CHAPTER-1 FOUNDATIONS OF STRATEGY (1)

Chapter 1 – Foundation of Strategy

Definition of Strategy and Elements of Strategic Org Purpose and Stakeholder and Intended and Future Basing
Levels of Strategy: Management and Strategy Stakeholder Emergent Strategies
Business Analysis Expectation • The vision
• Definitions • Hierarchy of goals • Intended Strategy • Milestones
• Levels of Strategy • Strategic Position: and objectives • Defining • Emergent Strategy • Reality
• Levels of Planning Org purpose and • Mission and stakeholders • Mix of intended check
• Elements of Strategic mission Vision • Expectations of and emergent
Management Process Environmental • Relevance of stakeholders strategy
o Strategic position analysis Resources mission statement • Stakeholder • Enforced choice
s
o Strategic choices and capabilities • Goals and mapping
o Strategy analysis objectives • Mendelow’s
implementation • Strategic choices: • Who decided Power Interest
Development and mission and goals Matrix
growth Integration • Stakeholder
(strategic, business influence
unit) Globalization
• Strategy
implementation:
Organizing
Enabling
Managing change
CHAPTER-1 STRATEGY, STAKEHOLDERS AND MISSION (2)

CHAPTER NO. 1
FOUNDATIONS OF STRATEGY

Contents

1 Definition of strategy and levels of strategy

2 Elements of strategic management and business analysis

3 Organizational purpose and strategy

4 Stakeholders and stakeholder expectations

5 Intended and emergent strategies

6 Future-basing
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Strategy and Levels of Strategy

Section overview

◼ Definition of strategy
◼ Levels of strategy
◼ Corporate strategy
◼ Business strategy
◼ Functional strategy
◼ A note on levels of planning

1.1 Definition of Strategy

1.1.1. Strategy (Chandler)

Chandler (1962) defined strategy as ‘the determination of the basic long-term goals and the
objectives of an enterprise and the adoption of courses of action and the allocation of resources
necessary for carrying out these goals.’

1.1.2. Strategy (Drucker)

Drucker defined strategy as ‘a pattern of activities that seek to achieve the objectives of the
organization and adapt its scope, resources and operations to environmental changes in the long
term.’

This definition is a bit more complex than the previous one. It contains several elements:
• A strategy consists of organized activities.
• The purpose of these activities (the strategy) is to achieve an objective.
• Strategy is long-term. Formal strategic planning by large companies, for example, might
cover five years or ten years into the future and for some companies even longer.
• The strategic choices that an enterprise makes are strongly influenced by the environment
in which the enterprise exists.
• The environment is continually changing, which means that strategies cannot be rigid and
unchanging.
• Strategies involve an enterprise in doing different things with different resources over
time, as it is forced to adapt to changes in its environment.
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1.1.3. Strategy (Johnson, Scholes and Whittington)

Johnson, Scholes and Whittington (‘Exploring Corporate Strategy’) have defined strategy as ‘the
direction and scope of an organization over the long term, which achieves advantage in a
changing environment through its configuration of resources and competencies with the aim of
fulfilling stakeholder expectations.
This definition has some similarities to the definition by Drucker, but it contains two other
aspects of strategic management:
• An enterprise should use its resources and its skills and abilities to achieve a ‘competitive
advantage’ in its business activities. Competitive advantage is achieved by doing
something better (and more successfully) than any competitors can do.
• It is often assumed that the main objective of a company should be to maximize the
wealth of its shareholders. Johnson, Scholes and Whittington state that the objective of an
entity should be to fulfil ‘stakeholder’ expectations.
Example: Business strategy
A company that extracts and supplies oil and natural gas is considering its future business
direction over the next 10 years. It is aware that these resources are in limited supply and that
there is growing public and political concern about the environment.
The company’s board of directors might agree on the following broad strategy:
• The company will continue to extract oil and natural gas but it will also invest heavily in
production of energy from renewable energy sources, such as wind and sea.
The move into energy from renewable sources recognizes the probability that public and
political pressure will grow for restrictions on the use of non-renewable energy sources and for
protection of the global environment.
Change is, therefore, essential for long-term survival.
The strategic plan should also provide for the resources required to achieve the
company’s goals. Important resources for the chosen plan will include exploration rights,
access to pipelines and other methods of transporting energy to users and expertise in wind and
wave power technology.
A decision must be made about how many resources (including money) should be invested in
each business activity.
This will depend partly on the strategic vision of the board of directors and the direction they
think the company should be taking. What proportion of its total energy sources in ten years’
time will come from wind and wave power and to what extent will the company still be relying
on oil and natural gas?
The strategic plan also reflects the values of the board of directors. In this example, the
company has not included nuclear power in its strategic plan.
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1.2. Levels of Strategy

