Transcription
Foreign. Welcome to VNC Tech Group's strategy planning process courses. In this course, we'll take a brief overview of five of the most popular strategic frameworks and their basic role in strategic planning. We'll cover the framework from an industry perspective, as well as touch briefly on how it's used to make your strategy process easier with the VNC Strategy Designer platform. Let's get started.
Let's make sure we know what the reasons are for a framework in general. So, frameworks work within the strategic planning process as tools where you need to dig a bit deeper into identifying goals, objectives, and actions. They help you with that. As you get into the strategic planning process, you'll need strategic planning frameworks based on your findings to get the details you need. For example, as you apply the strategic planning process using our VNC Designer platform, you will likely start with a SWOT analysis framework, or by defining your vision and mission statements first with a Balanced Scorecard framework. Or, if you're applying a scenario-based strategic model, you may start with a SWOT analysis, but you could end up also implementing a PEST analysis framework to get a better overview of your current external scenarios. So, depending on your goals, you may want to apply several different frameworks throughout the strategic planning process. I realize selecting the right frameworks could be a daunting task, which is exactly why these courses will help you, as well as our VNC Designer platform. As we progress together through these courses, you will get a better and better idea on when to use and combine the right frameworks to satisfy your business needs.
Foreign. Briefly describing each framework, let's look at their role in the strategic planning process model. Again, all these frameworks and models are available as templates in the VNC Designer platform. So, let's take a look at this table on this chart. The column on the left lists our five frameworks that we support today. Again, we'll add more frameworks as we validate their quality, but these five are a great start. The row across the top are the five steps of our strategic planning model. Here at VNC, we will discuss this in more detail in later courses when we get into developing your own technology strategy for your company. The asterisks in each cell indicate the application strength of the framework for that strategy planning step. One asterisk is good, two is better, and three is great. Of course, none means it's not applicable. So, at a glance, you can see Balanced Scorecard has a nice offering for all the steps of a strategic planning process, and OKRs is possibly in second place, having some offerings in most of the steps of the process. While other frameworks like SWOT, PEST, and VRIO do very well in strategy proposition and hypothesis, with some offerings in diving into the details of strategy around goals and objectives. As I noted earlier, VNC reviewed all these frameworks in great detail and feel confident that they all offer incredible value to the strategic planning process. In fact, we selected these because they all offer proven ability to add business value from different points of view. For example, some are great at proposition and business value, while others are better at the details, goals, and cascading communication. Let's look at each framework at a very high level to get a better feel on how they contribute to the strategy planning process.
Foreign. Let's start with the Balanced Scorecard, or acronym BSC, which is one of the most popular frameworks in strategy planning execution. In fact, the VNC strategy planning model and our platform's primary framework is modeled around the BSC. BSC is basically a strategy map with four perspectives. Each perspective builds on each other, starting from the base financial perspective. The framework provides the logic we use in creating a strategy through these four perspectives. Let's look briefly at each perspective and how they build off each other. With the finance perspective, or sometimes referred to as the stakeholder's perspective if you're a non-profit, we need to define the financial outcomes we want to achieve. I like to ask the question and also answer the question: If we satisfy the needs of our customers, what outcomes will our stakeholders realize? Then, we have to define the needs of the customer that the organization needs to satisfy to achieve those financial or stakeholder outcomes. To achieve this, I like to ask and answer the question: To achieve our vision, how should the customer feel? For internal business process, we define the challenges that we need to solve internally to satisfy the needs of the customer. I like to ask and answer the question: How are we going to meet the challenges to satisfy customer needs and also hit our financial goals? For the learning and growth perspective, we focus the learning aspects of the organization and the outcomes we need to achieve to satisfy internal challenges and meet customer and financial needs. I like to ask and answer the question: How should our company learn and improve in order to achieve the vision? Once the framework is complete, it will help us in the next step of the process to move into creating a more detailed strategy by mapping goals, through defining cause and effect connections, aligning goals to metrics and performance indicators, and defining action plans. The key is key to a successful and actionable strategy. We'll learn that more later. As I said earlier, the Balanced Scorecard is one of the most popular frameworks for strategy planning and execution, and central to VNC's strategy planning model and our designer platform. The VNC designer platform supports this framework natively and its use throughout the entire strategy planning process. To dive deeper into the Balanced Scorecard, use the pros and cons and examples, I recommend you read and watch various articles and podcasts published with the community part of your membership. You can also find live peer-to-peer meetings and roundtables with your membership where this framework is often discussed with your peers and other experts.
