As a manager, business owner, or employee, you’re always seeking ways to contribute to your organization’s growth. One way to do so is by helping formulate or execute an effective business strategy.
Your organization’s strategy should be tailored to fit your business’s goals and objectives. It also requires continually measuring your business performance and reassessing as new challenges and opportunities arise.
While crafting and executing a strategy takes time, there are frameworks and tools you can use to assess your business’s position in a competitive landscape and its approach to factors like pricing and product-market fit.
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DOWNLOAD NOWWhat Is a Strategy Framework?
Strategic frameworks are structured approaches or lenses used to conceptualize, develop, and implement strategic plans. These frameworks serve as guides to help organizations define and reach their vision and goals. Using frameworks and tools at any stage of the strategic process can offer a competitive advantage.
Here are five strategy frameworks and tools you can use right now to contribute to your organization’s growth.
Strategy Frameworks and Tools You Should Know
1. Jobs to Be Done Framework
The Jobs to Be Done (JTBD) framework, developed by Harvard Business School Professor Clayton Christensen, is a way to validate a consumer’s need for a product.
The basis of Christensen’s theory is that, when people purchase products, they “hire” them to do a “job.”
By asking yourself what job your company’s offering can do for consumers, you can hone brand messaging, differentiate your product from competitors’, and improve it to more effectively complete the job to be done.
One example of this framework in action is Kind Snacks’ line of breakfast bars. While Kind Snacks sells many types of granola bars, cereals, and other healthy options, the breakfast bars contain at least one full serving of whole grains, and some flavors contain extra protein and probiotics. These specific bars fill its customers’ need for a healthy, filling breakfast option that can be taken on the go.
The JTBD framework can be used during any stage of product development—to create a new product based on a customer job that isn’t being done yet, or to reassess the jobs your existing products fulfill. How has the customer need shifted since the conception of your offering, and how can this knowledge shape your business strategy?
A strong understanding and alignment on the customer need your product fills can be a foundation for following through on strategic plans.
2. Value Stick Framework
The value stick framework is a visual representation of a product’s value based on customers’ willingness to pay for it. This framework is helpful when formulating a product’s pricing strategy, and it can also be an important part of an organization’s broader strategic plan.
The value stick has four components:
- Willingness to pay: The highest price a customer is willing to pay for your product or service.
- Price: The amount of money you charge for a product or service.
- Cost: The amount of money it takes to produce a product or service.
- Willingness to sell: The lowest price a firm’s suppliers are willing to accept in exchange for the raw materials needed to create products.
Each of these components fall somewhere along the stick, and their locations determine the value of the product to the customer, supplier, and business.
Picturing each of these factors as sliders on a stick can allow you to test out different scenarios and aid in strategic decision-making. If you lower the production cost, will the customer’s willingness to pay decrease? If you raise the production cost and price, will the customer’s willingness to pay increase? If so, is it worth it?
Understanding the relationship between the supplier, business, and customer, and how each entity gains value from your product, is an important exercise during strategy formulation.
Related: 2 Ways to Increase Profit Margin Using Value-Based Pricing
3. Job Design Optimization Tool
The Job Design Optimization Tool, or JDOT, was created by HBS Professor Robert Simons and is a free, online tool that anyone can use.
In the online course Strategy Execution, Simons explains that jobs are optimized for high performance when they’re designed in service of the company’s strategy. The JDOT enables you to assess the degree to which each role at your organization is optimized for strategic success.
Each job is evaluated based on four factors, or “spans,” which are presented on a sliding bar: control, accountability, influence, and support. By adjusting the bars, you can determine the amount of each span that a specific role in your organization holds.
If the bars you’ve adjusted form an “X” in the tool, this indicates that the job is “balanced”—its supply of resources is equal to its demand for resources.” The JDOT then provides recommendations to improve the role, depending on which spans are out of balance. For instance, if you’re looking to increase the span of influence, the JDOT suggests implementing cross-unit task forces and providing stretch goals.
“If you get the settings right, you can design a job in which a talented individual can successfully execute your company’s strategy,” Simons writes in the Harvard Business Review. “But if you get the settings wrong, it will be difficult for any employee to be effective.”
Keep your organization’s strategy in mind when using the JDOT to assess its roles. If any role is revealed to be unbalanced, consider raising the tool’s suggestions to your team so that everyone has the resources necessary to support the company’s strategy.
Related: 5 Keys to Successful Strategy Execution
4. Disruptive Innovation Framework
Disruptive innovation, another concept coined by Christensen, refers to the process by which a smaller company—usually with fewer resources—moves upmarket and challenges larger, established businesses. The other type of innovation included in the framework is sustaining innovation, in which a company creates better-performing products to sell for higher profits to its best customers.
There are two types of disruptive innovation: low-end disruption and new-market disruption.
Low-end disruption occurs when an organization uses a low-cost business model to enter at the bottom of a market and claim an existing segment. New-market disruption, on the other hand, occurs when an organization enters at the bottom of an existing market and creates and claims a new segment.
Think about your organization’s place in the market. What segments does your brand own? Who are your competitors, and what differentiates them from your business? Are there any opportunities for your organization to either claim an existing low-end market segment or create a new one? If your organization is a big player in the market, how can you prepare for potential disruption?
Considering questions like these can raise valuable insights, opportunities, and concerns that influence your organization’s strategy.
Learn more about sustaining and disruptive innovation in the video below, and subscribe to our YouTube channel for more explainer content!
5. Balanced Scorecard
The balanced scorecard—developed in 1992 by HBS Professor Robert Kaplan and David Norton—is a tool that tracks and measures non-financial variables.
“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution. “These additional perspectives help businesses measure all the activities essential to creating value.”
The four perspectives include:
- Financial: Do your plans and processes lead to desired levels of economic value creation?
- Customer: Does your target audience perceive your product, services, and brand in the desired way?
- Internal business process: Do your organizational processes create value for customers?
- Learning and growth: Does your organization support and utilize human capital and infrastructure resources to meet goals?
To ensure you get the most out of your balanced scorecard, it’s crucial to use a strategy map as well. A strategy map is a visual representation of the relationships that directly impact your business strategy.
“A strategy map gives everyone in your business a road map to understand the relationship between goals and measures and how they build on each other to create value,” Simons says in Strategy Execution.
Creating a Strategic Foundation
The process of setting goals and formulating and executing a strategy to reach them is time-intensive and requires daily reassessment. Leveraging powerful tools and frameworks to shift your perspective, offer insight, and ensure alignment can make all the difference between an unsuccessful strategy and one that provides positive organizational growth.
Are you interested in elevating your strategic formulation, execution, or decision-making skills? Explore our online strategy courses and download our free flowchart to find the right HBS Online Strategy course for you.
This post was updated on December 8, 2023. It was originally published on December 10, 2020.
