Specifically, strategy is the answer to these five interrelated questions:

• What is your winning aspiration? The purpose of your enterprise, its motivating aspiration.

• Where will you play? A playing field where you can achieve that aspiration.

• How will you win? The way you will win on the chosen playing field.

• What capabilities must be in place? The set and configuration of capabilities required to win in the chosen way.

• What management systems are required? The systems and measures that enable the

capabilities and support the choices.

Two questions flow from and support the heart of strategy: (1) what capabilities must be in place to win, and (2) what management systems are required to support the strategic choices?

It isn’t entirely easy to make your way through the full choice cascade. Doing so isn’t a one-way, linear process. There is no checklist, whereby you create and articulate aspirations, then move on to where-to-play and how-to-win choices, then consider capabilities. Rather, strategy is an iterative process in which all of the moving parts influence one another and must be taken into account together.

It is essential that all of the systems have at least some capabilities and activities that line up with the core capabilities of the organization.

MANAGEMENT SYSTEMS AND MEASURES DOS AND DON’TS

• Don’t stop at capabilities; ask yourself which management systems are needed to

foster those capabilities.

• Do continue strategic discussions throughout the year, building an internal rhythm that keeps focus on the choices that matter.

• Do think about clarity and simplicity when communicating key strategic choices to

the organization. To get at the core, don’t overcomplicate things.

• Do build systems and measures that support both enterprise-wide capabilities and business-specific capabilities.

• Do define measures that will tell you, over the short and long run, how you are performing relative to your strategic choices.