Let's move on to the OKR, or Objectives and Key Results framework. OKR is an excellent tool to set up tangible goals and appraise achieved results. Where the OKR may slightly fall short in strategy hypothesis and details part of the process, as indicated in our prior comparison chart, it gains in the excellent cascading communication and execution of the strategy. An OKR best practice is to start with the top corporate objectives, which are then cascaded to the department or team OKRs to refine and get more detail. More on this later. In a typical OKR implementation, the objective is to qualitatively answer the question: What is to be accomplished? Questions like: What matters? Where are we now? Where do we want to go? How can we get there? What are the global and local objectives? What are the expected results from achievement of objectives? As you progress through a regular OKR, key results make the objectives more quantifiable, but it does not enforce actually quantifying the success factors. To have a full picture of why the objective was a success factor, we need to enforce leading factors and lagging results as KPIs within the key results. When starting with your OKR related discussions, teams likely did their best to come up with objectives that resonate with the company strategy. While the challenge of alignment between OKR objectives and strategy is clear, the OKR framework doesn't provide a mechanism to address this challenge. A good approach in this case would be to link objectives from OKRs to the objectives from the strategy map in the Scorecard. A strategy map in this case will work as a first lever filter for possible ideas. This is where automation software helps. For example, the VNC designer platform can visualize a company's strategic objectives on a strategy map, link the performance of the goal to the specific key results, and cascade OKRs, if needed, to other parts of the organization. You can get more details on the OKR analysis process by taking the OKR analysis course provided with this membership.
So, in summary, objectives are supported by quantitative key results in a typical OKR. To further enhance an OKR with an ability to quantify how the objective will be achieved, the OKR templates key results should support a mechanism to benchmark and monitor how to achieve the objective. Therefore, key results can be specific with part numbers, measurable, and time-bound, with both lagging and leading KPIs, like you see in the example contained in the VNC Strategy Designer platform OKR strategy map right here on this chart. The OKR tool, accessible with your VNC designer platform, can help you write OKRs and align them throughout the organization, and also track their progress. To dive deeper into OKR, use the pros and cons and examples, I highly recommend you read and watch the various articles and podcasts published with the community part of your membership. You can also find live peer-to-peer meetings and roundtables with your membership where this framework is often discussed with peers and experts.
Let's move on to the SWOT framework, which is the most well-known framework and really likely doesn't need an introduction at all. When we do a deeper dive on strategy planning model mapping and SWOT, you will see that the VNC designer platform uses SWOT and Balanced Scorecard directly with its strategy map. As you can see from the definition of SWOT on this slide, the whole idea is to find opportunities that can be maximized, while also understanding the negative factors that may hinder success. As we mentioned earlier, SWOT is great for designing business propositions or strategy hypothesis. We define this hypothesis using SWOT by converting and aligning the results from four factors: strengths, weaknesses, opportunities, and threats. First, you would identify the weaknesses that can be converted to a strength, then focus on converting threats into opportunities, and finally aligning strengths with opportunities. To dive deeper into SWOT, use the pros and cons and examples. I recommend you read and watch the various articles and podcasts that we publish with the community part of your membership. You can also find live peer-to-peer meetings and roundtables with your membership where this framework is very often discussed with peers and experts.
Let's use a couple of real VNC Tech Group examples of converting and aligning SWOT results because this is a really important topic and the power of a SWOT analysis. Let's start with aligning a couple of VNC strengths and opportunities. At VNC, when we did this, we have decades of experience successfully implementing digital transformations. This is called a strength. When we did our own SWOT analysis, we also have a very strong knowledge of highly automated systems, which really is another strength. Over the last several years, we discovered a major growing trend towards automated and smart platforms. This became an opportunity in our SWOT analysis. So, we matched these strengths with this opportunity and compiled ideas on providing our strategy services on a highly automated and smart platform. Hence, one of the many opportunities that eventually led to our VNC designer platform that you're using with your membership. It became a realization. Now, let's take another real example where we converted, here at VNC, a weakness to a strength. During our SWOT analysis, our customers, we discovered that our customers are spread out across the globe, and they really vary in size and complexity and leadership and so forth. We could not properly support face-to-face a growing number of clients with varying complexity needs with their strategy development needs. And because of this, competitors had an open door policy to take our clients where we could not scale. Hence, we lose new business. This is when we were purely a consulting company. This was another weakness. So, we converted these weaknesses to a strength by addressing our scaling problem through smarter and automated services, as well as on-demand world-class video training.
Okay, so this normally concludes a typical SWOT analysis for the in the traditional sense. You have your four blockers with internal strengths and weaknesses, as well as external opportunities and threats. You may have also added a few new strengths and opportunities through alignment and conversion steps we just discussed. Here at VNC, and with our strategic planning process on our designer platform, we don't consider this done yet. Since our model's central element is the strategy map, we want to get SWOT results closer to the strategy map. We take this extra step during the SWOT analysis by examining the SWOT results through the lens of a strategy map's four perspectives. This is the finance, the customer, internal business process, and learning and growth perspectives that you find in the Balanced Scorecard. So, now we get strengths, weaknesses, opportunities, and threats along the top of this chart here, aligned to each of the four perspectives that you see in your typical strategy map. And start mapping KPIs and initiatives and tasks. We also start aligning these SWOT results to actual strategic goals. The VNC Strategy Designer platform provides all the templates, strategy mapping automation, and more to accomplish all of this. The platform is user-friendly and takes you through the entire process and is fully automated. You can also participate in live peer-to-peer discussions, live roundtables, and even set up a one-on-one discussion with one of our senior leaders to get more insight in these mappings and more.
