Validation

A strategic hypothesis lays out your view of the market, the opportunity, the risks, and a prioritized set of options. Once subjected to internal review and discussion, there are bound to be a number of additional questions raised, and perhaps some preferences expressed.

The purpose of validation is to test the preferred options with friendly customers and internal stake-holders, and to find answers to the questions raised in the hypothesis review process.

Validation can be short or long, depending on the scope of the strategic leap proposed, and upon the style of the organization. I always try to keep the validation phase short, because you have established some momentum as a result of the hypothesis review, and you don’t want to allow too much time to pass between the establishment of a hypothesis and the delivery of final recommendations.

The key elements to be assembled in preparing for validation are these:

1. The list of unanswered questions raised by your stakeholders that need to be addressed to complete the strategy proposal
2. The list of objections and concerns raised in presentation and discussion of the hypothesis
3. The best sources of answers to the questions, objections and concerns

Then the validation is a process rather like we described for research planning and research execution previously. You need to build a schedule, set up the discussions, and collect the data.

Once you have the validation data, ask yourself the following questions:

1. Do I still believe the original hypothesis as stated, or does it need modification?
2. Do I have adequate answers to each of the questions, issues and objections so that a credible case can be made?

If all is well, congratulations! You are ready to proceed to the delivery of final recommendations. But if not, don’t despair. If you’ve done a good job throughout the process, you will find that the differences are small, and can generally be incorporated in a small revision of the ideas. The goal in concluding the validation process is to update the hypothesis with the additional information, so you are now armed with a thorough and defensible set of strategy recommendations.

How those are delivered is the subject of our seventh and final step to a sound strategy.

Recommendation

Once your strategy hypothesis has been presented and validated, it’s time to get on to implementation. But implementation in any organization requires buy-in and understanding from a lot of people.

The recommendation phase is the process of establishing common understanding and buy-in, so that implementation can proceed.

The good news is that you have gone through a thorough process already, if you’ve followed the seven steps approach—you have a good audit trail of information and ideas all the way from the original problem definition, and you’ve also taken the time to keep others involved along the way. If you’ve done a good job with the earlier phases, the recommendation is easier, because the key people have some exposure to the ideas, and most of the difficult questions have been asked and answered through research and validation follow-up.

The fundamental task of the recommendations phase is to drive action. That means your recommendations need to be clear, simple to explain, and that the value must also be clear. Most strategy processes are followed by a corporate budgeting cycle, in which funds are allocated to new and existing projects. New projects by definition have a harder time, because they are more risky than continuing to invest in projects that already produce revenue. That means that the financial arguments need to be as clear as possible.

Here’s a check-list of the elements of a great recommendation:

1. Project problem statement
2. Background (keep it short)
3. Market model—analysis of existing conditions in the market
4. Competitive situation
5. Scenarios that represent possible future outcomes
6. List of proposed actions or approaches
7. Indication of the recommended proposal
8. Estimation of resource requirements and operational factors associated with the recommendeed approach
9. Risks associated with the recommended approach, along with risk mitigation proposal
10. Factors that might change the strategy and how to deal with them
11. Summary page of key decisions required.

There’s some benefit in creating a richer document to go with the strategy that contains the outputs from other parts of the project – environmental scan, research plan, research results, hypothesis presentation, and validation questions and answers. Such a document should probably not be widely circulated, but it may be useful for the most senior decisionmakers either for their own use or for review by their staffs. The danger with such a document is that it can be used to re-open old questions, and to delay a decision. This should not happen if the appropriate people have been close to the process throughout.

Part of “asking for the order” has to do with getting some kind of operational decision made. Here are some indications that your strategy will go somewhere:

• Someone is assigned to own the project going forward
• The project is added to the list for the upcoming budget cycle
• The project is endorsed by the CEO or business line manager who has the budget to make it happen
• There’s a concrete next step agreed upon and assigned.

It’s not enough for people to like what you offer and to agree in principle. The great challenge for strategy teams is that they typically do not own the resources to make things happen. It’s therefore extremely important to work consciously on the process of transferring a strategy project to an implementation team.

If you own your own business, or lead a business, you can apply these same techniques. The process helps to guide the people you assign, and as the business leader you can drive change directly.

I hope these short descriptions have given you some practical insight into a proven way to develop strategy. You will have seen that while there are no guarantees, a rational and organized process significantly increases the chance of creating real positive change in your business.

Tim Barnes

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