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Business-Unit Strategy

Helping our clients create strategies that beat the market—from diagnosis to design to implementation

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McKinsey has worked with two-thirds of the world’s Fortune 100 companies on their business-unit strategies. In the last five years alone, we have worked on nearly 3,000 business-unit strategy engagements for these companies and other clients, in every business sector and in every part of the world.

Using our “Ten timeless tests of strategy” (McKinsey Quarterly), we are able to ensure that our clients’ strategies can withstand and beat the ever-strengthening forces of change and competition. More than a plan for how to achieve best practices, our approach to strategy development focuses on putting together a formula for our client to win over time.

To do this, we bring to bear the latest tools and techniques in strategy development. But while great strategy development can be controlled, it cannot be systematized. Distinctiveness comes from a complex mix of expertise, engagement, insight and process—a mix that McKinsey is uniquely positioned to deliver.

Recent innovations in our methodology include:

War gaming, which uses role play and modeling to simulate different competitive scenarios, essentially having clients “step into the shoes” of their competitors

Strategy as a journey, where we develop ongoing arrangements with our clients to allow a more variable and long-term engagement on strategy that can evolve over time—an approach that is in sync with how most companies actually make strategic decisions

Strategy walkthrough, an up-front three-to-four day expert-guided strategy diagnostic that uses our ten tests to pinpoint opportunities.

Strategy academy, a format designed not only to increase the capabilities of the client’s strategy team but also to learn by applying the tools and techniques to a real strategy problem the client is facing, either in a half-day or full-day format.

The Ten Timeless Tests ask:

1. Will your strategy beat the market?

We find that many so-called strategies are directed more toward “just playing along” than to overcoming the true power of market forces.

2. Does the strategy tap the true source of advantage?

Do you know why your company is successful? We go beyond superficial explanations to ensure that strategic decisions are built on a solid platform of positional and proprietary advantages.

3. Is the strategy granular about where to compete?

We have discovered that winning players systematically out-position themselves by making better and more granular choices about where to compete, and by following through with resource allocations that translate those choices into reality. In other words, which market to choose is usually more important than how much market share.

4. Does the strategy put the enterprise ahead of trends and discontinuities?

At its most basic, strategy is about seeing the writing on the wall and responding to it. McKinsey’s trend-finder database is a way to rapidly scan the globe for the key trends.

5. Does the strategy embed privileged insight and foresight?

Do you see something or know something others don’t? If not, it will be hard to beat the market. Common math applied to common data will yield common wisdom.

6. Is uncertainty properly defined and accounted for?

In these volatile times, we need no reminder that the world is uncertain. Is your strategy designed for multiple future scenarios or is it a bet on a “base case”?

7. Does the strategy balance high-commitment choices with flexibility and learning?

Great strategists know that one of the most important decisions is “when to compete.” Our strategy methodology produces a portfolio of moves that allows your company to develop a winning formula over time.

8. Have alternatives been evaluated without bias or false inference?

The best analysis will not add value if the decision making is flawed. However, all people have biases in drawing conclusions from data. We use methods that help counteract these biases and increase the quality of decision making.

9. Is there true conviction to act?

A new strategy demands new thinking and new beliefs, and must be incorporated early in the strategy process, because adults learn mostly by self-discovery.

10. Is the strategy translated into clear actions and reallocation of resources?

Have you gone beyond vague statements of intent toward a strategy than can be driven down the line? A strategy is only implemented when resources move and pivotal roles behave differently.

Latest thinking

article | McKinsey Quarterlyhayo11_frth_Thumbnail

Have you tested your strategy lately?

January 2011—Ten timeless tests can help you kick the tires on your strategy, and kick up the level of strategic dialogue throughout your company.more

surveyPutting strategies to the test McKinsey Global Survey results

Putting strategies to the test: McKinsey Global Survey results

January 2011—Creating a winning strategy is a struggle for most companies; some seem content just to play along. They may not be asking themselves the right questions.more

article | McKinsey QuarterlyPlaying war games to win

Playing war games to win

March 2011—They can be a powerful business tool—but only if you get the design right.more