As a follow-up to my previous article, "The Seven Meanings of Strategy" (which you can read here), I would like to introduce you to the concept of 5-Sentence Strategy and why it holds tremendous power.
One common mistake in many organizations is treating strategy as the seventh meaning (i.e., a set of humongous PPT slides, full of data, full of analysis, but dull and unactionable).
No matter how brilliant a strategy may be, at the end of the day, its true impact lies in its successful implementation. To achieve this, it must first be comprehensible to the people within the organization, and this is where simplicity plays a crucial role.
And this is where the 5-Sentence Strategy comes into play.
The 5-Sentence Strategy is a concise and powerful tool that can make complex strategies more accessible and actionable. It boils down a strategy to five essential sentences, making it easy to communicate, understand, and motivate the people responsible for its execution.
How 5-Sentence Strategy Creates a Lasting Impact
To illustrate the effectiveness of a 5-Sentence Strategy, let me share a story about Takashi (name changed for confidentiality). He assumed the role of acting CEO in a struggling manufacturing company that had experienced years of financial losses.
Takashi's previous boss, the departing CEO, had tried to stem the losses but failed to create a sustainable improvement. They had brought in a turnaround and restructuring firm. The firm did help them cut costs, but the impact isn't sustainable. Within 6 months, the costs crept up again, and they had to bring in a turnaround firm again. This happened several times until the Board became fed up, and the CEO had to go.
As the COO, Takashi stepped in as the acting CEO of this manufacturing company. The Board promised Takashi the CEO position if he could make a lasting change.
Takashi realized that to make a lasting change, the company needed the full support of all the employees. If the employees didn't change their behavior, then whatever cost-cutting impact would only be temporary.
Unfortunately, Traditional turnaround firms have failed to provide a lasting solution. Under intense pressure to deliver in the short term, turnaround firms often ignore the employees. Furthermore, they often operate in secrecy and keep everything intransparent from the employees. They only work with the company's executives to develop complex strategies. But, complex strategies are hard to communicate and understand – as a result, they lack clarity and often fail to motivate action from the people.
After all, strategy documents and presentations by themselves do not automatically become a company's strategy. The actual strategy isn't what is reflected on the slides but what is reflected in the actions of its people.
Takashi knows that he needs to find a way to translate the intentions and arguments of the strategists into the actions and results of the implementers. Hundreds of pages of PPT slides are certainly not helpful in this case.
To ensure the company's people can understand the strategy, Takashi and I designed the 5-Sentence Strategy. Our 5-Sentence Strategy for the company is as follows:
In the last 6 months, we have been losing roughly $1m per week.
We're facing an imminent bankruptcy.
But we have a way out with this simple threefold strategy: 1) Simplify our business model; 2) Kill all unnecessary expenses; and 3) Build the foundation for future growth.
I need your support to implement this strategy.
The next few months will be rough, but we can save the company if we all work together.
As the name implies, this strategy only consists of 5 sentences. Yet, despite its simplicity, this strategy is powerful because it is easy to communicate, easy to understand, and quick to move the hearts of the people who would implement the strategy.
This time, the profit improvements weren't driven top-down, but were initiated bottom-up by the employees. Because the employees understand what is at stake, what must be done, and why it must be done. Armed with this understanding, they quickly figure out how to do it in the best possible way that will create a lasting impact.
Furthermore, this 5-Setence strategy is easy to adjust based on the changes. For example, six months down the line:
Thanks to your hard work in the last 6 months, we have successfully brought our profitability to break even and avoided bankruptcy.
But, it's not time to hang up the boots yet: We still need to ensure the impacts are lasting, unlike in the previous turnarounds.
We can do it with the same threefold strategy: 1) Continue our simplification program; 2) Ensure unnecessary expenses never return; and 3) Invest for future growth.
I need your support again to implement this strategy.
If we do it right, we will turn our beloved company into the leading company in our industry.
As you can see, the 5-Sentence Strategy not only empowered the employees to take ownership and initiate a bottom-up approach to achieving positive results, but it also offered flexibility for adjustments as circumstances changed and provided a clear path for the company's revival.
For 2 years, the costs stayed low, the profit stayed positive, and the company successfully funded its strategic CAPEX programs and achieved its strategic goals. The Board was pleased with Takashi's performance and deservedly promoted him to permanent CEO.
