A strategy is a long-term plan that provides direction and goals for the organization. And a good strategy is simple, even though phases of strategic work can be complex. Read here how you can work with strategy.

By Pia Fuglsang Bach, Community Manager at CfL, updated June 2024.

Strategic plans are often spoken of with reverence because strategic work is among the highest tasks of top management. That may be true to some extent, but as our organizations change and decision-making power is delegated, more levels become involved in the strategic work.

Let us therefore demystify it and clarify the terminology:

Strategy: A long-term plan that creates direction and goals for the organization.

In other words: A strategy is a well-considered common platform that guides a person, an organization, or a company. A strategy enables you to make the right decisions – even decisions that you did not necessarily think of when developing the strategy.

Although it may sound complicated, a good strategy is simple. Phases of strategic work can be complex because everything is at stake, but in the end, you must prioritize and choose where you want to go. A golden rule is to keep working on the strategy until it is simple again.

The article continues below the box, where you can read about the 5 phases of strategy work.

Faith Without Higher Powers

“For the person who does not know which port they are steering toward, no wind is favorable.”

This quote — supposedly by the Roman writer and rhetorician Seneca (born 54 BC) — beautifully captures why we need to work with strategy.

If we don’t know where we’re heading, it’s difficult to make the right decisions. Having a clear picture of where we want to be in three to five years requires careful thought — also in order to communicate it simply.

A strategy should reflect where we are going. It should reflect where we believe our customers, markets, and society as a whole are heading. Based on that understanding, we choose how to position ourselves in the near future.

Faith here is not based on higher powers, but on the knowledge available at any given time. It’s based on analysis of the company’s financial capacity and insights into how customers, clients, politicians, or other stakeholders behave. With that knowledge, we offer our best estimate of the future — what could also be called a scenario.

A strategy is a temporary commitment. We know unforeseen events like Brexit, COVID-19, or war can arise, but if we try to account for every possible scenario, things become too complex — and we’ll never be done.

We must base our strategy on the assumptions we can see and then decide where we want to go. From there, we adjust and adapt along the way.

When CfL advises an executive team on strategy, the process typically unfolds in five phases.

Phase 1: The purpose

First, we help the company clarify the purpose of the strategy. Why this particular strategy? What is it that you want to achieve with it?

There can be different purposes. It might be that you need to redefine yourselves. It could be that a new top leader has arrived, that you are facing a merger or a crisis, or that a new strategy is needed to move the organization forward.

Once the purpose is in place, you gradually begin to determine which analyses are needed – an iterative process. If a later analysis phase, for example, shows that a market is non-existent or is entirely different from what was expected, you must go back in the process.

Phase 2: Process design

Once you have agreed on the purpose of the strategy – and why this time it is not just like last time – you must develop a process for the next phase and decide whether to pursue a top-down or bottom-up design.

Sometimes it is wise for the process to be controlled from the top, because major changes are required. Other times, it is sensible to involve many people.

A strategy should not be confused with an action plan. What characterizes a strategy is that you do not necessarily know how the various decisions will be implemented. You do not have all the answers, so you must involve the organization. It should help determine what will happen in the first half of the year, the next half, and so on.

Greater understanding and involvement make it much easier to execute the strategy. Once you have all agreed on the direction, there is less need for further debate, and the organization will follow.

Phase 3: The analysis phase

Here CfL asks: Which analyses are critically important for the company to carry out? You can analyze endlessly, so perhaps you should first map out what is essential on the company’s cost and revenue side.

What is it that is truly important? Where are your organizational bottlenecks? Where do you see potential but lack production capacity or competencies? What is needed to optimize in relation to these scarce resources? And it is not only about investments.

At CfL, we see that many organizations struggle with the notion that money is the scarce factor, but in reality, the problem often lies elsewhere. It could be about new trends, new technology, politics, or globalization suddenly moving in the opposite direction. Factors of that nature can be much more important than an organization or department receiving 50 million for a given strategic project.

Phase 4: The decision phase

Based on the analyses and assumptions about what will happen, you then finally define your strategy.

After that, you must begin detailed action planning to continuously move closer to the strategy – without assuming you can follow a straight line, because you cannot.

Phase 5: The execution phase

Once the decision is made, you must begin to execute the strategy. Some aspects may proceed quickly, while others will take a long time.

A new strategy often entails organizational changes, and if, for example, a director in a group has their powers or area curtailed, that person might choose to leave. This may involve huge potential, but also great risks, and therefore it might be necessary to delay that part.

That must depend on a specific assessment in the given situation. It is always up for discussion when the timing is right.

Remember the company culture

When it comes to execution, CfL draws on the international management expert Stephen Bungay.

His thinking is that you first set the direction – develop the strategy – and then break it down into what it means at the director level, the line level, the team leader level, etc. How does the strategy look from the director’s chair or from the perspective of a middle manager?

It is about establishing the right communication, which can be summed up as ensuring that everyone – regardless of level – comes to work with purpose and does what is right. Referring to Stephen Bungay, he says that even if you receive an incorrect message, you must do what is right. He calls this "independent thinking obedience."

It is about working within a culture where it is acceptable to give, take, and demand feedback. The fact that you dare to say what you see – and also dare to say no – is extremely important.

It is about culture, and it applies to both public and private organizations. Strategy and execution go hand in hand, and so do execution and culture.

Peter Drucker, the founder of modern management, is often quoted as saying, "Culture eats strategy for breakfast." And that is certainly not taken out of context.