Corporate strategy for the year: choices, resources and review
Strategy is a coherent set of choices about where a company creates value, how it gains an advantage and where it directs scarce resources. An annual strategy is more than a budget or a list of projects: it sets priorities for the existing business and the conditions for reviewing them.
- DiagnosisWhat has changed for customers and the business?
- Strategic choicesWhere do we compete, and what do we stop doing?
- Resource planWhich bets receive people and capital?
- Annual budgetWhat do we fund in the first year of the plan?
- Review during the yearWhat evidence would change our bet?
Strategy is not an action plan
A plan describes what the company intends to do; strategy explains why those actions could create an advantage. It connects choices about customers and markets, how value is created, the capabilities required and the alternatives to forgo. Roger Martin describes strategy as a bet under uncertainty: even a detailed schedule of initiatives does not prove that customers will choose you. For an established company, the annual cycle is a time to test that bet, rather than start from scratch every year.38
Start with a diagnosis, not an ambition
First establish where the company really creates or loses value: which customers deliver results, which needs remain unmet, how competition is changing and which capabilities already exist internally. Compare the actual economics of business areas with last year’s assumptions. Without this, it is easy to confuse a growth target with a strategy for achieving it. McKinsey recommends connecting the strategic review to actual capital allocation, rather than running two isolated processes.37
Define where to play and how to win
Identify specific customer groups, their needs, markets and the value proposition. Then describe the system of activities that enables the company to deliver on this promise better than the alternatives: product, service, channels, capabilities and economics. Check whether the chosen advantage is reflected in customer behaviour, rather than only in management’s presentation. If the company promises both personal service and the lowest price, show which operating model makes those promises compatible.38
Compare alternatives and the cost of giving them up
Consider several plausible paths, rather than one plan with different numbers. For each, write down what must be true, what resources it requires, which opportunities must be forgone and what would disprove the assumptions. Test the choice against several scenarios for demand, competition and access to capital. After comparing alternatives, the CEO must choose the bet and state the conditions for reviewing it.1838
Connect choices with their consequences
A strategic decision must explain at the same time which customers the company chooses, what advantage it offers them and which capabilities and resources it will need to deliver the promise. The annual action plan answers a different question: how to organise work around that choice. For example, a bet on demanding corporate customers is inconsistent with funding only the cheapest channel and having no service team. It is useful for the CEO to identify these contradictions before approving the budget. Roger Martin described this distinction between strategy and planning in 2025.38
Identify the main obstacle and evidence of progress
In his 2022 book, Richard Rumelt proposes finding a pivotal, surmountable challenge rather than starting with a list of desired results. If the problem is an inability to retain customers, a new geographic expansion plan may simply scale the losses. Define one or two obstacles, actions to overcome them and early evidence: what must change in customer behaviour or economics before the annual financial result appears? Then align these actions with the budget and review dates, so that strategy does not remain a separate presentation.4637
Translate choices into resources and a review rhythm
Set out each bet on one page: the customer problem, source of advantage, key assumptions, accountable owner, people and capital, first evidence of success and review date. Stop or reduce activities that no longer support the choice. McKinsey proposes linking the annual strategy cycle to the financial plan while retaining the ability to reallocate resources during the year. Technology, including AI, may help execute the bet, but does not justify it.374
Questions before a decision
- Which customer group and problem are we deliberately making our priority?
- Why will a customer choose us over an available alternative?
- Which attractive opportunities are we giving up to maintain focus?
- Which people, capital and attention will move to our chosen priorities?
Sources
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