Top Ten Questions To Develop Your Business Strategy
Yogi Berra once said that “if you don’t know where you are going, you will likely end up somewhere else.” The same is true in business. Unless you have a carefully crafted business strategy, you are essentially flying blind. With a clear business strategy for your firm, you can guide your way through uncharted business waters. A well thought out strategy enables you to properly allocate resources, and communicate direction to employees, customers and other stakeholders.
Former U.S. President and military commander, Dwight D. Eisenhower, remarked that “a finished plan is generally worthless, but careful planning is absolutely essential.” In other words, while a given plan may change based on what happens with your business, taking the time to thoroughly examine where your firm is now and where it is headed gives you the information to make course changes intelligently, against the backdrop of a clear business strategy.
Why Build a Strategic Plan? In a word, the answer to this question is focus. Strategy creates context for operating decisions. It establishes the playing field and provides guidance for decision-making about the types of experience and skills needed by employees, how marketing and advertising should be positioned, the priority of initiatives, how to structure the organization, and a host of other issues. If an organization has unlimited resources, a strategic plan would not be necessary.
Unlimited resources would provide the ability to invest in whatever came along. But most organizations do not have unlimited resources so a plan is necessary to guide decision-making, channel resources and define direction. Because of that, building a strategic plan should be well worth the time it will take to develop it, debate it and secure agreement on its direction.
How do you develop a new strategy? Strategy is the way in which an organization meets the challenges and opportunities of its environment. It is often an overused and misunderstood concept. Strategic thinking does not necessarily imply long term. In some industries, long term is less than one year. It is not tactics, though strategy needs to be supported through tactics. It doesn’t necessarily imply something big. The decision to move across town may have more human impact than the decision to do business in another city.
Strategy is a set of choices that defines the nature, direction and value system of an organization. It is not a document. It is a mindset which should be understood by every person in the organization and used to guide all decision-making. In developing strategy, leaders make conscious and informed choices about who they are and what they stand for:
o What are our core values and beliefs?
o What markets and customer groups will we serve?
o What products or services will, or will we not, deliver?
o What competitive advantages will cause us to succeed?
o What core competencies must we have to fuel our growth?
o What infrastructure, core processes and resources must we have to succeed?
o What financial results will we achieve?
o What should be our planning horizon?
o What is the quality-of-life contribution we want to make to our customers, our employees or the places in which we operate?
o How will we engage, develop and reward our employees?
The hardest step is plan implementation. Without a clear implementation strategy, even excellent business plans hardly stand a chance. In the United States, the average firm only achieves about 63% of its strategic plan. Studies also show that 90% of strategies that fail do so because of lack of execution. Research in the last several years has pinpointed many reasons why business plans fail. Most of the reasons have to do with “operator error” and include the following:
1.Poorly understood strategy.
2.Weak strategy execution.
3.The firm is change resistant.
4.Lack of a systematic approach.
5.People are not engaged.
6.A gap between knowing what to do, and doing it.
For effective implementation to happen, an “execution mentality” must be present in the working environment. In this environment, execution represents a primary value; activities and effort are not enough. There must also be measurable results and a get-it-done attitude. People are expected to step up to challenges. Lackluster performance is not tolerated though the emphasis is on constructive improvement rather than punitive measures.
Execution will not happen if the senior leadership is not out in front of the process. It is essential that leaders be hands-on rather than hands-off, meaning that even if you have delegated full accountability for an assignment, it is important to monitor progress and follow up with people at regular intervals. Being available as a resource, role model and as a coach can go a long way in making sure that plans stay on track and progress is being made. The opposite is also true; if the leadership is not involved, people will believe that what has been planned is really not a priority.