Table of Contents
What is a Strategy Toolkit?
A strategy toolkit is a collection of different strategy frameworks and tools which are used for developing strategy options and evaluating alternative strategy directions. While tools of internal and external analysis are sometimes seen as strategy frameworks, we need to make an important distinction. Most of these tools only help gather and categorize information which will help strategy formulation – they do not explore strategy options or help evaluate different strategic directions.
Instead, strategy tools and techniques are specifically those which help you come up with strategy choices or help evaluate them. They prescribe different strategic directions that a company can choose to take after having reviewed the internal and external factors of significance. To put it another way, the tools of internal and external analysis are essential for gathering and organizing important information that any strategy initiative should build upon. Strategy building tools on the other hand use that information as a foundation for exploring the options available to a company and weighing them against one another. The usage of such tools is critical for effective strategy visualization.
What is Strategy Visualization?
Strategy visualization refers to developing strategy options and the roadmap for achieving them. This is then followed by communicating this to relevant stakeholders in a way that is easily understandable by them. As the name suggests, strategy visualization is often accompanied by a visual representation of the strategies being explored and considered. However, this does not always have to mean a pictorial representation.
Instead, the term is used in general to refer to clear articulation of strategies and how they may be implemented. In other words, strategy visualization is often theoretical in nature, which is then followed by the process of strategy execution or implementation. These two phases together form the overall process of strategy planning, which we have explained in detail in our comprehensive strategy checklist.
Having said that, graphical illustration of the strategies being evaluated, and the variables inform can go a long way in effectively communicating a strategic vision to stakeholders. Hence, we highly recommend that you prepare visual representation representations of strategy choices when trying to convince your stakeholders about what strategy direction to take. The next section lists various strategy visualization tools, some of which are well-suited to graphical depiction, while others may not be as intuitive for this purpose.
What Tools are used in Developing Strategy?
There are many different tools used in strategic analysis. There are no specific strategy tools and techniques which are ‘best’ for all occasions. It is also worth keeping in mind that different tools have different strengths, weaknesses and relevance based on the situation of the strategy planner and the company. Often, you will need to mix and match multiple tools from the strategy toolkit to achieve your desired outcomes. Such a combination of different tools also helps triangulate information so that more informed and well-calculated decisions can be taken.
Here’s a business strategy toolkit which lists the most common tools used in strategic analysis. We have separate guides for most of these strategy tools and frameworks. You can look up the relevant guides to get a more detailed understanding of any of the concepts.
1. Ansoff’s Matrix
This tool helps identify strategy options of product-oriented versus market-oriented.
| Focus Variables | Strategy Options |
| ► Product Options (New vs. Same) ► Market Options (New vs. Same) | ► Market Development (same product, new market) ► Product Development (new product, same market) ► Diversification (new product and market) ► Market Penetration (same product and market) |
2. Porter’s Generic Strategies
Porter’s Generic Strategies model is useful for generating strategy options based on an emphasis of cost versus differentiation.
| Focus Variables | Strategy Options |
| ► Scope (Narrow vs. Broad) ► Source of Competitive Advantage (Cost vs. Differentiation) | ► Cost Leadership (broad scope, cost-based) ► Differentiation (broad scope, differentiation-based) ► Cost Focus (narrow scope, cost-based) ► Differentiation Focus (narrow scope, differentiation-based) |
3. BCG Growth Share Matrix
The BCG Growth-Share Matrix helps take decisions about which strategic business units deserve more attention.
| Focus Variables | Strategy Options |
| ► Growth rate (high vs. low) ► Market share (high vs. low) | ► Consolidate/Expand (high growth and market share) ► Harvest/Grow (low growth, high market share) ► Invest or Divest (high growth, low market share) ► Divest (low growth and market share) |
4. GE-McKinsey Matrix (aka Directional Policy)
The GE-McKinsey Matrix helps determine strategic priorities based on market opportunities.
| Focus Variables | Strategy Options |
| ► Industry attractiveness (high vs. low) ► Strength of a Business Unit or Product (high vs. low) | ► Invest/Grow (high attractiveness and strength) ► Hold/Protect (medium attractiveness and/or strength) ► Harvest/Divest (low attractiveness and strength) |
5. Shell Directional Matrix
The Shell Directional Matrix provides a simple, yet comprehensive matrix of strategy options based on internal and external factors.
| Focus Variables | Strategy Options |
| ► Strengths and capabilities of the business (strong vs. weak) ► Industry attractiveness and profitability (high vs. low) | ► Divest / withdraw from market ► Selective investment ► Invest to build and grow ► Selective growth ► Harvest/divest ► Consolidate and protect |
6. Strategy Clock
The Strategy Clock tool provides a means of strategic positioning based on some products or services.