It is usual to analyses strategy into a hierarchy of different levels. Johnson, Scholes and
Whittington identify three levels of strategy:
• corporate strategy;
• business strategy; and
• functional strategy.

Corporate
strategy

Business
Strategy

Functional
Strategy

Most academics classify strategies into three levels:

1.2.1. Corporate strategy - what business or businesses the firms should be in? It relates to the
future formula and structure of the company, and affects the rationale of the company and the
business in which it intends to compete.
Example Racal Electronics’ decision to float off Vodafone as a separate company.
Elements of corporate strategy:
1. Deciding purpose of the entity:
a. What is the mission of the entity?
b. What is it trying to achieve?
2. Deciding the scope of the activities of the entity:
a. Range of business (for example a transport company decides to operate in rail
and bus transport but not in air transport)
3. Matching business activities to external environment:
a. Aligning business activities to needs of the customer (McDonalds selling beef
burger in Pakistan but not in Inda)
b. Aligning business activities with available resources
4. Matching purpose of the entity to expectation of stakeholders:
a. Chosen strategy must be able to satisfy the needs of the stakeholders (mainly
owners).
i. Owners’ expectations: In a commercial company the owners are the
shareholders. They want entity to grow financially over time. Corporate
strategy may therefore aim towards profit maximization of shareholders’
wealth. Government is the owner of public companies. Expectations of
government is different from shareholders’ expectations.
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ii. Stakeholders’ expectations: “stakeholder” means any individual or

group who has/have strong interest (stake) in an organization’s activities.
Chosen strategy must also satisfy the needs of all the stakeholders such
as employees, customers, suppliers, government, lenders and local
communities
1.2.2 Competitive or business strategy - how each business attempts to achieve its mission within its
chosen area of activity. Here strategy is about which products or services should be developed
and offered to which markets and the extent to which the customer needs are met whilst achieving
the objectives of the organization. A term that is often used in relation to business strategy is
SBU, or strategic business unit. SBU means a unit within the overall corporate entity for which
there is an external market for its goods and services, which is distinct from that of another SBU.
Example: Ford’s Motor Co’s car division – an SBU - launched its Mondeo model, aimed at fleet
car buyers, who had not favored the Sierra, its predecessor.
1.2.3 Operational or functional strategies - how the different functions of the business support the
corporate and business strategies. They are concerned with how the various functions of the
organization contribute to the achievement of strategy. It examines how the different functions of
the business (marketing, production, finance etc.) support the corporate and business strategies.
Such corporate planning at the operational level is means oriented and most activities are
concerned only with the ability to undertake directions.
Example: revising delivery schedules and drivers’ hours to improve customer service or
recruiting a German-speaking salesperson to assist a UK company’s sales drive in Europe.
However, the boundaries between the three categories are very indistinct and much depends upon
the circumstances prevailing and the kind of organization. Overall, corporate planning is
concerned with the scope of an organization’s activities and the matching of these to the
organization’s environment, its resource capabilities and the values and expectations of its
various stakeholders.
1.3 Levels of Planning:
Planning is also a hierarchical activity, linking strategic planning at the top with detailed
operational planning at the bottom. Strategic plans set a framework and guidelines within which
more detailed plans and shorter-term planning decisions, can be made.
R N Anthony identified three levels of planning within an organisation:
1. Strategic planning. This involves identifying the objectives of the entity and plans for
achieving those objectives, mostly over the longer term. Strategic plans include corporate
strategy plans, business strategy plans and functional strategy plans.
2. Tactical planning. These are shorter-term plans for achieving medium- term objectives.
An example of tactical planning is the annual budget. Budgets and other tactical plans
can be seen as steps towards the achievement of longer-term strategic objectives.
3. Operational planning. This is detailed planning of activities, often at a supervisor level
or junior management level, for the achievement of short- term goals and targets. For
example, a supervisor might divide the workload between several employees in order to
complete all the work before the end of the day.
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2. Elements of Strategic Management

