The macro loop that decides where the company is headed, how resources are allocated, and how course corrections happen. This is the steering wheel for every management action in the company.
The first job of strategy is trade-offs. It is not “do whatever makes money,” but “who we are, whom we serve, and whom we don’t serve.”
| Force | Key question | Response |
|---|---|---|
| Existing rivals | How intense is the competition? | Differentiation / cost leadership |
| Potential entrants | Threat of new players? | Raise entry barriers (licenses / patents / scale) |
| Substitutes | Is there an alternative? | Lock in customer switching costs |
| Supplier bargaining power | How strong is the upstream? | Multi-sourcing / vertical integration / long-term contracts |
| Buyer bargaining power | How strong are customers? | Diversify customers / brand premium |
Strategy is, at its core, a bet against the market: you bet on a direction, and the market gives you feedback.
The budget is strategy translated into numbers — it is not a finance-department matter.
Company → department → individual: goals cascade down layer by layer.
KPI tree (adapted from the BIZOS design approach; ready to use as-is):
Company level: Net profit = Revenue − Costs − Expenses
├─ Revenue = Σ(sales by product line)
│ ├─ Sales = volume × unit price
│ │ ├─ New-customer revenue / existing-customer repurchase
│ │ └─ Contribution of product lines A/B/C
│ └─ Gross profit = Revenue × gross margin (gross margin is the ratio)
├─ Costs (operating costs, additive):
│ ├─ Materials (BOM cost / procurement cost-down rate)
│ ├─ Labor (direct labor / labor efficiency)
│ └─ Overhead (manufacturing overhead: depreciation / energy / maintenance)
└─ Cash flow: cash conversion cycle = AR payment terms + inventory days − AP payment terms
(the smaller the better: collect sooner and pay later = healthier cash flow)
| Frequency | Meeting | Content |
|---|---|---|
| Monthly | Business review meeting | Variance analysis: revenue / gross profit / cash flow vs. budget |
| Quarterly | Strategy retrospective | Direction calibration: market shifts, competitive dynamics, hypothesis testing |
| Annual | Strategic planning session | Reset plans, budget, and performance targets |
Three questions for the review (not blame, but calibration):
Huawei’s complete strategic methodology. There is an open-source skill on GitHub (chinaonlineNIU/huawei-blm-strategy); this section is the distilled core.
Core formula (heuristic, no fixed weights): outstanding performance = excellent strategy design × effective execution capability (strategy and execution multiply each other — if either is zero, the result is zero; but there is no official fixed 50/50 weighting)
⚠️ Concept hierarchy (to avoid confusion): BLM, DSTE, BEM, and PBC are not four modules at the same level — they are tools at different levels:
- BLM (Business Leadership Model) = the thinking framework for strategy planning (gap → strategy → execution; left brain / right brain)
- DSTE (Strategy to Execution) = the end-to-end operating system from strategy planning to execution (SP → BP → execution → review, running on an annual cadence)
- BEM (Business Execution Model) = the method for decoding strategy into executable metrics (CSF → KPI → key initiatives)
- PBC (Personal Business Commitment) = the tool for turning company goals into personal performance contracts Rollout order for SMBs: think it through with BLM first, decode it into metrics with BEM, then land it on individuals with PBC.
The BLM model:
| Dimension | Components | Core question |
|---|---|---|
| Strategy (left brain) | Market insight, strategic intent, innovation focus, business design | What to do? Where to compete? |
| Execution (right brain) | Key tasks, formal organization, talent, climate & culture | How to do it? How to land it? |
| Foundation running through | Leadership, values | Who drives it? What guides us? |
| Closed loop | Market results → new gaps → next cycle | How did we do? How to improve? |
Strategy is a closed loop driven by dissatisfaction:
The Five Views model (market insight):
| View | Content | Tool |
|---|---|---|
| Macro | Policy / economy / society / technology | PEST |
| Industry | Size / growth / structure | Porter’s Five Forces, SPAN matrix |
| Customer | Needs / pain points / buying behavior | Customer scenario reconstruction |
| Competitor | Rivals’ strategies / strengths & weaknesses / moves | Competitive benchmarking |
| Self | Capabilities / resources / gaps | Internal capability assessment |
Three horizons of growth (McKinsey’s classic model; 70/20/10 is a common reference split, not a fixed value from the original — resource allocation should vary by industry and stage):
| Horizon | Business | Reference allocation | Measured by |
|---|---|---|---|
| H1 | Core business | 60-80% | Revenue / profit / share |
| H2 | Growth business | 10-25% | Growth / new markets |
| H3 | Emerging opportunities | 5-15% | Exploration & validation (new users / ecosystem / tech prototypes) |
Two-track target method (a management design, not a Huawei-wide standard): must-achieve targets (completion ≥90%) + stretch targets (completion ≈50%). Note: this is a common OKR/goal-management design; set the specific completion thresholds to your own company culture.
BEM decoding chain: Strategy → CSFs (critical success factors) → KPIs → key initiatives → PBC (personal business commitments)
💡 Implementation advice: SMBs don’t need to copy Huawei wholesale, but the skeleton of “Five Views + three horizons + two-track targets + quarterly reviews” can be adopted directly.
| Company | Approach | Lesson |
|---|---|---|
| Huawei | Full BLM/DSTE/BEM closed loop | Strategy is institutionalized self-criticism |
| Amazon | Bet on what stays constant (low price / speed / selection) | Put resources behind what doesn’t change |
| BYD | Technology fish pond + bet on electrification | Keep the bet survivable, stay firm on direction |
| Laoganma | Stay focused, don’t expand | Trade-offs are strategy |
| Nokia | Missed the smartphone | What stays constant is customer need, not product form |