Narrowing the gap – formulating constituency-based strategy

Constituency-based strategy is about narrowing the gap between where an enterprise is and where it wants to be with respect to its employees, customers, suppliers, investors, regulators, and competitors. The same concept applies to its processes and products and/or services.

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The constituencies of an enterprise are:

  • Employees
  • Customers
  • Suppliers
  • Investors
  • Regulators
  • Competitors

Constituencies represent the people-oriented capabilities of an enterprise and its related-parties. The other capabilities are processes and products and/or services.

A process is a group of activities that:

  • Takes in one or more kinds of input
  • Creates output that is value to both external and internal consistencies

A product is a tangible output from a process that represents something of value – an item that meets a customer’s want or need. Products are component parts as single items or sub-assemblies, or end-products. Products are either commodities, such as oil or coffee, or value-added, such as manufactured items. Hard products are tangible; soft products are service-related. However, services are usually delivered with a product, regardless or whether it is hard or soft.
Constituency-based strategy narrows the gap between the enterprise and its related-parties. Narrowing the gap between where the enterprise is and where it wants to be with respect to its processes and products and/or services is usually a related set of activities to those for its constituencies. This is because everything ultimately relates to the primary constituencies of employees, customers, suppliers, and investors, in the context of the secondary constituencies of regulators and competitors, and the community-at-large. Constituency-based strategy can be expressed in terms of a “from to” relationship.

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Constituency-based strategy is set in terms of related-party, processes, and products and/or services within a framework of objectives, targets, goals, strategic initiatives, and priorities.

Objectives are specific statements of direction and intended results for narrowing the gap between where an enterprise is and where it wants to be – from the current to the future state.

Targets are measurable criteria for achievement over time, and are expressed in terms of intermediate and final goals. Targets represent the points of arrival from a point of departure over time in a “from to” relationship.

Goals are specific statements of achievement for each objective in time, such as for one, three, or five-year targets. Goals should always be specified according SMART criteria:

  • Specific in terms of why, what, who, when, where, which, and how?
  • Measurable
  • Actionable, attainable, and agreed to
  • Realistic
  • Tangible and time-specific

Stretch goals are set at one hundred and fifteen percent of the base, and may deserve reward for extra achievement.

Strategic initiatives are the specific action items to achieve the targets. High priority action items are called strategic imperatives. The action items should always be expressed in terms of specific tasks and steps.

Priorities can be classified as high, medium, or low using value-based criteria, such as return on investment, time-to-market, or improvement in efficiency, productivity, or utilization. Priorities are set by executives and/or the board of directors (or equivalent) of an enterprise by objectives and strategic initiatives. No more than twenty percent of the priorities should be classified as high, and no less than ten percent should be classified as low.

Constituency-based strategy sets the framework for “management by objectives” programs.

Formulating constituency-based strategy is an enterpriship (entrepreneurship, leadership, and managerial) competency.

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