Strategy review

More Than Giving Advice

When conducted well, a strategy review can deliver significant benefits to a business. In addition to the direct financial benefits of improving performance and targeting new growth opportunities, the process itself can improve alignment between employees, senior management teams and other key stakeholders, helping to drive a high performance culture and clarity on the future direction of the business.

What is a strategy review?

A strategy review is a structured process to identify new value creating opportunities within a business. This could be about improving the performance of an existing division, or taking advantage of a new market adjacency opportunity. Many companies undertake strategy reviews on an annual basis as part of their strategy planning process. Other businesses will undertake them on a more ad hoc basis when presented with a specific opportunity or problem within the business. A change of ownership or appointment of a new CEO can often trigger the need for a strategy review of the business as a way to clarify the key areas of opportunity and challenges within the existing portfolio. 

Whatever its origins, a strategy review should be a clear fact-based analysis of the business opportunity or issue. It provides an opportunity to step back from day-to-day operations to assess the strategy foundations on which a business is built. The outcome of a strategy review should be a clear set of strategy recommendations and a future roadmap for the business that charts its course and enables increased and sustained performance now and for the future.

The benefits of a strategy review

When conducted well, a strategy review can deliver significant benefits to a business. In addition to the direct financial benefits of improving performance and targeting new growth opportunities, the process itself can improve alignment between employees, senior management teams and other key stakeholders, helping to drive a high performance culture and clarity on the future direction of the business.

Strategy

• Clarity over the key drivers of strategic advantage
• Consensus at senior levels in the organisation
• Enables a sustainable position of competitive differentiation

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Financial

• Improved financial outcomes
• Improved capital allocation and return on capital

​Operational

• Organisation structure aligned with the strategy
• Core processes that reinforce key sources of competitive advantage

​Employees

• Understanding of the overall strategy and of the role that each individual can play in supporting the strategy
• Improved staff engagement and alignment with the business objectives

Stakeholders

• Effective oversight of management recommendations
• Improved alignment with the management team

Scoping a strategy review

The scope of a strategy review should be tailored to the specific opportunity or issue to be investigated. In setting the scope, a number of the questions outlined below are likely to be relevant:

Market

• How big is the market, and what is the growth outlook? What are the key underlying drivers of market growth, and how volatile are these drivers?
• How does the market break down into customer segments? What are the characteristics of each segment? Which segments are the most attractive?
• What are the key trends or emerging developments within the industry (e.g. new products, disintermediation, M&A, technological disruption)?
• What adjacent markets are potentially addressable?

Strategic positioning

• What is the core of our value proposition?
• How do we compete within the market (e.g. price-led, premium service positioning, technological innovation)
• What are the key strategic capabilities that underpin our competitive positioning (e.g. R&D, unique products, customer relationships, economies of scale)? How can we build on these strengths?
• What are our main areas of weakness? How are these impacting on our performance? How can we address them?

​Internal

• How aligned is our organisation structure with our strategic positioning and market segmentation?
• How effective are our core processes?
• How aligned is our culture to our strategic positioning?

Financial Analysis

• What are the key drivers of financial performance?
• What financial impact can we achieve beyond this through our strategic roadmap?
• What are the incremental capital requirements? How can these be funded​?

Delivering a succesful strategy review

• Map the answer
• Apply the 80/20 principle
• Allocate dedicated project resouces for the review
• Allow enough time to produce a good report
• Build in time to think about the implementation​

Conducting a strategy review requires the coordination of a range of analytical activities, financial modeling, stakeholder management and report development. A disciplined approach underpinned by a clear logical framework and a pragmatic analytical approach can significantly increase the success of the process. 

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