?
Another acronym is PESTEL. The letters stand for Political, Economic, Social, Technological, Environmental, and Legal/Regulatory. Often used in conjunction with the SWOT Analysis, the PESTEL Analysis helps executives deliberate on external factors (the six categories) that could present external opportunities or threats.
As the name implies, this is a tool for measuring how a business stacks up against competitors in the same industry. Like the SWOT, it measures strengths and weaknesses. It helps explore a way to create a unique position in the marketplace. In business, meaningful differentiation can mean the difference between mediocrity and soaring success.
Finally, scenario planning is a tool for forecasting. It is based on observing current trends and making projections. By extrapolating, a business may be able to prevent disaster or seize an untapped market opportunity.
Applying one or more of these strategy development tools will improve efficiency, reduce waste, and increase asset-building. In fact, these tools are powerful enough to help a struggling business thrive and a successful business move to a new level.