Move guide
Face the real challenge
Your report suggested a move on at least one of these three practices:
- whether the strategy faces the real challenge;
- whether plans are checked against what happened;
- how trends and uncertainty are handled.
This move guide gets the leadership to agree, in plain words, the two or three issues that will decide the business's future. It sets targets from the business's own record, and takes a position on the outside forces that could reshape it.
1. When it applies
Use this move guide if your report placed any of these three practices in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| Whether it faces the real challenge | Lagging: "The strategy never names the problem it is solving; it opens with ambition and skips the situation." Basic: "The challenge is acknowledged in general terms but softened until it threatens nobody." |
Competent: "A written diagnosis names the two or three issues that actually determine the business's future." |
| Whether plans are checked against what happened | Lagging: "Every year's plan shows a dip then a climb, and nobody puts last year's plan beside what actually happened." Basic: "Missed targets are explained as one-offs each year, and the next plan starts from the same optimistic curve." |
Competent: "Last year's plan is put beside actual results at least once a year, and the gap is discussed without blame." |
| How trends and uncertainty are handled | Lagging: "The plan assumes next year looks like last year; surprises arrive as crises." Basic: "Trends get a slide in the planning pack and no consequences in the plan." |
Competent: "The two or three outside forces that could reshape the business, a trend, a policy shift or a dependency, are named, with a stated position on each." |
If all three already sit at the middle stage or higher, skip this move guide.
It works best after knowing your own numbers and your market. A diagnosis needs the facts under it.
2. What to do
Five steps. They take two to three weeks.
- Write down the two or three issues that will decide the business's future. Keep it to half a page, in words a sceptic would accept. The diagnosis worksheet does this.
- Add the momentum case: where the current course leads in five years if nothing changes. It is the cheapest strategy tool there is. The momentum calculator does the sums, and Table A below records them.
- Put the last three years' plans beside what actually happened, on one page. Discuss the gap without blame. The plan-track-record worksheet does this.
- Set next year's targets from that record, and stop drawing another hopeful curve.
- Name the outside forces that could reshape the business, such as a trend, a policy shift or a dependency. Write your position on each: bet, hedge, or watch with a trigger. The trends-uncertainty worksheet does this.
The three free worksheets do the recording:
- /worksheets/strategy/diagnosis for the issues that decide the future;
- /worksheets/strategy/plan-track-record for past plans beside what happened;
- /worksheets/strategy/trends-uncertainty for the outside forces and your position on each.
3. What to produce
One table, plus the three worksheets above.
Table A. The momentum case
| Year | Revenue on the current course | Profit on the current course | What the plan says | The gap |
|---|---|---|---|---|
| This year | ||||
| Year 2 | ||||
| Year 3 | ||||
| Year 4 | ||||
| Year 5 |
The current course means today's prices, costs, customers and trends, carried forward with nothing new done. The gap is what the strategy has to close.
4. A worked example
Illustrative. Written for this move guide. It describes no client.
A regional private hospital group runs three hospitals and two day-surgery centres.
The diagnosis.
- The first draft opened with "trusted", "leading" and "growing". The leadership cut it.
- The second named two issues. Its surgeons were ageing, with no successors in two specialties. And the health funds were shifting procedures to day surgery, where the group had little room.
The momentum case.
- On the current course, revenue held about level for three years, then fell as two specialties lost their surgeons.
- Profit fell faster, because the hospitals' fixed costs stayed.
The record.
- The last three plans had each forecast growth. Results came in below plan each year, by more each time.
- Next year's targets were set from that record.
One month on.
- 2 issues named in the diagnosis
- 3 of 3 past plans set beside results
- 4 outside forces, each with a position
- The diagnosis sat on half a page, and the board accepted it.
- Each of four outside forces had a position: bet, hedge or watch.
On a retake, all three practices could be answered at the middle stage.
What it looked like in our work
From our own work. Figures changed.