Section overview

◼ Johnson, Scholes and Whittington – Defining elements of strategic management

◼ Strategic position
◼ Strategic choices
◼ Strategy into action
◼ The scope of business analysis

2.1 Johnsons, Scholes and Whittington – defining elements of strategic management:

Strategic management is concerned with complexity arising out of ambiguous and non-routine
situations with organization-wide rather than operation-specific implications. This is a major
challenge for managers who are used to managing on a day-to-day basis the resources they
control. It can be a particular problem because of the background of managers who may typically
have been trained, perhaps over many years, to undertake operational tasks and to take
operational responsibility. Accountants find that they still tend to see problems in financial terms,
IT managers in IT terms, marketing managers in marketing terms, and so on.
Johnson, Scholes and Whittington state that strategic management consists of three elements:
• Strategic position
• Strategic choices
• Strategy into action.
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2.2 The strategic position

Understanding the strategic position is concerned with:

• identifying the impact on strategy of the external environment,

• an organization’s strategic capability (resources and competences) and
• the expectations and purpose

The environment. The organization exists in the context of a complex political, economic, social,
technological, environmental and legal world. This environment changes and is more complex for
some organizations than for others. How this affects the organization could include an
understanding of historical and environmental effects, as well as expected or potential changes in
environmental variables. Many of those variables will give rise to opportunities and others will
exert threats on the organization – or both. A problem that has tobe faced is that the range of
variables is likely to be so great that it may not be possible or realistic to identify and understand
each one. Therefore, it is necessary to distil out of this complexity a view of the key
environmental impacts on the organization. Chapter 2 examines how this might be possible.

Strategic capability of the organization. Strategic capability measures what an entity can achieve?
The assessment of strategic capability involves the analysis of strengths and weaknesses.

Expectation and purpose. Strategic position analysis involves an understanding of:

• Mission statement: A formal statement that iterates the purpose of the entity
• Consideration for shareholders: increasing return on investment, maximizing
shareholders’ wealth etc.
• Consideration for other stakeholder groups: taking responsibility of stakeholder groups
like customers, employees and community.

The purpose of an entity is linked to the expectations that managers, owners and other
stakeholders have about it. Management need to understand how successful the entity has been in
meeting the expectations of its owners and other stakeholder groups. They also need to make
decisions about what the entity should be doing in the future to meet stakeholder expectations
more successfully than in the past.

2.3 Strategic choices

The second element in the Johnson, Scholes and Whittington model is strategic choices. This
involves identifying different possible strategies that the entity might adopt and making a choice
of the preferred strategies from the different alternatives that are available. There are three aspects
to identifying alternative strategies and making strategic choices:

• Corporate level strategies

• Business level strategies
• Development directions and methods
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2.3.1 Corporate level strategies: Corporate level strategies are developed at the top-level
management. These strategies are concerned about what the entity should be doing. Corporate
level strategies include decisions regarding:

• What products the firms should be selling?

• Which markets the firm should be targeting?
• How the firm should be expanding their operations at international level?

2.3.2 Business level strategies: These strategies are made at business unit level. These strategies
include choices between cost leadership or differentiation.

2.3.3 Development directions and methods: These strategies are developed at individual product-
market level. The company may decide to grow through:

• Market penetration
• Market development
• Product development
• Diversification
2.4 Strategy into action

The third element in the Johnson, Scholes and Whittington model of strategic management is
‘strategy into action’. This means implementing the chosen strategies. There are three aspects to
strategy implementation:

• Organizing
• Enabling
• Managing change
2.4.1 Organizing: An organization structure must be established that will help the entity to implement
its strategies effectively in order to achieve its strategic targets. ‘Organizing’ means putting into
place a management structure and delegating authority. Individuals should be made responsible
and accountable for different aspects of the chosen strategies. Decision-making processes must be
established.

