Strategic filters are tools you can use to prioritize your organization’s initiatives.
Being able to evaluate the initiatives you’re going to pursue as part of your strategic plan is at the core of the strategic planning process. You need to be able to identify what the high-priority initiatives are and what the low-priority initiatives are. To do so, you need a common set of criteria that everyone across the organization is going to use to conduct those evaluations. I call them strategic filters.
These filters are going to be things that are important to your organization, things like this idea meets a customer need, or it helps us be differentiated versus our competition, or it has an acceptable level of complexity. Sometimes your filters aren’t qualitative; they’re quantitative. So what’s the net present value of this initiative? What’s the financial return? What’s the return on investment? By articulating this set of criteria, you’re going to have a common lens to evaluate your initiatives through.
These filters are going to screen out initiatives that aren’t consistent with the stated direction of the organization. And they’re going to be customized based upon the needs of the organization. For example, if you need to grow internationally, you probably need a filter that says, “Helps us be more global.” If the initiative does that and gets you into new countries and new geographies, then it would be high on the priority list. If it doesn’t and it keeps you domestic, that initiative would be low.
Once you’ve generated your set of strategic filters, you need to understand how much risk they’re going to have you take on. There are five things to look at as you evaluate that risk.
First, consider how relevant your existing capabilities are. Are the strengths you have today going to be relevant to the initiatives you pursue tomorrow?
Second, look at your channels. Will we be distributing our products through the same channels, or will we be entering new channels? For example, if we sell through retail today and we’re looking at selling online only tomorrow, you’re going to be taking on more risk with a newer channel.
Third, look at your cost structure or the infrastructure. If the cost structure and infrastructure required to pursue an initiative is similar to what you do today, then it’s lower risk, and if it’s not, then it’s higher risk.
The fourth thing to look at is your customers. Will you be serving the same customers or are you going after new customers? Obviously, new customers carry higher risk.
And lastly, will you be running against the same competitors or are you going to compete with different ones?
Once you’ve generated your filters, do this back-check against these five criteria to understand whether your filters are going to direct you in a riskier direction or a safer direction. The right answer lies somewhere in the middle. You want to take on some risk because that’s going to create new opportunities for you, but not so much risk that you’re risking the enterprise.
By creating this consistent set of filters, you’re going to be able to evaluate your initiatives quickly and effectively and stay on your stated path to reach your goals.
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