For an energy network business, our scenario work took the two uncertainties that mattered most. How much would new technology disrupt the industry? And would power still be generated centrally, or in homes and businesses?
| High disruption, Central generation: Smarter demandPrices that reflect cost, and automation, let customers shift their use. Less new network capacity is needed. | High disruption, Local generation: IntegratedRooftop solar and batteries spread widely. Demand responds to price signals the network sends. |
| Little disruption, Central generation: Business as usualThe network keeps carrying power from large, cleaner plants. Demand grows with electric cars and industry. | Little disruption, Local generation: Leaving the networkCustomers hold back at first. Then they move quickly to local and off-grid supply once the network's costs no longer pay. |
| World | Consumption growth a year (%) | Peak demand growth a year (%) | Price growth a year (%) |
|---|---|---|---|
| Business as usual | 1.8 | 1.2 | 2.4 |
| Smarter demand | 1.7 | 0.4 | 2.4 |
| Integrated | -0.6 | -0.8 | 1.5 |
| Leaving the network | 0.6 | 0.2 | 1.1 |
Each capital plan was then valued in every world.
| Plan | Capital a year ($m) | Business as usual ($bn) | Smarter demand ($bn) | Integrated ($bn) | Leaving the network ($bn) |
|---|---|---|---|---|---|
| 1 | 140 | 2.1 | 1.8 | 1.4 | 0.2 |
| 2 | 115 | 2.1 | 2.1 | 1.9 | 0.7 |
| 3 | 90 | 2.1 | 2.1 | 2.1 | 1.7 |
| 4 | 55 | 1.9 | 1.9 | 1.9 | 1.8 |
Plan 3 held up best overall. It was worth the most in three worlds, and close to the best in the fourth. The highest-spending plan was worth no more even if nothing changed, and far less if customers left.
- No regretsNeeded in every world. Not all defensive: some reshape the market.
- OptionsKeep or take hold of options that look worth having in most worlds.
- Big betsLarge, costly commitments that pay in only one or two worlds.
Sort the forces, then build the worlds
Illustrative. The steps are standard scenario planning.
Before you build scenarios, sort the outside forces by how much they matter and how uncertain they are. Then break the one you care about most into its drivers.
Build the scenarios on two forces from the top right. Build the top left into every scenario.
- Demand for the service
- Number of customers who could buy
- Businesses of the right size
- Share of them in the regions served
- Share that buy from an outside provider
- Spend per customer
- How much they use
- Price per use
- Number of customers who could buy
An illustrative driver tree. The market's growth is the product of its drivers, so each can be checked against its own source.
5. Effort and dependencies
- Chief executiveWrites the diagnosis with the leadership team.
- FinancePuts past plans beside results, and builds the momentum case.
- Leadership teamAgrees the issues and the position on each outside force.
What you need
- The last three years' plans and results.
- The numbers from knowing your own numbers and your market.
How long
- Two to three weeks.
What gets in the way. We have seen these in our own work:
- A diagnosis that opens with praise. A leisure business opened its strategy with "unique", "leading" and "proven". The hard parts appeared only in general terms: sites, capital and management depth.
- The same curve again. The same business explained two sites' shortfalls as temporary, and started its next plan from the same curve.
- A prize never sized. A food processor's earlier improvement ideas were never quantified. They stayed something people did beside their day jobs, with little progress.
6. How will you know it worked?
The test is whether the diagnosis shapes the choices that follow. Retake the check after the next planning round. Each of these should be true when you answer:
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| Whether it faces the real challenge | A written diagnosis names the two or three issues that will decide the business's future. | The diagnosis lists strengths and goals, with no issue named. |
| Whether plans are checked against what happened | Last year's plan sits beside actual results at least once a year, and the gap is discussed without blame. | The comparison was made once, and the next plan ignored it. |
| How trends and uncertainty are handled | The two or three outside forces that could reshape the business are named, with a stated position on each. | The forces are listed, with no position taken. |
The worked example is illustrative.
Think we've used your work without proper credit? Tell us and we'll fix it.