2.4.2 Enabling: ‘Enabling’ means enabling the entity to achieve success through the effective use of its
resources.

2.4.3 Managing change: Most entities exist in a rapidly changing environment and they need to adapt
and change in order to survive and succeed. Implementing strategy always means having to make
changes. Managing change successfully is therefore an important aspect of strategic management.
Change Management is explained in more details in a later chapter.
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3. Organizational purpose and strategy

Section overview

◼ A hierarchy of objectives and plans

◼ Vision and Mission
◼ The relevance and purpose of the mission statement
◼ Goals and objectives
◼ Who decides mission, goals and objectives?

3.1. Hierarchy of vision, mission, goals, objectives and strategies:

In the strategic planning process, goals, objectives and strategies should be decided with the aim
of fulfilling the entity’s purpose. A business entity should have a hierarchy of aims and plans. A
useful way of presenting this is shown below.
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3.2. Vision and Mission

3.2.1. Vision: a vision statement represents a desired optimal future state of what the organization wants
to achieve over time. For example:
• Microsoft: “Empower people through great software anytime, anyplace and on any device”
• Avon: “To be the company that best understands and satisfies the product, service and self-
fulfillment needs of women – globally”

3.2.2. Mission: A mission is the purpose of an organization and the reason for its existence. Many
entities give a formal expression to their mission in a mission statement.
‘A mission describes the organization’s basic function in society, in terms of the products and
services it produces for its customers’ (Mintzberg). The mission defines the present state or
purpose of an organization.
A mission statement should be a clear and short statement. Drucker suggested that it should
answer the following fundamental questions:
• What is our business?
• What is our value to the customer?
• What will our business be?

• What should our business be?

Examples of Mission statement
The World Bank
‘Our dream is a world free of poverty
To fight poverty with passion and professionalism for lasting results.
To help poor people help themselves and their environment, by providing resources, sharing
knowledge, building capacity and forging partnerships in the public and private sectors.
To be an excellent institution able to attract, excite and nurture diverse and committed staff with
exceptional skills who know how to listen and learn.’

Commercial entities also often emphasize the ethical aspects of their mission, perhaps as a
method of motivating employees.
Pfizer Corporation (pharmaceuticals)
‘Our mission. We will become the world’s most valued company to patients, customers,
colleagues, investors, business partners and the communities where we work and live.
Our purpose. We dedicate ourselves to humanity’s quest for longer, healthier, happier lives
through innovation in pharmaceutical, consumer and animal health products.’

A mission statement might include some reference to competitive position.

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Kodak (imaging products)

The Kodak mission statement starts with statements about the corporation’s values and then
continues as follows:

‘With the above-mentioned values in mind we plan to grow more rapidly than our competitors by
providing customers with the solutions they need to capture, store, process, output and
communicate images – anywhere, any time. We will derive our competitive advantage by
delivering differentiated, cost-effective solutions – including consumables, hardware, software,
systems and services – quickly and with flawless quality. All this is thanks to our energetic,
results-oriented employees with the world-class talent and skills necessary to sustain Kodak as
the world leader in imaging.’

3.3 Relevance and purpose of mission statement

A mission statement can have several different purposes:
• to provide a basis for consistent strategic planning decisions
• to assist with translating broad intentions and purposes into corporate objectives
• to provide a common purpose for all groups and individuals within the organization
• to inspire employees
• to establish goals and ethics for the organization
• to improve the understanding and support for the organization from external stakeholder
groups and the public in general.

3.4 Goals and objectives

3.4.1 Goals: are aims for the entity to achieve, expressed in narrative terms. They are broad intentions.
For example, an entity might have the goal of maximizing the wealth of its shareholders or the
goal of being the world’s leading business entity in one or more markets.

