In this week’s episode of the podcast, we talked about the Strategy component of Compass, Code and Strategy.
Many vision plans that companies develop are missing the crucial element of the nuts and bolts of your business. What is it, exactly, that you do?
The Strategy Matrix helps to answer that question in a way that can illuminate your next steps.
Let’s take a look at a Strategy Matrix.
Meet the Strategy Matrix. The first step in defining yours is to define the categories that your work fits into. For our example company, we decided that they spend their time in repairs, new commercial construction, and new residential construction. These are different kinds of work, sometimes they are performed by different departments and teams within the company, and they have different costs, profit margins and potential pitfalls.
Next, we want to look at your effort. By percent (and this can be as accurate and precise or as quick and off the cuff as you like) how much time does your organization expend in each of these categories. Your total should add up to 100!
Next, we’ll look at the money you make. At the end of the day, what percent of your net profit comes from each of your categories of work? Again, these percents might come out of your accounting software, or they might just be your best guess.
Finally, we calculate the ratio of Effort to Profit – 60% to 30% is a 2:1 ratio – giving us an efficiency factor of 2. That means we are expending more effort than profit in this category. An efficiency factor less than 1 means we are doing well in terms of effort to profit. Ideally though, we’d see all of our efficiency factors at 1, since that means we always put in an even amount of effort for the profit we get back.
We can analyze this information in a lot of different ways. For Get ‘Er Done, for example, we might decide that we are doing well enough on Commercial work that we want to increase the number of those jobs we’re bidding. We might look at that ‘2’ listed under Repairs and think about how we can develop new processes to make it more efficient.
Ultimately, this is just a simple tool to look, while you’re defining your goals and promises as an organization, at what it is you actually do, and how it’s working for you.
Want to learn more? Listen to the episode!