Let's move on to VRIO analysis. From the frameworks comparison chart we showed earlier, we know this framework is great at developing business proposition and strategy hypothesis. Basically, this is step two of our process. Like all frameworks, they're good at evaluating certain needs, and VRIO is no different. As shown in this diagram, the main focus is on corporate resources and capabilities, and they are examined through the lens of value, rarity, imitability, and organization factors. These four factors are markers for unique value and resources your business is characterized by, and their data analysis helps uncover what the long-term advantages are for your organization. Once you have a deep understanding of your unique value and how your resources help bring that to life, you could begin to strategize how your business can capitalize on this competitive advantage and create a sustainable plan for success. It's not uncommon to answer no to some of these questions. This is normal and requires you to see if you can convert limitations and or rethink the possibilities. Formulating hypothesis when you think about your company's unique value, it's important to emphasize the fact that sustainable success requires qualities that cannot be easily replicated or integrated by your competitors. Being able to maintain a competitive edge is critical to your success, and doing so requires a nuanced understanding of why you're important and unique as a company.
I'd like to elaborate on the main focus of VRIO before we move on here. As we said on the prior slide, the main focus area for VRIO analysis is the internal resources and capabilities of an organization. It suggests looking at the resources and capabilities and deciding which of them might lead to sustainable competitive advantage. Using VRIO to understand a sustainable advantage works great for an MBA college classroom full of textbook answers. In the real world, though, situations we are more interested in finding the resource capabilities that could help us to achieve that sustainable advantage, or if we are lucky to have one, understand how to maintain and improve it. So, for my own real-world perspective, the idea of VRIO is to find the resource capability that has the highest potential to become your sustainable advantage. So, getting a mix of yes and no's on that prior chart means that they'll likely result in a hypothesis that will align to strategic goals, actions, and KPIs, providing the path you need to successful execution. By doing this, it helps you align and focus your actionable strategy on developing these competitive advantages. Let's take a quick look at a few examples of a VRIO analysis from the VRIO strategy map shown here through the VNC designer platform. Looking at customer satisfaction, you can see we came up with two hypothesis or ideas. The first one is to make customer satisfaction even more valuable, for example, provide strategy automation tools to make strategy execution easier and repeatable for the customer. The second one is to make it harder to imitate by expanding subject matter experts' capabilities right away. You can map these hypothesis to strategic goals, including number one: Don't just consult, use automation, as well as network SMEs and expanding the community and overall marketplace. When examining the other examples in this chart, you will see similar patterns where we take the information from VRIO analysis and it created the hypothesis and mapped that to an eventual strategic goal.
We dive deeper into the VRIO framework and the process in other certification courses with your membership. Also, the VNC Strategy Designer platform provides all the templates, strategy mapping automation, and more to accomplish all of this. The platform's user-friendly and takes you through the entire process. You can also participate in peer-to-peer discussions, live roundtables, and even set up one-on-one discussions with one of our senior leaders to get more insight into these mappings and more.
Let's move on to PEST, or what we sometimes call PESTEL with an EL framework, where the focus is on external factors and their influences on business. This framework is great at developing your business proposition and strategy hypothesis. As shown in this standard PESTEL diagram, it includes analysis of several factors: political, economic, sociological, technological, environmental, and legal. Note that some PEST analysis performed don't use the last two concerning environmental and legal, but we do include these in this overview for better understanding. In our PESTEL deeper dive course, we provide examples of each of these factors. You would brainstorm with your team on what to use that best fits your company needs. Here's a snapshot of one of our PESTEL strategy maps from our VNC Strategy Designer platform. The strategy map has all seven factors along the left side of the map, along with the questions to ask. I highly suggest you start the PESTEL process with the first factor, political. Find the political trends that could potentially impact your business. Such trends examples for political may be government policies, political stability, bureaucracy and corruption, or a country's political climate and pending legislation, just to mention a few. Then brainstorm with your team all potential implications for each item. Note the relevant findings as your business proposition or strategic hypothesis in your PESTEL chart, and then move on to the next factor and do the same. Use the questions shown for each factor in this chart to get you started with identifying trends. Brainstorming with your team, notice that in the container boxes of our diagram, you will see areas where you can input your hypothesis, idea, or even a specific action, and more. It's important that you use this feature of the designer platform PESTEL strategy map, as you will use the strategic hypothesis derived and the overall strategy map in later steps of the process.
To dive deeper into Balanced Scorecard, use the pros and cons and examples. I recommend you read and watch the various articles and podcasts published with the community part of your membership. You can also find live peer-to-peer meetings and roundtables with your membership where this framework is often discussed with peers and experts.