For some businesses, the transition from the startup phase to well-oiled expansion machine with a long term vision can be overwhelming.
At that point in their growth, companies must begin focusing on strategic components like creating competitive advantage, while establishing longer term business growth and company development strategies. All, of course, with the limited time and resources that most of those businesses possess.
The good news is that developing those strategies isn’t incredibly difficult. Making sure they’re complete and executable, on the other hand, is a different challenge altogether.
The first step is to establish and follow an executable strategy map that lays out essential strategic components and ensures that each one is complete and well-aligned. Wikipedia has a good overview of strategy maps, while David Norton and Robert Kaplan also wrote a very good book on the topic.
At OpenView, we’ve been working with strategy maps for our portfolio companies for several years. Over time, we molded the concept and extended the idea of strategy maps into seven unique lenses.
The reasoning is simple. At the concept level, the ideas associated with strategy maps are intact, but we’ve found that a seven lens framework makes it much easier to design strategy and link it to operational execution. Quite simply, by using the lenses you can:
- Develop a more robust understanding of the current state of your company in the context of the market(s) in which it operates.
- Create a clearer understanding of what you need to change.
- Better develop the initiatives you need to execute to create that change.
- More obviously recognize the impact those initiatives are making, which will help management make adjustments to optimize execution.
So, without further ado, here is a basic description of each lens we use to help our portfolio companies understand their strategies and make them more complete and executable.
Lens 1: Market Participants
This lens showcases the view of a company’s target customer segments, the users and buyers in those segments, the people who influence those users and buyers, the marketing channels available to reach the users and buyers (and the sales channels they use), and the companies or products that compete for the attention and resources of other market participants.
By looking through the market participants lens, you can get a much clearer picture of the market’s current state and trends. From that, you gain a clearer idea of the goals that you might want to create, allowing you to develop initiatives to execute and realize them.
Lens 2: Company Touch-Points With the Market Participants
The touch-points your company has with market participants act as your operating levers for driving market change. Those touch-points include your core product user experience, plus all the touch-points drawn from professional services, customer service, marketing content and contacts, sales content and contacts, finance, business development, and any others.
Touch-points can drive sales and customer satisfaction, ultimately creating your brand in the market. If you want to drive market results, you probably need to focus on your touch-points.
Lens 3: Methodologies
Methodologies represent the processes, systems, and the information you use to drive market touch-points. For example, they may include:
- Your product design and development process
- The marketing process you use to drive your marketing messages through marketing channels
- Your sales, customer service, and billing and dunning processes
Creating and improving methodologies can enable you to develop new and better touch-points. Ultimately, considering all of your touch-points as a bundle can help you design, create, and execute a branding and positioning strategy into the market. It will provide consistency across all of your touch-points, targeting the right market participants and helping your brand resonate and develop with them.
Lens 4: People
In the end, the success of a company is created by its people. They drive the methodologies and create the touch-points with market participants. But they also drive the management systems that allow you to determine and execute the right focal points.
Having people with the right skill sets, motivation, and culture for the methodologies and touch-points you’re trying to create is crucial. In that sense, this is arguably the most critical lens. That said, the other lenses help inform the views you’ll gain from this one.
Lens 5: Management Systems
Management systems are the organizational processes and software systems that help you get the right people into the company who will do things well. Those management systems include:
- The company’s aspirations (mission, vision, values), organizational structure, meeting structure, compensation systems, and software systems (i.e. Intranet, collaboration, project management, team management, and recruiting systems).
- Human resource systems that help companies recruit, onboard, develop, motivate, advance, and separate people, along with approaches that help everyone within the organization focus on the activities that drive the business toward its goals.
- Reports that you can use to determine the organization’s goals and understand where it stands against them, helping identify future focal points.
Each of those management systems help everyone focus on the right things with limited friction and distraction.
Lens 6: Economic Model
Your economic model is the piece of the business that articulates how the activities (and their costs) and pricing create cash flow. It also reflects how those two things can drive your current and projected economic results. It’s a purely economic view of the world, removed from GAAP financials so that you can more clearly judge the economics of your business.
Typically, the key economic model components include your cost of customer acquisition, pricing model, gross profits from customers over time, and other costs relative to the size of your business. More advanced economic models might break down smaller models by segment or perform a deeper analysis of how certain activities drive the economic results of the business. But the better you understand your economic model, the better you’ll be at determining the other lenses you might focus on to improve its performance.
Lens 7: GAAP Financials
This one is relatively easy: your GAAP financials are essentially what your accountants say they are. It may be easier to manage your company to an economic model performance at first, but all larger companies are ultimately evaluated from a GAAP financial perspective. Therefore, it’s important to understand the view through that lens.
Are you looking through all of the lenses?
I find that most managers consider some combination of these lenses, handpicking the ones they think are most relevant to their strategy or operational execution.
But rather than focus on a subset of them, it’s important to consider all of the lenses together — even if briefly — for every strategy. That collective examination will help management teams ensure that their strategy is complete, executable, and stands the best chance for success.