3.4.2 Objectives: are derived from the goals of an entity and are aims expressed in a form that can be
measured and there should be a specific time by which the objectives should be achieved.
The objectives specified by the strategic planners should be SMART:
• Specific/stated clearly
• Measurable
• Agreed
• Realistic
• Time-bound (a time must be set for the achievement of the objective).
Objectives can be:
• Corporate
• Strategic
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Example:
Goal Corporate objective(s) Strategic objective(s)
Maximizing shareholders’ wealth Double the share price in • Increase annual
next ten years profit after tax by
125% in next ten
years
• Introduce average of
three new products
each year for next
ten years
• To become market
leader in four new
market segments in
next ten years
Some strategic objectives are more important than others. These strategic objectives become
critical success factors for which firms define key performance indicators.
3.5 Who decides vision, mission, goals and objectives?

When an entity states its mission in a mission statement, the statement is issued by the leaders of
the entity. For a company this is the board of directors.
Similarly, the formal goals and objectives of an entity are stated by its leaders.
However, the decisions by a board of directors about the goals and objectives of an entity are
influenced by the way in which the company is governed and the expectations of other
stakeholders in the company.
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4 Stakeholders and stakeholder expectations

Section overview

◼ Definition of stakeholders
◼ The expectations of stakeholders
◼ Stakeholder mapping
◼ Mendelow’s stakeholder power/interest matrix
◼ Stakeholder influence: the cultural context

4.1. Defining stakeholder

The stakeholders in an entity are any individuals, groups of individuals or external organizations
that have an interest (a ‘stake’) in what the entity does or is trying to achieve. Some stakeholders
have much more influence than others over the strategic decision-making of an entity and the
identity of the main stakeholders varies between different entities.
The stakeholders or stakeholder groups for a business entity usually include most of the
following:
• the ordinary shareholders
• the controlling shareholder, if there is one
• other classes of shareholders
• bondholders
• the investment community
• lenders
• suppliers, especially major suppliers
• customers
• the directors
• other senior executive managers
• other managers and employees, or groups of employees
• the government (local or national government)
• pressure groups, such as environmental protection groups and human rights groups
• local communities in which the entity operates
• the general public.
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4.2 Expectations of stakeholders

Each stakeholder or stakeholder group has different expectations from a company. They expect to
benefit from their association with the company and the benefits they expect are different.
According to the traditional view of corporate governance, the main stakeholders are the
shareholders of the company, its board of directors and probably also its senior managers. These
stakeholder groups have different rights and duties and they also have different expectations of
what the company should provide for them.
Company law varies between countries, but the rights, duties and expectations of the main
stakeholder groups might be described briefly as follows.
Rights Duties Expectations
Shareholders Right to vote on certain None Share price growth
issues Stable dividends Return on
Other rights are set out investment
in the constitution of the Possibly also an expectation
company of being consulted by the
board on major issues
Directors Right to take decisions in The directors have Personal advancement –
board meetings certain duties in remuneration, status
(extensive powers are law (for example,
given to the board under a legal duty of due
the company’s care and skill)The
constitution) board of directors
has a duty to give
leadership to the
company
Senior managers Employment rights Senior managers Personal advancement –
have a duty to remuneration, status Possibly
carry out their a belief that they should have
delegated tasks, in the power to make key
accordance with strategic Decisions
their contract of
employment

Employees Employment rights as Carry out Fair pay, job security, career
defined by employment delegated tasks as progress, good working
laws defined by job conditions
description and
employment
contract
Customers To be treated fairly and None Good quality products,
ethically ethical communication
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Rights Duties Expectations

Suppliers To be treated fairly and To supply the firm Good business relationships,
ethically with the products collaboration with supply
timely chain partners, improvements
in value networks
Communities Pollution free None Employment and economic
environment, ethical prosperity in local areas
business
General public Pollution free None Expect companies to show
environment, ethical concern for the environment,
business reduce pollution, and
develop environmentally
friendly products

