Grids, Quads, and Pyramids: Saving Your Organization from Strategic Misalignment

When key questions like the following are hard to answer, the culprit is often the lack of a well-thought-out and well-understood strategy.

• Who are we and what is our business all about?
• Which markets should we pursue? In what sequence?
• What types of customers should we target and how?
• How should we allocate resources to get the most bang for the buck?

These are big, complex questions that need a thoughtful approach, backup data, different perspectives, and thorough discussions to answer. I continue to marvel at how much time is spent debating the answers to these questions without some kind of structured thinking and guardrails to facilitate the process. Many debates fall prey to endless loops, misalignment, wasted time, frustration, and tense relationships because people aren’t given the forum to consider other perspectives and data. Worse yet, with misalignment, each person makes his/her own assumption about what the strategy is.

As leaders, we need to be hyper-aware when the organization begins to flail in execution due to lack of clarity or absence of strategy. It is incumbent upon us to guide our teams out of this mode by converging on a strategy and communicating it effectively.

Keys to Strategy Development and Alignment

To help avoid that painful ad-hoc process with mediocre or no results, it’s worth considering a more structured approach and forum to get to the answers. Although the answers are important, equally or even more important are the following:

• Using a facilitated process, tools, data, and pre-work to drive the right discussion.
• Having the right people together in a risk-free environment to openly discuss, debate, and converge towards the answers.
• Gaining alignment to articulate and cascade what the strategy is and explain why the strategy is what it is.
• Testing and validating the strategy.
• Being ok to change the strategy based on validation results, changes in assumptions, and shifts in market conditions.

I can easily write an article for each bullet above. But for the purposes of this article, I’ll primarily share tools to help break up complex problems into bite-sized chunks to evaluate and debate potential answers, and ultimately choose and align around the right answers. Vehicles or tools like grids, quadrants and pyramids should be familiar to many of you. But if you’re like most, including me, when you’re in the middle of a strategic discussion where there’s misalignment and emotions are flying high, tools to help evaluate answers and drive towards alignment probably aren’t the first things that come to mind. So this should serve as a reminder, at the very least.

Grids

I personally love using grids to evaluate multiple potential answers across a wide range of criteria. In the example in Figure 1 below, the grid shows potential business definitions for a company. In other words, it’s used to figure out what a company is all about. In which area will the company differentiate and defend to the death? The business definition provides the foundation for how the company operates. Where, when, how, and how much a company spends will be different depending on how it defines its business.

In the grid, each of the potential business definition options are evaluated against a set of criteria: leverage competencies, market fit, resource fit, and shareholder value. Using a forced ranking approach, each business definition gets a score when evaluated against each criterion. For example, the business definition of network simplification leverages the company’s core competencies the most and scalability leverages it the least. Then the scores are tallied for each of the definitions across the criteria to determine the best answer.

Figure 1. Grid to Evaluate Potential Business Definitions

Before ranking, the group needs to identify the potential business definition candidates and the criteria, as well as agree on what each of those mean. For each business definition, the group should characterize the target segments/customers, products, channels, resources required, etc. The same applies for criteria. Does market fit mean size of the market? Rapid market growth? Ability to compete? Combination? For core competencies, what does the list of core competencies look like? Regardless of the criteria, the group needs to understand what each criterion means so everyone has the same basis for evaluation.

Much of the debate happens when applying the forced-ranked scores. Two people might have completely opposing views on which definition leverages competencies most and least. So that discussion is critical for the group to make decisions about the ranking. Ultimately, with the seven potential options, it’s less important for the group to get the 3 correctly. But it’s critical to get alignment on the 7 and 1. In other words, finding the most and least important business definitions are more important than nailing down the ranking for the gray area in the middle.

Throughout the discussion, the team might also discuss and decide that the criteria should not be weighted equally, so weights can be used in that scenario. Playing around with the weights might also present different results and interesting discussions.

In the end, the team needs to gut check the mathematical answer as a result of the process. Does the answer feel right or is there something amiss? Oftentimes, it’s a combo of the mathematical answer, gut check, and data/validation.

Quads

A 2x2 quad gives us the opportunity to analyze across two dimensions and gradients within each dimension. In the Needs vs Buying Criteria quadrant example in Figure 2, it works to determine what types of customers to target based on the customers’ needs (simple vs. complex) and how they buy (price sensitive vs. willing to pay for added value).

