Themes set a 2-5 year picture of how the business will look and organize strategy execution. They advance your Positioning and are powerful organizing ideas for medium and short term planning and execution. These ideas create focus when considering what should be your most important next actions. They establish priority supporting Initiatives & processes, policies, Rocks, Goals, Measures, and roles.
Themes are broader than plans or programs in that they offer guidance about what is needed without limiting possible plans of action or timeframes. They are destination statements describing with details what the business looks like at some future date from a variety of perspectives.
Since it is difficult to envision a clear future much further out than about three years, use two to five years as your timeframe to create destination statements describing your major next achievements. Make these challenging and motivational, but within the realm of possible outcomes.
Destination statements come from assessing how you can best use your business’ unique talents and capabilities to win in the business’ Context.
Academics have spent more time and effort describing ways to evaluate Context than perhaps any other part of strategy. You can use techniques like SW-T analysis, competitive positioning, 5 forces analysis, customer segmentation, value chain analysis, adjacent markets, best practices, and internal gap analysis as some of the many ways to understand Context for destination statements that lead to Theme ideas. All these can add understanding, but the are difficult to evaluate and prioritize. The truth is, you don’t need any of theses.
The best way get focus on important Context topics is to talk to customers, employees, partners. Brainstorm issues, ideas and insights about what could affect momentum in achieving the vision with your team while reflecting on these conversations.
You should break Context into its two pieces: First, Context is impacted by external factors that are trends in the business environment. These trends consider the topics and sources listed below; most notably, the current status and changes in Customer Preferences, Competition, and Evolution of the Industry.
Second is how you respond to these with your internal abilities and unique capabilities. It helps to consider a structure for these like the balanced score card model that considers financial results that are delivered by the customer value you create and internal business processes that deliver them. They are enabled by core capabilities that allow for learning and growth.
The most important ideas from Context should inform your Destination Statements. The topics for which you include destination statements can come from any idea that can most impact success in delivering your Positioning. Borrow from the right column of the first table above for topics.
Every Strategy must include two specific Themes: Your “Go to Market” and “Financial” themes.
Your Go to Market or market strategy Theme is how you will sell and win business. If you need a structure, borrow from what is described by Traction (pg 55-65.) The elements are listed below and summarized with examples in this table:
- Ideal Customer
- Proven (sales) Process
The Financial theme defines your revenue model and includes at least two associated Measures: revenue and net margin. As you learn key drivers of your financial results add them as leading measures to give early indication of success. SaaS companies for example generally emphasize financial drivers by including measures like annual recurring revenues, customer acquisition costs, retention rates, customer lifetime value, and average revenue per user. Service companies focus on utilization and average hourly rates.
Find the few key leverage points that drive your bottom line success. Elevate these measures to the Financial Theme and give them Outcomes and Measures matching your strategy time frame. Finally, you must ensure the company never runs out of funds to operate. Cash management and fund raising are essential parts of the Financial theme especially for early stage companies.
Often there are also destination statements around People Practices or from Context trends that suggest the need for a Theme. Consider whether there is some destination statement for these that should be part of what the business looks like in three years.
Brainstorming with business and thought leaders that work in the business and with customers is the way I have found most useful in generating your destination statements.
From the universe of possible destinations, group, prioritize and focus on the top 4 to 6 that can have the largest impact on success. Give them short titles that become your Themes.
Once you have priority Themes, ensure they are well understood by giving each at least one descriptive Outcome and Measure that will indicate reaching the destination. This process helps make the Theme more concrete and allows the right focus of resources needed to achieve the Theme.
Be flexible; some Themes’ Outcomes may be less tangible than specific measures in this planning horizon. But it should always be possible to determine whether the Theme was achieved or not.
Capture all your Themes on your Business Model Cheat Sheet to share regularly.
Structure the organization to ensure there are roles that support delivering each Theme.
Use Themes to organize and document processes and policies that run your business
Use Themes to organize your scorecard measures.
Use Themes to organize and track Initiatives that close the gap between today’s capabilities and the Theme described future.
Organize and track iterative Rocks to move initiatives forward each quarter that deliver the Themes
Use Themes to set direction for periodic planning refreshes.
At Council and other execution meetings uncover Issues, Ideas and Insights about whether teams feel like each Theme still has good:
- Relevance: Do we still have the right business model?
- Progress: Are we making the right progress?
- Mood: Is everyone still onboard?