Peeling the Onion: VaPGO model of strategy formulation
Management Strategy is a topic of evergreen interest and debate since the beginning of modern management with F. W. Taylor’s famous monograph published in 1911. Outsiders usually want to know the strategy of an organisation and the plan to achieve what it aims at. They are not as interested in the process of finding out why the strategy came to be so.
It may seem that just by creating a ‘strategic’ plan periodically an organisation’s job is done. That feels intuitive and deceptively simple. The reality is far from it. The practice of leadership and management has also bought into this intuitive logic. It has come to a stage where even good leaders and managers confuse strategy with periodic planning and budgeting. As Prof. Roger Martin, dean of Rotman School of Management pointed out in his recent blog, “…strategy is a singular thing; there is one strategy for a given business — not a set of strategies.”
I think that is true. It is a thought process we need to move to. The important questions they need to ask and seek answers to are:
- Why form a strategy?
- Which fundamental basis informs strategy formulation?
- How to define parameters of success of strategy?
Peeling the onion
Thinking about these questions, I imagined it to be like peeling an onion to expose the layers inside. Given the objectives that an organisation (or individual) can grasp in a shorter term, what are the goals it is trying to achieve in the medium to longer term? If those are the goals, what is the core set of principles – ethics – that are driving the endeavour to achieve them? What is the one value(s) it is trying to create? This gave birth to the VaPGO model.
The VaPGO model
I call this model VaPGO for the sake of simplicity (VaPGO = Values, Principles, Goals, Objectives). This is the outside in perspective. I think it is more useful. Organisations do not disclose their strategic objectives often. However they do talk more openly about their values, culture, and principles etc. It could be called, by the same logic applied in opposite direction the OGPVa model.
If the users of this model are clear about the principles and want to arrive at the value(s) they want to deliver, they could begin from inside out. Alternatively, if they know shorter term objectives and wish to have a stable strategic framework for the longer term, they may follow it outside in.
VaPGO model follows a simple 5-step question and answer structure. Here are the steps:
Step 1: Which behaviours, practices, habits etc. would we like to encourage and discourage?
This should be as exhaustive a list as possible. Take your time to gather all the things that you, as an organisation or individual, would encourage and discourage within your sphere of influence. You may or may not have actually done these but you would encourage/discourage nevertheless. They range from offering bring-your-own-device to wasteful use of water and electricity on office premises to procrastination etc.
Step 2: Why do we wish to encourage and discourage these things?
This why may not be as trivial as one may think on the face of it. The answer can’t be merely ‘because we don’t like / like these things’. Please think twice before providing a superficial answer. One answer may form the reason for a group of encouraged/discouraged things.
Step 3:
Step 3.1. What are our/my priorities based on the things we encourage/discourage?
These are the things you do not just encourage/discourage but would want to make sure are done/not done.
Answer them in the order of preference – a list with the most important first, followed by the second priority, and
so on.
Step 3.2. Which of these priorities are non-negotiable goals that the organisation (or individual) must
achieve in order to justify the reason for its existence?
Step 4: What are the main 2-3 motivations that are driving these goals?
The motive(s) behind these goals are the value(s) that the organisation is trying to create. These values define how the organisation wants to be measured.
Please note that here I refer to ‘value’ as instrumental (or extrinsic) value, as it is known in the study of philosophy.
Step 5: What are the things that we cannot compromise on even if that means sacrificing or delaying achievement of one or more of the goals listed in Step 3.2 above?
The rules that must be followed while striving to deliver on the values form your ethic (normative ethics). It is the core set of principles that guide judgements of the rightness and wrongness of actions taken.
Answers – preferably as single words or terms – to all steps in respective concentric circles for your fundamental strategic organisational make up.
So what?
- Ethics inform the vision (organisational or individual) – what you are and will be known for
- Values inform the mission – what you have set out to create through a life time
- Goals inform the periodic plans – measurable landmarks of strategic success in the medium to long term.
- Objectives inform measurement – specific and measurable milestones the will let you know if you are on track
Final thought
This is not an annual planning or budgeting tool although its outcomes, especially goals and objectives will certainly help guide the short (1-2 year) term planning and budgeting as well as medium term (3-5 year) corporate planning exercises.
Please try it and let me know what works and what does not seem to work in your situation. I would be glad to peel this onion again and again with your help as that is also as iterative as is VaPGO model.
Please use comments section to let me know your thoughts.
Disclaimer: The views, opinions, thoughts and ideas that I post on this blog are personal. They are, in no manner whatsoever, representative of or endorsed by any of the corporate entities that I have, do or will work with.
Thank you, to those who provided their valuable feedback. I have revised certain aspects taking it into consideration. I hope the post is slightly better for the effort.
