Five questions that drive successful business strategy

You hear the word more and more in business circles, and even within design firms and advertising agencies: "strategy." Far more than a buzzword, strategy -- the key to building competitive advantages -- is essential in planning what a company will do (or not do) in years to come.

A new article in the Winter 2013 issue of Rotman magazine, the publication of the University of Toronto's Rotman School of Management, simplifies successful strategy by offering five questions that serve as a framework for any type of business. And they have a very trusted provenance: they're provided by Procter & Gamble's former chief executive and chairman, A.G. Lafley, and Rotman dean Roger Martin, along with co-author Jennifer Riel, associate director of the Desautels Center for Integrative Thinking at Rotman.

(Note: the article is not available online on Rotman's site, but you can find it in a preview of Rotman magazine's digital edition or purchase it via Harvard Business Review as a stand-alone piece.)

The five questions:

1. What is your winning aspiration? Asking this means going beyond the often-abstract "mission statement" of your company. Procter & Gamble, for instance, decided that its aspiration was to "create products and services that would improve consumers' lives." And then acted upon it.

2. Where will you play? Being as specific as possible in your answer, even if it is quite a large playing field, will help focus your company's efforts, and also determine if your choices of playing field really advances the company's core goals.

3. How will you win? This is not a question about winning in general (say, in terms of target revenues). It is about "what will enable...unique value, and how [to] deliver that value to customers in a way that is distinct from...competition."

4. Which capabilities must be in place? This question isn't about taking stock of what your company is good at doing now. Instead, it's about what specific abilities (Deep consumer understanding? Brand building?) are absolutely necessary to win in the future, as related to the answers to the previous three questions.

5. What management systems are required? As Lafley, Martin, and Riel write in Rotman magazine, there must be "supporting structures, systems, and measures" in place to achieve the goals outlined in the answers to the first four questions in this list. These can be as simple as setting up regular executive dialogues on strategy reviews -- to basically revisit the five questions here.

As the authors make clear, all of these questions are meant to be answered in the order presented, as each answer affects the other. Yes, these questions might seem very simple. But, as many executives might discover as they ask the questions, they may not be so simple to answer. Thankfully, the list is so straightforward -- the sign of a very focused and achievable strategy.

Image: ed_needs_a_bicycle/Flickr

This post was originally published on Smartplanet.com