That is the power of 5-Sentence Strategy!
How Do you Create a 5-Sentence Strategy?
Although the 5-Sentence Strategy looks simplistic and incomprehensive, it doesn't mean the strategy is half-baked. No, far from it, you actually create extra work to simplify the strategy.
Like any other strategies, for the 5-Sentence Strategy to be effective, a robust analysis and a thorough understanding of the internal and external landscape of the company are still needed.
To build a 5-Sentence Strategy, you need to:
1. Be Crystal Clear on Your Goal, Ensuring Specific and Focused Objectives
You need to know what exactly you want to achieve, in specific details, so that you don't need to "boil the ocean" during your analysis and can choose the best path for your company.
After all, which path is the best strategy depends on your specific goal.
2. Analyze the Internal and External Landscape Thoroughly to Identify the Best Strategy Options
Answer the following questions to help you understand your company's best options:
Internal Factors
What activities do we perform? What assets do we have?
How are our activities and assets unique? How does this uniqueness create value?
How can we improve this value?
External Factors
Who are our customers? Where are they?
How are our customers unique? How can we exploit this uniqueness?
How will customer behavior and locations change?
Internal-External Fit
How do we make money?
How did our revenues change? What internal and external factors caused this?
What is unique behind these factors? How should we respond to this?
How will the factors likely develop? What does this change mean for future revenue potential?
Once you have the answers, you can start generating the options for your company and choose the best option. Don't forget to link it back to your goal.
This best option will be your strategy (even if it still hasn't been written yet).
3. Write Your 5-Sentence Strategy, then Test the Strategy with Internal and External Stakeholders
Use the SCRAB framework to write your strategy:
1st sentence: Situation: Describe the background to the problem. You can use a data point or statistic to set the scene.
2nd sentence: Complication: Describe why it is problematic. Make sure this sentence is moving the heart.
3rd sentence: Resolution: Propose the solution to the problem. Provide three key initiatives to support the solution (and make it more convincing).
4th sentence: Action: Explain what the audience needs to do. This sentence can be adjusted depending on who the audience is.
5th sentence: Benefit: Explain what the audience will gain. Make sure this sentence is moving the heart.
For example, Takashi's 5-Sentence Strategy is as follows:
Situation: In the last 6 months, we have been losing roughly $1m per week.
Complication: We're facing an imminent bankruptcy.
Resolution: But we have a way out with this simple threefold strategy:
Simplify our business model;
Kill all unnecessary expenses; and
Build the foundation for future growth.
Action: I need your support to implement this strategy.
Benefit: The next few months will be rough, but we can save the company if we all work together.
Once you have built this 5-Sentence Strategy, don't forget to test it on internal audiences who will need to understand and implement it, as well as the external audiences who will need to endorse and adopt it.
For communication purposes, you can adjust the action and benefit sections for different stakeholder groups. You can also support this strategy with vivid audiovisual content.
Of course, by itself, the 5-Sentence Strategy is not ready for implementation. Because it still needs to be accompanied by detailed implementation plans. However, the 5-Sentence Strategy is ready for communication. In essence, it has reduced the company's most pressing problem into its most essential core and then made a compelling case for action.
4 & 5. Prepare Detailed Implementation Plans and Execute Them Effectively
Once you have the 5-Sentence Strategy, start building the detailed plans for implementation (e.g., financial plans, special projects, key initiatives, new targets, etc).
The employees can now help you build detailed plans because they understand the strategy. As they come out with the plans themselves, they know how to execute them and can make sure the intended goal is fulfilled.
And once you have the detailed plans, you just need to ensure they are properly executed.
6. Continuously Review and Adjust Your Strategy Based on Results and Changing Circumstances
Lastly, don't forget to monitor the results and adjust as needed. The beauty of 5-Sentence Strategy is that they are easy to adjust. For example, in Takashi's case, they created a second version six months down the line.
The 5-Sentence Strategy is powerful. Its simplicity not only enhances implementation but also fosters alignment and rapid learning within the organization, providing a significant competitive advantage in today's fast-paced business environment.
Do let me know if you have any questions related to 5-Sentence Strategy. I can be reached at Marvilano@Marvilano.com.