- Abhijit
I presume you mean business strategy when considering this model. Value and principles are embedded in any organization and they should become de-facto for any strategy exercise. From my perspective strategy formulation should answer questions such as – where do we play/compete?, How do we do that?, what will it take us to reach there? and what are the potential returns. Strategy becomes of little value if there is no clear vision on where we want to be.
Thank you for the comment, Monil. Yes, I mean business strategy; however for the purposes of this model my scope of thought was limited to why form a certain strategy and how to arrive at it.
Perhaps I should make it a series and elaborate on how to define strategic parameters once the overall direction is arrived at using VaPGO model. Let me think how to do that. That’s the plan with metrics, which comes next.
Agree, but most leaders try to emulate strategy as a long documentation of activities where the key message gets lost. A strategy should be concise and be able to articulate the key message or plan easily. A good read is ‘Business model Generation” book my Alex Osterwalder. The focus there is building business models but it beautifully encompasses strategy and in a very simple way. Another read is: http://www.strategy-business.com/article/cs00006?gko=ccb11&cid=20130212enews&utm_campaign=20130212enews
I agree, Monil. Too much of emphasis on planning and budgeting and focus on RoI without even realising fully what the ‘R’ is meant to be causes these problems.
Here I am trying to provide a tool to find that precise, hopefully one-term length, answer to that question. What is our strategy? It could be something like make the best biscuits or make our hospital best for in-patient care, be the best out-bound marketer or paint the best water-colours etc.
1) How relevant or applicable is this model to an individual himself? Can he manage himself using such a model that is better meant for an organization?
2) It seems that in today’s world there is larger turnover of organizations and we are not expecting companies to stay around for a long time particularly in some sectors like technology, e-commerce etc. So, whats the relvance of having focus on Ethics/Culture and Values when you may not be around in a few years anyway.
3)How much can a start-up focus on such a model when its struggling to surive especially in it’s first 3-7 years.
Thank you, Shaillay. These are good and pertinent questions. Here I have attempted to answer them one by one. Please do comment and let me know how successful I have been.
1. When I say that this model may apply to individuals. I am viewing them from a ‘professional’ or ‘vocational’ perspective – as products/services. I think that one should view oneself like that in order to improve professionally. Afterall, that’s what we get paid for – providing someone with ourselves as products (e.g. a craftsman with some skill) or services (e.g. a teacher).
In that sense, all the steps of VaPGO apply to an individual. It will help one set their own expectations from themselves in a more structured manner. If one were to review this model for oneself from time to time, it would grow and change as any human being does.
2. This model, for obvious reasons, won’t be of much use to a fly-by-night business that does not attempt to last for more than a few years riding on some ‘wave’ to make a quick buck.
However, I think that the very definition of a ‘successful’ business is changing from longevity to sustainability. Merely doing what you know well for an extended period of time does not mean ‘success’ anymore. To be able to apply your core strengths to a progressive set of endeavours that changes with time is the new definition of success. These core strengths are an organisation’s (or individual’s) ethics and values they deliver consistently on.
3. I agree that a start-up has a tough operational challenge on a daily survival basis, especially during the initial period of achieving good cash flows and setting itself up for attaining critical mass.
As leaders of any start-up, the most crucial aspect that management needs to take into account is that all these huge efforts would be laid waste if wrong people are chosen to be the branches and leaves of such a nascent and fledgling plant.
How would they be able to lay down the framework to choose the practices and people that will help them achieve, collectively the very reason of existance of an organisation unless they know why and what of it? VaPGO will help there. As I have reiterated, it’s not a static model. It’s an iterative process of strategy formulation, re-formulation and revisions.
I think it is essential to take that much time out of the hectic start-up environment, periodically to take stock and correct course.
good one. I think step-4 – motivation comes before everything else. Usually an entity has a mission or goal to begin with. This is the end state they want to be in, for example a company might say we got a great product so we want to sell it and profit from it, or an individual might say i want to find a new job. This end-state usually acts as motivator. Once its defined or at least thought of values is defined next. For the case of company they might say, we want to sell without price gouging or bribing. And these values in most cases automatically drive the behaviors that will encouraged or discouraged. But i guess the challenge is not much in defining a strategy, its a lot more challenging to adjust it to changing circumstances – and this brings up two interesting issues. One most entities do not realize the need for change and secondly what would you do if the required change poses a threat to the values your practice? the second questions lands us into philosophy, ofcorse.
P.S: My thought is that values exist even before motivation is defined, but its hazy to figure out what principles should define your execution.
Thank you SD, for reading, thinking and commenting with insight. Good to hear from you.
I understand the point of view you are speaking from. Here I have taken the point of view of a person or organisation that is trying to find its strategic root from ‘outside in’ – going from the most apparent i.e. behaviour, practices, habits etc. to the most deep rooted i.e. ethical principles.
I think that if done periodically, this could bring about a gradual but certain improvement in a person’s or organisations’ strategic outlook of themselves.