importance of a business strategy
Sun Tzu (544 BC - 496 BC), Chinese Military Commander and Author
Imagine for a moment ... you jump in the car for a family vacation for spring break. Your luggage is packed. And you just started driving. You asked your parents where you're going -- but they just said we're driving. One mile at a time. You stop for lunch, dinner, and keep driving. Find a hotel along the drive and spend the night. Then keep driving .... and so on. No one knows where you're going.
The challenge is that most businesses I've worked for ... and I imagine some or maybe all of those you have worked for are like this. They just keep driving. Doing the same thing day in and day out. With no clear destination in mind. We're just going that way.
Those businesses who have a clear end goal, a clear path / strategy, can focus their efforts on the right things, and maximize their talent and resources to grow. But first lets define a few key pieces ....
In our Spring Break example above, the end goal was described as non-existent -- but what if now we said we were going to Disney World.
Many businesses call this the vision -- others may call it the end goal. But in short, it is the place you want to be some number of years out -- if you're a more mature business maybe its 5 years or so, in a newer business maybe its 2-3 years out or a startup, maybe its 1 year out. What does your business look like?
This often is not a quick decision, but more of a strategic decision where you spend time looking at the a multitude of factors from what your business does well (and why your customers buy your product(s)), where is the marketplace heading, what are your competitors doing, political or government influences, trends, etc. Think detailed SWAT analysis.
What opportunities should you consider, and finally -- resources it will require, ease of doing this, and risk of failure.
You'll end up with a prioritized list of opportunities ... this can be a starting point. To create the prioritized list you can use something similar to a FMEA that allows you to set categories and prioritize features. Poke holes in it. You can and may need to shift your vision as new details come to light over time -- but it must be realistic and do-able from the start.
Can you clearly explain this to someone why this is your vision -- why it matters -- AND most importantly, how will you know if you're there. You must be able to measure you have achieved it.
A strategy is the path or journey to the vision. In the example above, if we knew that we were driving to Disney World (the end goal), then all of us could plan accordingly to be sure we get there.
In business, the strategy is path -- the things we need to do to achieve our end goal. It could be to add resources, create a new product, expand into a new market, add more features to upsell to existing customers, etc.
Lets roll this all together ....
The positive impact of this approach goes farther than just checking the boxes to have a clear viable strategy -- your teams will be more focused and aligned as well. Check out our article, is business strategy important?.
American researcher, author, speaker and consultant focused
on the subject of business management and company sustainability and growth