Thirty-one words from a brokerage
In 2008, David Collis and Michael Rukstad asked a question most executives fail: “Can you summarize your company's strategy in 35 words or less?” Their example of a company that could was Edward Jones, the St. Louis brokerage. Its strategy: “grow to 17,000 financial advisers by 2012 [from about 10,000 today] by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions, through a national network of one-financial-adviser offices” 1.
Thirty-one words, leaving out the authors' bracketed note. Read it again and count what it rules out: day traders, investors who would rather make their own decisions, online trading, branches with many advisers under one roof 1. The sentence is short because the choices behind it were already made.
This builder walks you through those choices in eight fields: the objective, the scope, where you will not go, the advantage and the trade-off, then the statement itself. Checks under each field flag the usual mistakes as you type. You leave with a draft statement, its annotations, and a short list of the arguments your team still has to have.
A strategy statement is a tool for saying no.
Strategy Statement Builder
Work through the fields in order. The checks under each field flag common mistakes; they warn but never block, because you may have a reason. Your statement and its annotations are assembled below.
One goal, specific and time-bound. If growth and profitability conflict, which wins? The objective should answer that.
Describe them so a salesperson could tell who is out. A behavior or a need often separates customers better than size or industry.
The products or services and the geography. Add how much of the value chain you do yourself if that is a real choice.
Customers, products, regions or activities you will turn down, even when the money looks good.
The customer value proposition, in the customer's terms. What do they get from you that they would not get elsewhere, including from doing it themselves?
The activities, assets or ways of working behind the value proposition. If a rival could copy one next quarter, it is not doing much work.
What you give up to get the advantage. If you cannot name a cost, the advantage is probably not a choice.
One or two sentences that join the objective, the scope and the advantage. Write it last, from the fields above.
Objective, scope, advantage, and the trade-off underneath
Collis and Rukstad name three elements a strategy statement must contain 1. Each one is a place where a vague statement gives itself away.
| Element | What Collis and Rukstad ask for 1 | How it usually goes wrong |
|---|---|---|
| Objective | A single goal that is “specific, measurable, and time bound,” the one that will drive the business over the next five years or so | A mission or a platitude in its place, or two goals that conflict |
| Scope | The domain: customer or offering, geography, and vertical integration, including “where the firm or business will not go” | A customer description that includes everyone |
| Advantage | A customer value proposition, plus the activities that let only your firm deliver it | A list of strengths any competitor would also claim |
Underneath all three sits a trade-off. “Defining the objective, scope, and advantage requires trade-offs,” the authors write, drawing on Michael Porter 1. Porter's own line is shorter: “The essence of strategy is choosing what not to do” 2. That is why the builder asks for exclusions and a trade-off as separate fields. A statement that costs nothing is easy to write and useless to a manager deciding whether to take an order.
A strategy statement is not a mission. Collis and Rukstad say companies tend to confuse their statement of values or their mission with their strategic objective, and that if your firm's strategy can be applied to any other firm, “you don't have a very good one” 1. Our page on mission, vision and strategy sorts out what goes where.
What the checks catch
- No number in the objective. Collis and Rukstad want the objective measurable and time-bound, including a time frame for reaching it 1. Without a number, nobody can tell whether the strategy is working.
- Two goals in one. “Grow profitably” fails their test. Which matters more, growth or profitability? A salesperson needs the answer when deciding how hard to push on price 1.
- A scope with no edge. Words like “everyone” or “all customers” rule nothing out. The builder also asks for at least two exclusions; that minimum is our rule of thumb.
- Buzzwords. Richard Rumelt's example is a bank memo calling its strategy “customer-centric intermediation,” which, once the fluff is removed, says the bank is a bank 3. The banned-word lists are ours and deliberately short; a buzzword they miss is still a buzzword.
- More than 35 words. The limit comes from Collis and Rukstad's question 1. It is a benchmark, not a law, but going over it usually means a choice has not been made.
A filled-in example
What a builder cannot do
The fair objection: a form can produce a tidy sentence with no strategy behind it. True. Collis and Rukstad say plainly that the first step is to create a great strategy, and they suggest developing “two or three plausible but very different strategic options” before settling on one 1. If your team has not chosen between real alternatives, the builder will expose that, because the exclusions and trade-off fields will stay empty or obvious. Treat an empty field as a finding, not a gap to fill with something plausible.
The second limit is that one author is the wrong number. The authors argue that the wording should be worked through in painstaking detail, and that “it is usually in heated discussions over the choice of a single word that a strategy is crystallized” 1. Run the builder alone to get a draft, then put the draft in front of the leadership team and argue about each word. They also recommend annotations that spell out each element's nuances and implications 1; the result's last section starts you on that.
A statement has done its job when a manager two levels down can use it to turn down a good idea, which is the test our page on communicating strategy sets. Words that cannot do that are an announcement. Write the sentence that can.
Questions
- What should a strategy statement include?
- Collis and Rukstad's answer is three elements: the objective (a single, specific, measurable, time-bound goal), the scope (which customers or offerings, where, and how much of the value chain, including where the business will not go) and the advantage (why the target customer buys from you and the activities that let only you deliver it).
- How long should a strategy statement be?
- Collis and Rukstad framed the test as whether you can summarize your strategy in 35 words or less. Their Edward Jones example runs to 31 words. Treat 35 as a benchmark, not a rule. A statement that will not fit usually means a choice is still open, and the fix is to make the choice rather than trim words.
- What is the difference between a strategy statement and a mission statement?
- A mission states why the organization exists, and firms in the same business often have similar ones. A strategy statement states the specific objective for the next several years, the scope and the advantage. Collis and Rukstad note that companies often confuse their mission or values with their strategic objective, and that a strategy any other firm could adopt is not a good one.
- Does a good statement mean we have a good strategy?
- No. The builder checks that a statement has the parts a strategy needs and avoids common mistakes. It cannot check that the choices are right. Develop real alternatives first, choose, and then use the builder to state the choice. Test the result on real proposals and on colleagues writing it from memory.
Sources
- Collis, D. J., and Rukstad, M. G. (2008). Can You Say What Your Strategy Is?. Harvard Business Review, 86(4) (April 2008). The 35-words question; the Edward Jones strategy statement quoted on this page; objective, scope and advantage as the three elements; the objective as a single goal that is specific, measurable and time bound, with growth versus profitability as the example; scope's three dimensions and where the firm will not go; advantage as value proposition plus activities; trade-offs; confusing mission or values with the objective; a strategy applicable to any firm; two or three very different strategic options; heated discussions over a single word; annotations.
- Porter, M. E. (1996). What Is Strategy?. Harvard Business Review (November–December 1996). Section III: “The essence of strategy is choosing what not to do.”
- Rumelt, R. P. (2011). The Perils of Bad Strategy. McKinsey Quarterly (June 2011), adapted from Good Strategy/Bad Strategy. Fluff as a hallmark of bad strategy; the retail bank's “customer-centric intermediation” memo.
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