Pyramid of strategy

Even a good strategy will fail
if people don't understand it. 

Without communicating the strategy clearly: The people won't know where the organization is going, or how to help you get there. They'll probably get frustrated and confused; customers may feel dissatisfied; and other stakeholders may lose their faith in your organization's ability to deliver. 

So your business needs both effective strategic planning as well as a good communication of strategy.  Just as a map is more effective than a list of directions, so in strategy "Pyramid of purpose" is more effective than a big document.

The strategy essentially answers why are we doing what we are doing? What do we need to do to fulfill our intended purpose? How exactly are we going to do what needs to be done? Who (or what) is going to make sure it's done?

A hierarchy of questions emerges: In order to answer question 4, you need to answer question 3; to answer question 3, you need to answer question 2; and to answer question 2, you need to answer question 1. 

• Question 1 – "why" – refers to your organization's values, mission, and vision.  
• This is the "Collective Mind" part of the strategy which energizes , motivates and directs the employees and other stakeholders. These decisions are taken by the founders and boards
• In terms of "7S" model, these decide style, shared values and skills
• They represent what the organization wants to do and what it does not want to do and thus represent both the aspirations and limits. 
• They are used by the top management to decide the kind of culture that needs to be created inside the organization; and the type of people the company needs to hire so that their value system matches with the organization's values. 
• Most of the times these are expressed in "timeless" terms and, as such, do not change over time unless there is a drastic change in the external and internal environment.  
• Vision is expressed normally to communicate strategy to external audiences in inspirational terms whereas the mission is normally used to communicate the strategy to internal audiences and is more specific regarding what to achieve. 
• Question 2 – "what" – covers objectives and goals.  These are long range (typically 5 year) plans and objectives  and are crucial to linking the vision, mission and values to the long terms decisions the top management must take to create enablers for the long term direction by taking important long term decisions like allocating resources to capital expenditures, resource development, capacity building and organizational development  in terms of structures, staff and systems.
  
• Question 3 – "how" – refers the actions needed to realize these goals. This is a typical organization wide process - generally done under the supervision of the finance department - of setting annual goals and incorporate all aspects of inflows and outflows of money and the activities which will drive them. The evidence is in terms of all people being aware of what they need to deliver financially (revenues and costs)
  
  
• Question 4 – "who" – refers to the people, systems and tools which deliver these. Much of this happens within a function / department wherein the activities are planned and periodically monitored and corrected.  These are variously called as projects, programs, work plans etc. 

How to build your own Pyramid Of Purpose

STARTING POINT

If the purpose is to communicate strategy to customers and stakeholders of your organization (an external audience), a good place to start your pyramid is with a vision statement. For an internal audience, the "why" level might focus on the mission statement, or indeed include both vision and mission statements in your pyramid.

("Mission" and "Vision" are different jobs. A Mission is the organization's purpose and is to be used by the leadership team and owners as the key measure of success. A vision also defines the purpose but in more inspirational / value terms rather than in terms of bottom line.  The vision statement communicates both the purpose and values of the organization. For employees, it gives direction about how they are expected to behave and inspires them to give their best. Shared with customers, it shapes customers' understanding of why they should work with the organization. Mission Statements and Vision Statements usually refer to an organization or an organizational unit) 

An entrepreneur explains his strategic plan to potential investors as a Pyramid 

1. Why: Vision / Mission : To delight and enthrall parents and children alike with beautiful, collectable, wooden toys and games, and in so doing, become the nation's leading retailer of high quality, wooden toys and games.
2. What: Objectives : Prove the concept by launching a pilot store and reaching profitability within 18 months.
3. How: Actions : Identify the pilot store location, Source good quality wooden toys and games, Design attractive store front and merchandising approach
4. Who: People : Responsible for location selection; Responsible for supplier identification and product sourcing; Responsible for selecting store designers and shop fitters;

Once you have described the "why", the next steps of building your pyramid must define the "what", then the "how" and finally the "who". And you need to do this in a way that clearly explains your strategy to your specific audience.  putting the various elements of a good strategic plan into a pyramid form, it is easy to see the "big picture" and relationships between different elements of the plan in a form that is easy to understand: The purpose shown at the apex cascades from one level of strategy to the next. 

There are no hard and fast rules for building a Pyramid of Purpose: Use it to convey your plan in the way your intended audience is most likely to understand.