It shows that this particular business would target customers that have complex requirements and are willing to pay for added value (upper right). The company would only respond opportunistically to customers with simple requirements and are price sensitive, which can most likely be addressed by more competitors with off-the-shelf products where there’s not as much differentiation and margins are low (lower left). The upper left quadrant is equally interesting in that the company needs to address how to show its value and get customers with complex requirements to pay for that value. And for those customers with simple requirements who are willing to pay for value (lower right), what are some of the value-added services that can be offered (e.g., expedited delivery intervals, online ordering and billing, customized reporting, consulting services, etc.) For each of the quadrants, we should be able to identify the customers, potential revenue, GTM strategy, and marketing strategy.

And the corresponding 4-Ps 2x2 chart in Figure 2 shows a sample high-level execution plan.

Figure 2. Buying Criteria vs Needs and 4-Ps Quadrants

Pyramids

There are so many different uses for the classic pyramid. The pyramid sample in Figure 3 is used to determine the go-to-market strategy for the business based on goals for various target segments of the market. The benefit of this approach is that all functional groups have visibility into the key focus areas. And it allows for discussion about how the groups will work together to best address the needs of the target segments. It also helps highlight key requirements and dependencies to achieve the goals.

Figure 3. Pyramid to Determine GTM Strategy and Approaches for Target Segments

As part of the goals and strategy discussion, the team needs to converge on the strategy for each tier based on the goals (e.g., revenue, sales, market share). The strategy might be retain, grow, harvest, innovate, or pause/exit.

Let’s use the top tier of the pyramid example above to determine go-to-market execution approaches based on the strategy. There might be 100 or so top named accounts where there’s a specific revenue goal that the company wants to achieve with a strategy of retention and customer stakeholder relationship expansion to improve stickiness. The various functional groups need to determine what that strategy means for their group and work together with other functional groups to achieve the goals.

The product team might have to focus on a developing solutions with customizable options and/or key innovations to support the needs of this segment. Sales might need to think about identifying new contacts and planning to build relationships with customer groups that it has not traditionally targeted like the business units, marketing, strategy, or finance to support new revenue generation value propositions. There may or may not be a role for the channel in this tier, given the direct and high-touch approach required. Marketing may need to focus on helping sales identify new contacts, digitally surrounding these new contacts, and engage these contacts with relevant content. Account-based marketing approaches may be a natural fit here. Finally, the support team might offer personalized support services with dedicated support resources in every aspect of the customer lifecycle and better service level agreements. A similar approach can then be applied for the pyramid’s mid-tier vertical markets and bottom-tier volume business.

As the teams develop their respective GTM approaches, there needs to be collaboration across to understand required resources and key dependencies from each group. During that discussion, the teams should be open to a give-and-take and potentially modify approaches as needed. For example, the teams might need to prioritize or take a phased approach across the board to accommodate resource limitations in product development.

Although these approaches are fairly intuitive, in practice, it can be quite challenging to commit to having a strategic discussion; capturing the output of that discussion in a conceptual framework using tools like those discussed above; and using those principles to drive tactical decisions and execution, while remaining agile and attuned to corrective feedback from customers and the field. However, it’s pain now or much bigger pain later. It’s well worth the time and effort to put in the upfront strategy work to avoid potential downstream implications on productivity, employee morale, market competitiveness, overall customer satisfaction, company revenues, and more.

Much of the strategy work nowadays revolves around transforming towards a digital business. An article I wrote, Leading a Digital Business: What Wasn’t OK is Now a Must, also offers other tips in strategy development and leadership in a digital business.

Debate, Align, and Onboard

In the end, it’s less about vehicles or tools such as grids, quads, or pyramids. Tools help facilitate a process. What are most important are a healthy debate that happens when the right people bring and listen to different perspectives, the understanding and alignment around what needs to be done, and the communication to gain buy-in throughout the organization for execution.

Getting the rest of the organization onboard requires more than just cascading the decisions. It means communicating 1) the process to get to the decisions, 2) participants in the process (hopefully showing that someone on their team has represented their views), 3) the decisions, and 4) the rationale for the decisions. Also share that as things change, which they will, the organization can more easily go back to the tools and notes from the discussions to re-evaluate and make modifications.

Having a clear understanding of the strategy across the organization builds confidence in people to make the hundreds of day-to-day decisions to align with company strategy. When every decision doesn’t have to come to you as the leader, then that’s a good sign that you have alignment and people are empowered.

Remember, if you want to go fast, go alone. If you want to go far, go together.

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