4.3 Stakeholder Mapping

A business entity should manage its stakeholders, particularly those with the greatest influence.
As a part of a review of the strategic position of a company, management should identify its
major stakeholder groups, their power and their expectations.
One way of presenting the results of a stakeholder assessment is to prepare a ‘stakeholder map’.
The purpose of stakeholder mapping is to assist the directors of a company (or the governors of a
public sector entity) to obtain an appreciation of which the main stakeholder groups are and what
their real and potential influences are over the entity and the entity’s strategies.
The power/interest matrix is associated with Mendelow and might be referred to as a ‘Mendelow
matrix’.
4.4 Mendelow’s stakeholder power/interest matrix
This matrix compares:
the amount of interest of the stakeholders on a particular issue, for example, on a scale ranging
from ‘not at all interested’ (0) to ‘very interested’ (+10); and
the relative power of the stakeholders, on a scale, for example, from ‘very weak’ (0) to ‘very
powerful’ (+10).
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The recommended approach to dealing with the stakeholder group is indicated in each quadrant
of the matrix. The key stakeholders are those who have considerable power or influence, and also
a keen interesting the matter or decision that management is considering.
a) If a stakeholder has very little power and very little interest in a matter, minimal effort is
needed trying to keep the stakeholder informed about the matter or satisfied.
b) If a stakeholder has very little power but a strong interest in a matter, the appropriate way
to deal with them is to keep them informed about what is happening and why. The
stakeholder should be kept informed even if they oppose what the organization is doing.
c) If the power of a stakeholder is strong but the stakeholder has very little interest in the
matter, it is important to keep the stakeholder satisfied. It is essential to avoid any course
of action that will increase the stakeholder’s interest and persuade the stakeholder to
exercise its power.
d) The most significant stakeholders are those with a large amount of power and a high level
of interest in a matter. These stakeholders are key players and it is essential to obtain and
keep their support.

4.5 Stakeholder influence: the cultural context

The power or influence of stakeholders might come from a variety of sources.

Stakeholder Power
Employees Employees might have considerable power when they possess a high level of
skills and it would be difficult to replace them if they left the company.
Communities and The power of communities and the general public could be affected by
the general public government policy, how well organized they are and how much the company’s
activities impact on them and their environment.
Shareholders their control over formal decision-making processes
Senior managers their position in the management hierarchy (although senior managers should
not rely on their formal power alone to exercise influence within the entity)
their influence (through personal qualities)
Government Law and regulations
Customers Bargaining power of customers
Suppliers Control over key resources
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5 Intended and Emergent Strategies

Section overview

◼ Intended strategy
◼ Emergent strategy
◼ A mix of intended strategy and emergent strategy
◼ Enforced choice
5.1 Intended strategy
Intended strategy is a strategy that is planned through a formal planning process. The choice of
strategy is a conscious decision by senior management.
The board of directors of a company might approve a formal business plan. For example, the
directors of a company might approve a rolling five-year business plan each year.
It is therefore necessary for managers to understand that:
• intended strategy is a formally approved choice about the strategic direction that the
entity should be taking; and
• this choice was considered valid and appropriate at the time that it was approved.
However, strategy should be flexible.
5.1.1 Strategic intent
Definition: Strategic intent is a high-level statement of how an organization achieves its vision.
Strategic intent embraces the concept of ‘stretch’ meaning that current resources and capabilities
would not be enough to achieve the vision without some form of change.
An intended strategy is also a statement of strategic intent. It indicates the strategic direction that
the entity is taking. Although detailed strategies might change, strategic intent should be
consistent. When new, emergent strategies are adopted, these should also be consistent with the
entity’s strategic intent.

