“James, I am not sure that I fully understand what business strategy is … I hear the words, and I read that I'm supposed to have one, but I really don't understand what one is!”
That sentence was recently spoken to me by a business owner. It was a good thing that I was sitting down when he said it, because I was in shock! I've known people who had gone into business without having a business plan, and I've known people who had gone into business lacking a solid understanding of basic financial principles. However, I had NEVER known a business owner that didn't have a plan for what they were doing, where they were going, and how they were going to get there.
It is sometimes difficult to explain strategy. It can be like describing a color or a texture; sometimes it's one of those “I will know it when I see it” kind of things. Let’s try to break it down anyway!
In essence, strategy is the ‘action' part of your business. You have a great idea, and you have the means to launch your great idea – but that's not enough. The next necessary element is the actions that carry your mission and vision into application. It is important to note that this is much different than marketing, because marketing is about the 4p's of your business: product, price, placement, and positioning. Strategy is the reason you do marketing. Some business owners balk at discussions of marketing; they say they don't need to market their business. When pressed, they say, “it's just not clear to me that my marketing efforts are paying off.” When a business owner says that to me, what I hear between the lines is, “I don't have a well-defined strategy in place to guide my marketing efforts, so things like marketing are not clear to me.”
Strategy is the fundamental reason you are doing what you do. In what I believe is the most easy to read book on the subject of strategy, Kaplan and Norton (2004) offer a very concise definition of strategy: “Strategy describes how an organization intends to create sustained value for its shareholders” (p.29). A key ingredient to good strategy is that it ties all your business elements together into one clear, cohesive machine that propels you and your produce or service into the marketplace. This means good strategy is about having a synthesized, integrated and coherent plan in placed for how all the different aspects of your business are working in concert to make you grow. No matter how big or how small your business is, you have “departments” that make up your business. For example, your business has a CEO, a CFO, a facilities department, a marketing team, a brand management guru, and a human resources department. While your business may be small enough that YOU are all of those things, it is important to think about the different roles and functions of each as you plan for your business success. Stated differently, each of these different roles or functions has an important part to play in your overall business direction and sustainability.
Developing a strategy is best done out loud with key players in your business. As with so many things in life, the first step in this process is assessment. Begin by asking yourself, “Do I have a clear strategy for my business?” If you answered ‘yes,' then pat yourself on the back and have a small party! After the party, take out your strategy, review it, and make sure it is current. After all, as soon as something is put on paper, it becomes outdated. These things require nurturing and attention to stay current and inform your growth! If you answered “no,” then it's time to invest in your business and develop your strategy. This investment will pay off in multiple ways. Here are a few key points to consider as you develop or improve your strategy:
• Who are the ‘key' players in my business? This includes your staff and your customers!
• Who do I trust that can help me develop my strategy?
• Why do I do this for a living? What's my passion? Where am I going?
• Does my strategy define a role for each of the different areas of my business?
• Do all the different sub-strategies inside my business agree? In other words, are they congruent with one another, moving all parts of my business in one direction?
Whether you have an existing strategy, or you are developing one for the first time, it is important to remember that input from a trusted outside source is critical to the success of your plan. We all have ‘blind spots' to things that we have emotional connections with. Seeking input from a trusted person outside of yourself will ensure that these spots are identified. In the world of strategy, finding those blind spots and capitalizing on them may be the difference between success and failure!
For further reading, see Kaplan and Norton (2004) Strategy maps: Converting intangible assets into tangible outcomes.
At Tap the Potential, it is my intention to use the social sciences to help solve business challenges. When business owners are talking and thinking about topics like leadership, staff development, and strategy, work becomes less stressful and more rewarding for everyone.