| Focus Variables | Strategy Options |
| ► How customers perceive the value of products or services ► Price of products or services | ► Price-emphasis ► Differentiation ► Hybrid Strategy ► High Margins ► Monopoly Pricing |
7. Gap Analysis
Gap Analysis aims to identify chokepoints and other negative aspects which may be holding the company back.
| Focus Variables | Strategy Options |
| Is not limited to specific types of input. Can consider any internal or external aspects of a business | Does not recommend specific strategies. Instead, it can help identify various types of gaps in the market |
8. Strategy Canvas
The strategy canvas model helps plan the future direction of the company, with a focus on innovating and avoiding factors with high competition.
| Focus Variables | Strategy Options |
| ► Most common and dominant trends and critical factors in the industry ► Areas of innovation with relatively less competition | Does not recommend specific strategies. Instead, it helps identify gaps in competitor’s offerings specifically |
9. Scenario Planning and Analysis
Scenario Planning is aimed at rooting strategy choices based on the degree of likelihood and risks involved.
| Focus Variables | Strategy Options |
| ► Impact of scenario (high vs. low) ► Likelihood of scenario (high vs. low) | ► Cautious approach (high impact and low likelihood) ► Safe approach (low impact and likelihood) ► Risk approach (high impact, high likelihood) ► Taking a gamble (low impact, high likelihood) |
10. Strategic Alignment Matrix (aka Action Priority Matrix)
The Strategic Alignment Matrix is a framework for prioritizing strategies options by comparing potential significance of strategies with the effort required to pursue and capitalize on them.
| Focus Variables | Strategy Options |
| ► Impact of initiatives (high vs. low) ► Effort required to implement (high vs. low) | ► Pursue Quick Wins (high impact, low effort) ► ‘Fill in’ Opportunities (low impact and effort) ► Waste of Time (low impact, high effort) ► Major Projects (high impact and effort) |
11. Change-Impact Model
The Change-Impact model is particularly relevant when looking at strategies involving changes. It helps categorize the different options for easier decision-making.
| Focus Variables | Strategy Options |
| ► Necessity for change (high vs. low) ► Degree of change required (high vs. low) | ► Overhaul (high need and level of change) ► Overkill ((low need, high level of change) ► Synergy (high need, low level of change) ► Limited Impact (low need and level of change) |
12. Strategic Fit and Progress
The Strategic Fit and Progress framework assists in evaluating ongoing strategic initiatives and taking decisions on how to continue further with them.
| Focus Variables | Strategy Options |
| ► Level of Strategic Fit (high vs. low) ► Progress of initiative (good vs. bad) | ► Invest Further (high fit, good progress) ► Selective Support (high fit, bad progress) ► De-prioritize (low fit, good progress) ► Scrap / Eliminate (low fit, bad progress) |
13. Game Theory
The application of Game Theory allows companies to stay ahead of the curve through anticipating, acting or reacting dynamically in response to moves by competitors.
| Focus Variables | Strategy Options |
| ► Actions and reactions of market players ► Potential consequences of different actions | Does not recommend specific strategies. Instead, it helps plan contingencies by considering moves and countermoves |
14. Balanced Scorecard
The Balanced Scorecard approach is useful for optimizing workflow by monitoring performance against benchmarks.
| Focus Variables | Strategy Options |
| ► Financial Aspects ► Customer Relationship ► Internal Business ► Innovation & Learning | Does not recommend specific strategies. Instead, it helps identify gaps in service delivery |
15. Strategic Sweet Spot
The Strategic Sweet Spot illustration helps to visualize unique core competencies that are difficult to imitate and addresses main pain points of customers.
| Focus Variables | Strategy Options |
| ► Customer Needs ► Company’s Capabilities ► Competitor Offerings ► Environmental Context | Does not recommend specific strategies. Instead, it helps identify gaps in service delivery |
16. Buyer Utility Map
The Buyer Utility Map is a representation of the value proposition of the company and how it corresponds to each stage of user experience. Improve on pain points to deliver better value.
| Focus Variables | Strategy Options |
| ► Utility Levels (Six Variables) ► Buyer Experience (Six Stages) | ► Identify and categorize problems faced by customers ► Strategy output is to consider ways of resolving the pain points |
17. Business Model Canvas
The Business Model Canvas helps identify new ideas for growth in existing businesses and create a visual roadmap for realizing them.
| Focus Variables | Strategy Options |
| ► Hybrid Internal/External Analysis ► Internal Activities ► Resources ► Cost and channels ► Key Partners ► Value Proposition for Customers | Brainstorm strategies ideas which create better links between the main factors considered |
18. Jobs to be Done Model
Jobs to be Done is a model which helps explore ideas for strategies which provide the best returns for the level of work done by the company.
