Dear Consultant, I work in a small engineering firm that designs and manufactures products that are brought to market by our clients.  Even though many of these products sell to customers for a lot of money, we don’t get paid very much for the items that we produce for our clients.  I recommended to my boss that we should start selling them ourselves.  She told to come up with a business strategy to bring to her and the team.  Where do I start?  What parts should I include in a business strategy proposal?

 In this response I will describe a good model that will help you evaluate the fit between a proposed business strategy and your organization.

The content of this response is based partially on industry best-practices and partially on work by Crossan, Fry and Killing (2002).

The Diamond-E framework is named as such because it helps us think about the whether or not a particular strategy fits properly with four other important factors that affect the success of a strategy.

These four factors include: 1) The preferences of current management (executives, board, owner/operator, shareholders, etc.),

2) Organizational capabilities, culture and behaviour of employee and stakeholders,

3) Resources that are available to the organization, including money, equipment, social capital, connections, etc.

4) The environment within-which your organization operates; this includes the competitive landscape, your customers, partners, government, sustainability considerations, technology and the broader economy, etc.

All of these four factors need to “fit” with your strategy, if they don’t then the feasibility of your strategy is in jeopardy.

All of these four factors need to “fit” with your strategy, if they don’t then the feasibility of your strategy is in jeopardy.  What I mean by fit here is that your strategy needs to realistically take into account each of the four above mentioned factors.  Let’s say for example that your suggested strategy goes against the desires of top management, and they are strong-headed enough not to change their minds even in the context of strong evidence supporting your strategy, then there is a gap in the link between your strategy and management preferences.  This is useful because it helps you plan how to close that gap.  The arrows in the above diagram of particular importance; think about how well your strategy fits with each of the four factors.  If the fit is not good, then think about how you can make it fit better.

Now let’s apply your strategy to the Diamond-E model by examining each of the four connections:

1)      Strategy to Management Preferences:  Ask yourself, will your boss and other executives be interested in starting a business that sells directly to customers in some retail capacity, rather than to other businesses?  If not, how would they be convinced?

2)      Strategy to Organization: Does your organization currently have the capabilities to sell directly to non-business customers?  If not, then how would you propose to do this, and how much would it cost in terms of time and money?

3)      Strategy to Resources: Does your company currently have the excess capacity in terms of worker resources to devote to making this initiative happen?  If not, which projects would those employee resources be diverted from?  How much would that diversion cost the company?

4)      Strategy to Environment: Is there a customer market for whatever product/service that you’re proposing to sell?  Are there competitors currently selling those products?  How would your current business customers react to you selling to their customers? Can you do it in a way that is differentiated from competitors in some way?

Evaluating business strategy requires a holistic view of your organization and its environment.  The four above mentioned factors are umbrella concepts that include a number of sub-factors that should be taken into account when evaluating any business strategy.