5.2 Emergent strategy

Emergent strategy is new strategy that develops or ‘emerges’ without formal approval being
given in advance. It is the result of reaction to changes in the environment and might be a
response to changes as they occur.
Emergent strategy has been defined as an ‘organization-wide process of incremental adjustment
to environmental states that cannot be discerned or anticipated through the prior analysis of data’
(Boisot 1995).
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For example, many companies in the past few years have developed an e- business for selling
their products on the internet. This development for most companies was in response to an
unexpected growth in customer orders or enquiries in their website. An emergent strategy, selling
goods by e-commerce, therefore came into existence without formal planning or formal approval.
It was a natural response to a major environmental change – customer use of the internet.
• Emergent strategy may be developed at different levels within an entity, in response to
events as and when they occur.
• When environmental change or ‘turbulence’ is high, the responsibility for emergent
strategy might have to be decentralized entirely and intended strategy becomes irrelevant
due to the inability of managers at head office to understand the changes that are
happening.
5.3 A mix of intended and emergent strategies
Mintzberg argues that strategy development should be a mixture of intended strategy and
emergent strategy. He commented (1987) that strategy is shaped as much by the capacity of
individuals throughout the entity to respond to or create opportunities, as it is by the strategic
intentions of the senior managers at the top.
Management need to understand that strategic developments can occur in either of these ways –
intended or emergent. However, new strategic developments, both intended and emergent, must
be consistent and fit in with the same strategic objectives.
5.4 Enforced choice
In some cases, management might take the view that they have no real choice of strategy, and that
they are ‘forced’ to adopt a strategy. The reasons for having to select an enforced strategy might
be that:
• a key stakeholder, such as a major shareholder, is insisting on a strategy, or,
• every competitor is doing the same thing.
However, it is probably a sign of weak management that a strategy is considered necessary or
unavoidable. Strategy selection should be positive. Management should be looking for the
strategies that are most likely to achieve the corporate objectives.
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6 Future Basing

Section overview

◼ Definition
◼ The vision
◼ Milestones
◼ Reality check

6.1 Definition
Future-basing is a relatively new and alternative methodology that can be used to create a vision
for implementing strategy at any level within an organization. This could range from overall
corporate strategy through to setting personal goals for individuals within a team.
Future-basing involves three phases:
• Firstly, a compelling vision needs to be established whilst ‘based in the future’.
• Secondly, milestone events and dates need to be identified by ‘remembering back’ what you
must have done to get to the future-based vision.
• Reality check - the final stage involves planning and strategizing how to achieve the
milestones through scheduling events and assessing the resources required.
6.2 The vision
Establishing a future-based vision involves picking a date by which time success needs to be
achieved. ‘Success’ needs defining (i.e. what you want to achieve) by describing the vision in a
detailed and structured fashion as if it is already real. This is achieved by pretending the future is
in fact today and ‘telling a story’ in the present tense. The visionary process is most effective
when positive language is used to describe the success.
The future-basing vision should be driven by what someone wants and not be restricted by
preconceptions of what they think is possible.
Example: Achievement

An example of an achievement story within the innovation category might be:

“We have successfully launched our new website with its revolutionary 360 degree 3-D
interactive shop window. It is highly satisfying that the Website has received such great feedback
from customers with a 97% ‘excellent’ rating. We are pleased that over 85% of our new-customer
sales are now generated through the Website with up-time running at 99.8% since launch.

The new website was launched on-time thanks to the superb project manager and great team that
they recruited. Employees felt a sense of ownership and buy-in to the project as everyone was
involved right from the start.”
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6.3 Milestones

The second phase is to ‘remember back’ to establish milestones that must have been achieved in
arriving at the vision. For ‘remembering back’ it is sufficient to know that something happened
rather than needing to know how it happened.
Continuing with the previous example:

Achievement Milestone events or actions Date

We successfully launched We subcontracted technical 12 months

our new website development to a specialist ago,
developer in 360 degree 3-D
interactive shop windowing.

It is highly satisfying that the We involved a customer focus 11 months

Website received great group in designing the new ago,
feedback with a 97% excellent interface which comprised a mix of
rating existing and potential customers.

We are pleased that over We ran a highly successful sales 5 months

85% of our new-customer and marketing campaign that ago,
sales are now generated focused on the unique customer
through the Website benefits of the new website.

6.4 Reality check

The reality check stage involves planning and strategizing how to achieve the milestones through
scheduling events and assessing the resources required. This is achieved by returning to ‘real
time’ and asking probing questions about the vision that has been created such as:
• Would we accept the vision without reservation exactly as it has been described?
• What resources would we need and how would we obtain them?
• What could prevent us realizing the vision?
• What action could we take right now to make it happen?
• How would we ‘sell’ the vision to all impacted stakeholders?
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