Much has been written on setting strategy and on implementing it. Missing from nearly all of it is one practical page that says what the company must change to get from where it is to where the strategy says it will be. Not the project list; that comes later. The specification: the capabilities that must be bought, built or phased out, against the customer needs they serve, with the investment required and the return expected. In short, the first honest estimate of return on invested capital.
It is also the one page a board can use to judge how real the planning was, and the business case a CEO takes to shareholders. And it explains to the company the what and the why behind the initiatives that follow.
What a future capability is
The processes, skills and technology needed to build what is next and underpin the advantage you make money from. Put another way: if we envision this purpose and path, across these product and market priorities, then to reach these goals we require X. X is the capability, and it has to produce above-average profitability against the competition or it is a cost, not a capability.
Three steps
Be clear on product and market priorities first, and on the purchasing criteria your priority segments weight most heavily; without those, capabilities are guesses. For each priority segment, list the capabilities needed to win on those criteria, and mark each build, buy or stop. Put the investment and the expected return beside each, and let the board see the arithmetic.
Where it sits
This is tool four of the MOVE® system, advantage and future capabilities, and it is the link between the product-market matrix and the project portfolio. Without it, projects get funded by persuasion. With it, they get funded by return.
Monday
List the three largest investments in this year's plan. Beside each, write the capability it builds and the segment that pays for it. Any investment without both is a project in search of a strategy.
