Business strategy

Purpose:

To describe the business direction for the future (short and medium term as minimum; ideally covering longer term as well) in terms of a vision, strategic themes and a portfolio of planned changes to which every programme and project contributes.

Fitness for purpose checklist:

• The strategic direction exists, as a set of strategic themes which are capable of providing a starting point for the planning of the required set of change programmes?
• Is there a set of strategic change initiatives which are consistent with the vision and the strategic themes for the business unit, are described in sufficient detail to enable subsequent prioritisation, selection and sequencing? Is the nature of the description of the change initiatives also such that implications of their influence on overall strategic direction can be interpreted?
• Is there a prioritised set of change programmes which clearly shows the interrelationships and dependencies between the change programmes themselves together with their costs and relative contributions (expressed in terms of potential benefits) to the vision and strategic themes of the organisation?

Suggested content:

A statement of direction for the future, which summarises the desired future for the organisation; it expresses 'where we want to be' in relation to the business success of the organisation. It indicates the areas of significant change and the desired outcome of such changes and developments. It can be constructed by considering what the situation will be as a result of progressing each of the themes in the strategy (see below).

• Strategic themes (the things the organisation must do to achieve its business objectives - significant topics, related to strategic change that is of concern to the business management of the organisation; maximum of six themes); descriptions to include:
• The reason why the theme is strategically important to the organisation
• The strategic issues which this theme helps to address
• The main changes or developments which the organisation will expect to achieve within the theme, and the direction in which this theme will take the organisation.
• High level plans: a preferred portfolio of programmes/projects for implementation, with component activities scoped in terms of:
• Estimated resources and costs for completion (these will be subject to wide margins of error at this stage)
• Expected outcome and benefits arising
• Implications for workspace, IT infrastructure and support
• Dependencies on other developments or on other components of business plans
• Constraints on timing - for example, this must be finished by a specified milestone date in the business plan.
• The preferred portfolio combines selected activities and developments in programmes of work that:
• Meet requirements and targets and satisfy constraints, as specified by the business
• Present acceptable cost and benefit profiles
• Are consistent with overall business strategy and plans for change
• Can be resourced and delivered by supplier organisations
• Are technically achievable with acceptable risk.

Notes:

The business strategy must be maintained continually, in line with changes in the business and its environment. It should be formally reviewed at least annually as part of the business planning round; it provides the context for progress reporting on strategic themes.

The business strategy must be developed in light of the outcomes from strategic spending reviews, e.g. the 2000 Spending Review as this sets the business context. Spending plans should be based on sound economic principles with a distinction between current and capital spending. The strategy should be developed along with full value for money measures, i.e. the cost effectiveness of the strategy. As much of the spending is now planned on a three-year horizon, with firm realistic limits (Departmental Expenditure Limits) for departments set three years ahead in each review. This gives departments a solid base for planning and it means that they can now concentrate on better management of existing programmes.

The business strategies of agencies and non-departmental public bodies must also take account of the Quinquennial Agency Review, which covers all activities of the organisation with regard to continued agency/NDPB status and options for rationalisation and merger.

The business strategy must always show progress against plans to date, to enable planners to determine the current business environment and the impact that specific change programmes and projects will have on the organisation as a whole. There must be accurate, timely information about:

• Major investments to date
• The corporate risk register
• For each major investment, the risks associated with it.

Further information:
Business change briefings : Business and IS strategies; Strategic management;and Positioning for the future

Cabinet Office guidance on business planning : Your Delivery Strategy

OGC's Estate Services Guide (Estate Strategy, STRAT 2.0)