The Strategy Wheel

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“Study the past if you would define the future.”– Confucius

It’s tough to survive and thrive in today’s world if you don’t have a way to stand out and differentiate yourself from the crowd.

A Strategy Wheel is a tool you can use for work and life to get clarity on how you create unique value for the world.

In a nutshell, it’s a technique to help you create a picture of your system of value creation.

At the center of the wheel is your purpose.  It’s why you or your business exist.

Surrounding the center, are all of the activities that support your purpose and create value.

In the book, The Strategist: Be the Leaders Your Business Needs, Cynthia A. Montgomery how a Strategy Wheel can help you build a better system for creating unique value for the world.

Every Strategy Wheel is a Unique a Picture of How You Will Win

Your Strategy Wheel should be a reflection of your purpose and your approach for unique value creation.  It’s a system view at a glance.  For example, in a business context, it helps show how marketing, supply chain, product development, distribution, sales, and customer service work together to create unique value for your specific customer, or who you serve.

Via The Strategist:

“The Strategy Wheel provides a picture of how you will win.  The purpose in the center says why you exist–what you do differently or better than others–and the unique configuration of activities and resources around the rim shows what will enable you to deliver on that promise.

Each system of value creation, and thus each strategy wheel, will be different, because every organization has its own purpose and unique set of activities that drive that purpose.  Even the headings around the rim will differ across firms–for example, while R&D will be important in one firm, in another it wouldn’t even appear on the wheel.”

Example Strategy Wheel for Brighton Collectibles, Inc.

You can use whatever names for the activities that makes sense for you or your business.

The idea is to capture the key ongoing activities that support your purpose, and to show unique or interesting aspects of each activity, as well as the unique value that each activity adds.

The real key here though is to keep the big picture or the balcony view.

Montgomery shares an example of a Strategy Wheel for Brighton Collectibles:

 

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Push the Envelope on What Your Business Could Be

Your Strategy Wheel helps you identify what winning would really take.

When you can easily see your value creation system at a glance, you can start to ask better questions.  For example, do your activities even align or support your purpose?

You can start to evaluate whether you are spending enough time in your strengths or too much time in your weaknesses.  You can start to think about better sourcing strategies and potentially outsourcing strategies.  You can consider what to do more of and what to do less of.

Via The Strategist:

“The point of this work isn’t about ‘checking boxes’ or ‘getting all the way around the wheel.’  It’s about spending time thinking about your business and challenging yourself to see what’s really there–and even more, envisioning what could be there.  Just penciling in what you do in finance, human resources, R&D, or any other function in a mechanical way isn’t likely to be helpful; identifying a bunch of plain-vanilla activities around a plain-vanilla purpose won’t leave you any better off than you are today.

Rather, when it works best, the process is a lot like putting together a jigsaw puzzle.  Each piece must work with the others, coming together to create a picture of what your business can be.  The real work and the real payoff come when you’re assertive, when you push the envelope and ask: What would winning really take?  How could this element do more for us? What could we do differently if we narrowed our focus to one type of target customer? Gradually, as you define and refine, you should begin to identify not just what you do better and worse than the other guy, but what aspects of your company–from your customer base to what you do for them–make you different, and truly give you an edge, or could do so.”

Check Your Assumptions

Is your system of value creation really linked to your purpose?  If you want to be more effective, more efficient, and create greater impact, you need to line things up so that you don’t fork your focus or diffuse your energy across activities that water down what you’re capable of.

Via The Strategist:

“You will likely have to make a number of assumptions in building your wheel.  Check them carefully!  People in all professions go astray because they’re operating on untested assumptions.  In strategy, these are often a recipe for disaster.  Be ruthless in challenging what you think you know.

It’s particularly easy to make this mistake when it comes to the linkage between your stated purpose and your system of value creation–is it really designed to do what you say, and is it working? Too often, I’ve seen executives claim to make a difference by offering customers not lower prices, but better-than-average goods.  They have everything lined up–except customers who share that view and are willing to pay a premium for their products or services.  Remember how Maurizio Gucci staked the company’s future on top-of-the-line products that customers stayed away from in droves/  The linkage simply wasn’t there.

To assess whether what you are doing is working, you need to look for the data and the facts, and not just rely on intuition.  What evidence do you have that you are the low-cost provider or the premium producer you say you are? Where, exactly, in the process do you add value? Can you support that view with facts–internal process measures of key performance drivers, and outcome measures like sales results, profit margins, market share, or return on investment?”

While this walkthrough of a Strategy Wheel was really geared toward a business example, you can just as easily apply it to your life.

For example, if you were to plot out a Strategy Wheel for your life, you could put your purpose in the center, and then identify all of the value creating activities that you do around it.   You might find some disconnects such as your work.

But more importantly, you might quickly find ways that you can better bridge work and life so that you can live your values and support your purpose.

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