The Art of Crafting a 15-Word Strategy Statement
In the January issue of HBR, Roger Martin sets out some rules for avoiding common mistakes in strategy making. As he writes in “The Big Lie of Strategic Planning”, the first rule is “keep the strategy statement simple.” Rather than a long, often vague document, the company’s strategy should summarize the chosen target customers and the value proposition in one page.
I couldn’t agree more. In my consulting work, I take this idea even further by asking my clients to summarize their strategy in less than 15 words. This statement must identify the target customer, the value proposition, and how the latter fits two requirements:
- Focus: What you want to offer to the target customer and what you don’t;
- Difference: Why your value proposition is divergent from competitive alternatives.
Sounds simple. But it’s more difficult than it seems. The 15-word constraint is a test that often reveals a profound lack of alignment among managers. In a 100-page strategy document you can state everything you want, which makes everyone in the organization feel comfortable. The trouble is that managers then interpret the 100 pages according to their view and aspiration of the company’s strategy. The result: one planning document, many different strategies.
All great business strategies can be summarized in a short headline. Easy to understand and communicate, they convey clarity internally and externally to the customer. Clarity is so important for good strategies that companies should make an effort to understand what it means and how to achieve it.
Neuroscience can help us in this endeavor. Clarity, as several studies demonstrate, depends a lot on the Contrast Principle. We understand something better when we see it in comparison with something else than in isolation.
To understand the power of comparison, let me retell this famous old advertising story. One day, an advertising executive and a colleague were having lunch in New York’s Central Park. On the way back, they saw a blind man begging for money. He had a cup for donations, and a sign read: “I am blind”. Passers-by ignored him. The executive stopped and offered to alter the wording on his sign to increase the donations. He took out a marker pen and scribbled four words. Passers-by started stopping, and soon the cash poured in. What did he add? The sign now read: “It is spring and I am blind.”
IKEA is a company that exemplifies the power of strategic clarity. Many people believe that its success is rooted in its business model; others point to the service experience. For me, IKEA’s success is mostly due to the clarity of its strategy. Most businesses try to build their market around what they offer. What’s intriguing about IKEA is that it consciously designed its value proposition and brand identity around contrasts: a set of negatives (things they do not offer) and a few positives (things they offer).
Initially, specialty furniture retailers thought that IKEA’s value proposition was absurd. It offered minimal variety. Stores were designed to propel customers through the labyrinth spaces without sales support. No delivery, no assembly. Not even the promise of durability. What IKEA did was to replace the warehouse atmosphere associated with most discount furniture retailers with a cheerful, innovative look and feel, wrapping its bare-bone offerings with an amusing set of attributes. It offered other items besides furniture (housewares, unique toys), and customers could drop children off a brightly designed, company-operated day care center.
IKEA’s value proposition is focused (clearly states what to do and not to do) and different (divergent compared to alternative offerings). For the consumer, IKEA has a clear positioning in their minds and is sharply contrasted with other value. This case and other great business strategies underscore how critical that is. Keeping to a 15-word limit can help you achieve that kind of clarity and avoid the confusion and misalignment so easily hidden in a 100-page document. Practice it in your next strategic workshop and see what happens.