Strategy Diamond (The Five Major Elements of Strategy)

“Change is not a destination, just as hope is not a strategy.” — Rudy Giuliani

You can hope for the best, or you can focus on effective strategies to improve your business or your life.  A Strategy Diamond is a crisp way to analyze, visualize, summarize, and share your strategy for your product or your business.

Donald Hambrick and James Fredrickson created the Strategy Diamond as a way to show what the actual bits and pieces of a strategy are and how they fit together.

Strategy is about making important choices, and the real power of a Strategy Diamond is that it integrates important choices into a bigger picture, instead of as a piecemeal approach.

We’ve used strategy diamonds successfully on our Microsoft patterns & practices team to think through strategy.  Simply by walking the diamond and asking and answering the tough questions, we shaped a better strategy.

The beauty of a Strategy Diamond is that you can apply it whether you’re a solopreneur, a corporate citizen, or just want to get a new lens on life for how to survive and thrive in today’s world.

The Five Major Elements of Strategy

The five key parts of a strategy are: arenas, vehicles, differentiation, staging, and economic value.

By answering key questions in each area, you paint a picture of your strategy with increasing clarity.

Arenas – “Where will we be active and with how much emphasis?”:

• Which core technologies?
• Which geographic areas?
• Which market segments?
• Which product categories?
• Which value-creation stages?

Vehicles – “How will we get there?”

• Acquisitions?
• Joint ventures?
• Internal development?
• Licensing/franchising?

Differentiation – “How will we win?”

• Customization?
• Image?
• Price?
• Product reliability?

Staging – “What will be our speed and sequence of moves?”

• Speed of expansion?
• Speed of initiatives?
• Economic Logic

Economic Logic- “How will we obtain our returns?”

• Lowest costs through scale advantages?
• Lowest costs through scope and replication advantages?
• Premium prices due to unmatchable service?
• Premium prices due to proprietary product features?

For more information on designing effective strategies and Strategy Diamonds, see the presentation, What is Strategy, by Marc Sniukas.

I think a Strategy Diamond dovetails nicely with a Future Picture, which is a technique the military uses for painting and communicating a clear picture of the future.

It’s a powerful technique to get clarity on your vision.

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