Strategic Principle Framework

Crowdsourced Business
Presentation Design Service
Strategic Principle
Transforming Corner-Office Strategy
into Frontline Action
February 25, 2014
Strategic principles allow organizations to make decentralized decisions while
maintaining cohesive strategic action. This document explains the strategic principle
framework, including examples, defining attributes, relevant crucial situations, and
an approach to strategic principle development.
ORIGINAL PROJECT DETAILS
http://pptlab.com/ppt/HBR-Transforming-Corner-Office-Strategy-into-Frontline-Action-21

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Contents
Constructing a Strategic Principle
Closing Thoughts
Crucial Situations for Strategic Principle
Overview
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The strategic principle abides by the 80-100 rule of business
80-100 Rule
Source: HBR: Transforming Corner-Office Strategy into Frontline Action, Gadiesh, Gilbert (2001)
The distillation of an organization’s strategy into a pithy and prescriptive phrase is important because a
great business strategy is of little use unless people understand it well enough to apply it—both to
anticipated decisions and unforeseen opportunities.
The essence of why a strategic principle is useful can be explained by the 80-100 rule of business, which
states:
You are better with a strategy that is 80% right and 100% implemented than one that
is 100% right, but doesn’t drive consistent action throughout the company.
A strategic principle helps an organization balance the ratio between correct strategic
decision and strategy implementation.

There are 4 primary situations where having a strategic principle is crucial
to success
Today, companies face 4 situations—oftentimes simultaneously—that make a strategic
principle crucial to success:
Rapid GrowthDecentralization
Institutional TurmoilTechnological Change
Strategic
Principle

Technological change is becoming more and
more pervasive in modern industries
Crucial Situation: Technological Change
Rapid GrowthDecentralization
Institutional
Turmoil
Technological
Change
Strategic
Principle
EXAMPLE(S)
• For the case of Dell in the late 90s, its mandate
to sell direct to end users helped ensure that
the decisions made by frontline managers in
such circumstances add up to a consistent
corporate strategy
Technological change is an impact that not only affects the company’s strategic
direction, but can significantly impact its operations.
The staggering pace of technological change over the past couple
decades has been costly for companies that have not employed a
strategic principle
Never before in business has there been more uncertainty coupled
with so great an emphasis on speed
Oftentimes, the sum of the reactions across the organization ends
up defining the company’s strategic course—whether or not its
aligned with the company’s strategic plan
In particular, in high-tech industries, managers must react
immediately to sudden and unexpected developments
OVERVIEW

Many successive companies were originally founded upon strategic
principles
Constructing a Strategic Principle (1 of 3)
Many of the best and most conspicuous examples of strategic principles come from companies that
found on them, such as:
• eBay
• Dell
• Vanguard
• Southwest Airlines
• Wal-Mart
The founders of these companies adopted a clear guiding principle that summarized the essence of
what would later grow to a full-blown business strategy.
However, in the case of established multinationals, these organizations often need to craft their strategic
principles at a critical juncture.
The question that arises is, how do you construct a strategic principle when one doesn’t exist?

Contents
Constructing a Strategic Principle
Closing Thoughts
Overview

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