Setting Your Strategic Direction

Rich Horwath

Think back to your childhood. Can you recall a time when you got lost? Maybe it was at the mall, a supermarket or museum. Maybe it was just for a few moments. Do you recall the sinking feeling in your gut? Were you anxious, frightened or downright terrified? And do you remember the joy that came when you were reunited with your mom or dad?

Becoming lost can be a quickly relieved scare for a child, but in business, being rudderless and without direction can be a source of chronic frustration and failure. In a study of 89 companies, the biggest difference between the groups with superior profit and sales and the laggards was agreement with the statement, “strategic planning in our enterprise has led to an improved competitive position.” Unfortunately, in an APQC study on the skills managers need versus the skills they possess, the number one skill deficiency identified was strategic planning.

ROI of strategic planning

In looking at 100 companies, we find that more than 70 percent of successful businesses started from a process of strategic planning. Consider your current plan: is it a clear, concise and motivating driver of your daily activities? If not, sooner or later you will lose significant business to your competitors.

Research out of Harvard Business School over a 10-year period showed that companies with clearly defined and well-articulated strategies outperformed their counterparts, on average, by 304 percent in profit margin, 332 percent in total sales and 833 percent in total return to shareholders.

There are three C’s to setting strong strategic direction for your business: clear, cut and concise.

Clear – Setting strategic direction boils down to answering just two questions:

1. What are you trying to achieve?
2. How will you achieve it?

While the team needs to think about and discuss the market, customers, competitors and the company, these two questions form the foundation of any good plan. If you and your group can gain clarity on your goals (what you are trying to achieve) and your strategies (how you will achieve them), you’re ahead of the pack.

Cut – One of the main responsibilities of a leader is to act as the editor of the business. A good leader is continually monitoring products, services, processes and people’s habits for things to cut out if they no longer add value. In the strategy workshops I facilitate, an exercise that generates great interest is when the group discusses what they should stop doing. Too often, projects, initiatives, reports and tactics have continued to receive resources even though they have outlived their usefulness.

Concise – One of the favorite sayings around our dinner table is when one of us (OK, usually me) starts to finish a story with “To make a long story short,” my kids chime in with “Too late!” There is something to be said for brevity, especially when talking with teenagers. Brevity can also be a powerful tool in setting strategic direction.

Being concise relies heavily on the first two C’s: clear and cut. If there’s a lack of clarity in one’s thinking, and tradeoffs or cuts haven’t been made, then it’s extremely difficult to be concise. This is most often evident in the huge PowerPoint decks that make up people’s plans. As Airbnb CEO Brian Chesky said, “If you can’t fit your plan on a page, you’re not simplifying it enough.”

In my work facilitating strategy sessions with both startups and Fortune 500 companies, I’ve found it helpful to reduce the complexity of the plans by having the teams develop a two-page blueprint or StrategyPrint, which becomes their plan. Since it’s only two pages, the StrategyPrint ensures their plans only include the make-or-break insights on page one and the corresponding action plan (goals, objectives, strategies and tactics) on page two. Is your plan a concise guide to your strategic direction, or a long, meandering PowerPoint deck that includes everything but the kitchen sink?

Rich Horwath is the CEO of the Strategic Thinking Institute, leading executive teams through the strategy process and training more than 100,000 managers on strategic thinking. He is a New York Times and Wall Street Journal bestselling author on strategy and has appeared on ABC, NBC and FOX TV. Sign up to receive your free copy of Strategic Thinker by visiting or contact