| Focus Variables | Strategy Options |
| ► Level of Work (Better vs. Worse) ► Charge to Customer (More vs. Less) | ► Differentiated Strategy (target underserved customers) ► Dominate Strategy (all types of customers) ► Discrete Strategy (customers with limited options) ► Disruptive Strategy (overserved and non-customers) |
19. Six Paths Framework (Blue Ocean strategy)
The Six Paths Framework is a common application of blue ocean strategy in which the strategy pathways which focus on ‘blue ocean’ spaces with relatively less competition are explored.
| Focus Variables | Strategy Options |
| ► Industry ► Strategic Group ► Buyer Group ► Scope of Product/Service ► Functional/Emotional Orientation ► Time | ► Explore alternative industries ► Identify other strategic groups ► Redefine industry buyer groups ► Consider complementary products and services ► Rethink orientation of the industry ► Try to share external trends over time |
20. Three Tiers of Non-Customers
The model of Three Tiers of Non-Customers provides recommendations for expanding target customers to other tiers of non-customers and bringing them into the industry.
| Focus Variables | Strategy Options |
| ► Customers currently in the industry ► Customers who are at the edge of industry ► Customers who refuse to come into the industry ► Customers in other Industries | Does not recommend specific strategies. Instead, it helps identify gaps in the company’s market reach |
21. Competitive Position Tactics
Competition Position Tactics is a tool which factors in the cost aspect to categorize differentiation strategies.
| Focus Variables | Strategy Options |
| ► Degree of Differentiation ► Relative Costs | ► Maintain Specialty (high differentiation and cost) ► Outstanding Success (high differentiation and low cost) ► Hope for Growth (low differentiation and high cost) ► Maintain Cost Advantage (low differentiation and cost) |
22. Importance Satisfaction Model
The Importance-Satisfaction Model helps identify which strategies require more focus and attention based on the satisfaction level of stakeholders and their importance to the company.
| Focus Variables | Strategy Options |
| ► Satisfaction Level of Stakeholders ► Importance of Stakeholders | ► Surplus Area (high satisfaction, low importance) ► Excellent Area (high satisfaction and importance) ► Careless Area (low satisfaction and importance) ► Area to be Improved (low satisfaction, high importance) |
What Makes a Good Toolkit
The selection of the right tools for strategy analysis depends on the goals and expected outcomes of the strategy planner and stakeholders. The following section provides an overview of different contexts and some of the most suitable techniques from the strategy toolbox for them.
Strategy Toolkit for Improving Value Proposition
When the strategy which you are looking for involves creating better value for customers, then it would be better to choose a tool which takes this into consideration. This can include the following tools.
- Balanced Scorecard
- Gap Analysis
- Buyer Utility Map
- Business Model Canvas
- Strategic Sweet Spot
Strategy Toolkit for Growth in Scale or Scope
If you aiming to achieve a growth in the company’s scale of operations, the suitable tools are ones that compare growth potential in some way. This can include tools like the following.
- Ansoff’s Matrix
- BCG Growth-Share Matrix
- GE-McKinsey Matrix
- Shell Directional Matrix
- Strategic Alignment Matrix
Strategic Toolkit for Competitive Positioning
For better strategic positioning in relation to competition, the appropriate tools to consider must have a consideration of competitive aspects. This makes the following tools well-suited to this situation.
- Porter’s Generic Strategies
- Strategy Clock
- Strategy Canvas
- Strategic Fit
- Six Paths Framework
- Tiers of Non-Customers
Strategy Toolkit for Evaluating and Choosing Strategic Direction
The best tools to use when changes to strategic direction are involved are those that help explore and address the uncertainties or efforts involved with the changes. Hence, the appropriate tools for this situation are:
- Scenario Planning
- Change-Impact model
- Game Theory
- Jobs to be Done
Strategy Toolkit for Performance Optimization
On the other hand, if you are only looking to enhance company performance and optimize workflows, some of the strategy tools to consider are the following.
- Gap Analysis
- Balanced Scorecard
- Scenario Planning
- Jobs to be Done
Strategy Tools for Small Businesses
Most of the strategy tools listed above are broad in scope and can be used by small businesses in the same way that large corporations would. Some other key considerations for small businesses when using strategy tools and techniques are as follows:
- Small business must take care in choosing strategy tools that are suited to their scale of operations
- Some of the tools such as BCG Matrix which looks at strategic business units are not directly relevant for small businesses as they typically do not have many such divisions
- Small businesses should restrict the use of tools to only the immediate market or environment to avoid distractions and poor allocation of resource and efforts
- Tools aimed at improving the value proposition are likely to be more important in the early stages for small businesses
- Strategy prioritization tools such as the Strategic Alignment or Change-Impact models are also more important for small businesses as they have a greater need for time and resource prioritization
- Tools such as Balanced Scorecard and Gap Analysis may complicate things if used in early-stage start-ups as they can create distractions and lead to over-fixation on process optimization over the company’s growth and expansion