What Is A Business Strategy?
A business strategy is the way your business is going to win business from your target customers in your specific business market. If you get it right, it is what you are remembered for.
Some examples of well-known successful strategies are;
Apple – using innovation and design to create premium products.
Lidl – focussing on value and price – “Making good food available to everyone”.
Amazon – focuses on developing differentiated products and services that meet the needs of its customers.
In a nutshell, your winning business strategy is the way you want to differentiate your business, and it is usually comprised of one or several of the following;
- Capabilities or technology
- Results or guarantees.
- Design or fashion
Strategies are not just for large companies; they are fundamental to the success of every company.
Think of all the smaller companies you choose and use as individuals and as a business. You choose to use them again because the way they appealed to you and delivered to you as a customer and aligned with your needs or desires. Their strategy worked.
What Are The Benefits Of A Business Strategy?
The right business strategy will enable your business to achieve its objective faster by aligning to your customers’ needs better than your competitors and using your strengths and resources most effectively.
Just as importantly, and in the words of the famous economist and business strategy expert Michael Porter, “the essence of strategy is choosing what not to do”. Don’t flutter about like a butterfly; focus on doing the right things like the bee.
In very practical terms the right business strategy;
- Significantly improves decision-making within the company. Are you spending time working on something or about to invest in something that is not aligned with and supportive of your strategy?
- Reduces operational costs by directing and optimising the use of resources resource, skills, and investment to the best effect.
- Focuses and optimises marketing spend on the right engaging messages to the right customers.
- Utilises the strengths of individuals and the organisation to maximum effect to achieve your objective. As humans we are more motivated to do, repeat and learn about what we are good at, as bestselling author and speaker James Clear says.
- Keeps individuals and teams aligned which reduces potential friction.
- Helps you and your business understand the risks and challenges to be overcome to achieve your objective.
How Do You Develop A Business Strategy?
- Clarify your business vision and specific goal.
You cannot approach a task or journey without knowing what you want to achieve or where you want to get to.
A strategy is nothing, without a specific goal. It needs a specific outcome and a time period. Goal setting is thus the first task of any business looking to create an effective strategy and business plan.
- Understand your market today and tomorrow.
The strategy needs to right for the environment
its operating in and the customers it is targeting. To do this effectively, you need to understand;
- Your target customer’ specific needs and wants. This may not be the customers you have today but the customers you want in the future;
- Your competitors’ propositions, strengths, and weaknesses;
- The potential impacts of new technologies or challenger brands on your market today and tomorrow.
- Be honest, know your own business. (Strengths, weaknesses, opportunities, and threats).
This may seem simple but very few businesses do this very well. To help you I have a few rules;
- Strengths are only strengths if you do them brilliantly and everyone tells you so. Otherwise, they are marked as good for further development. Most small businesses start with a real strength that is diluted by working on other things they are not as strong at.
- Weaknesses are real areas of opportunity, but not things you are going to change overnight. If you haven’t mastered it yet, it will take investment and time. I have seen so many business strategies fail by underestimating the time it takes to fix a weakness.
- Opportunities are not lottery tickets or dreams. They are things you can realistically grasp with a few clear steps. Be realistic, it’s your money.
- Threats are not always obvious, how many market disruptions have there been due to new technology e.g., banking, music, car sales, selling your house.
Once you know your business, customers, and market you now have the capability to understand what you could achieve for your customers in your market.
4. Identify the business strategies and impacts your business could choose.
This step is critical, if only to eliminate a strategy your competitors can also adopt quickly and therefore negate your competitive advantage.
Use the checklist I outlined before;
- Results or guarantees.
- Design or fashion
Ask yourself the following three questions about each strategy;
- Which of these strategies could your business use to be successful with your target customers in your market?
- How easy is it for your company to adopt and execute well?
- How easy is it for your competitors to copy well? How might they react?
The answers to these questions will give you a clear indication of which strategies would work best for your company, with your customers in your market.
- Choose the right business strategy based on cost, speed, capabilities, and impacts.
You have done a lot of the hard work identifying the potential best business strategy, now the of the final choice.
I firmly believe you need to keep it simple but objective here. Normally you will have developed a favourite by this time, but it might not be the simplest or it may have some difficult impacts. Keep yourself honest.
For each potential good strategy ask the following questions;
- How much will it cost realistically?
- How quickly can it be implemented and achieved confidently?
- Does the business have all the capabilities, or do we have to develop them or source them?
- What are the potential impacts on;
- Shareholders – profits, income, timing, and business value?
- Stakeholders – suppliers, regulators etc.?
This last piece of analysis is the final piece of the risk versus reward assessment to determine the best strategy for your business.
Your best business strategy or strategies should now be evident. If you are in any doubt, share your decision and rationale with others whose advice you respect and see if they make the same decision.
Now you have your chosen strategy, the challenges, and opportunities of deploying your business strategy commence.
How Do You Use A Business Strategy?
Your chosen business strategy is a guide, a framework, and a basis for making key business decisions.
Every business manages change and implementation differently but my critical next steps to implement and use a strategy for best results are;
- Establish goals. measures and targets to define strategy progress and success.
- Identify the key actions to deliver your strategy through;
- Products or service
- Marketing and sales
- People and resources
(Note: Each of these functions may determine their own particular strategy to deliver their part of the overall business strategy).
- Develop an end-to-end plan aligning the critical actions in order, showing dependencies and critical paths.
- Assess and develop actions to address key skills and resource challenges to deliver the plan.
- Test the new strategy with key customers and stakeholders, plus address initial feedback on issues or confusion.
- Engage the business to communicate support for any key strategic changes.
- Develop appropriate incentives and communications to create excitement, engagement, and momentum in the strategy.
- Officially launch the new strategy to ensure awareness and support to change.
- The right business strategy can deliver your business much better results and faster.
- Following a logical rigorous process to determine the right strategy will help you grow your business today and tomorrow.
- The effectiveness of your strategy must be measured continually and changed when appropriate. Market, customer needs, competitors, and technology change.
- Use the same rigorous process to change your strategy.
- Implement your strategy with the same focus and rigor to get the best results.
I hope you found this article interesting and useful.
Wishing you and your business all the very best as you determine your winning strategies. If you would like to discuss or develop your business strategy or business plan, or need help with goal setting and other tools to help you grow your business, you need to speak to a professional business consultant and coach. Please get in touch at firstname.lastname@example.org