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Business strategy and how it helps you succeed

Friday, July 16, 2021

Even if you have not thought about a business strategy yet, your company still has it. There are two types of strategies: deliberate and intuitive. If you operate without a system, situationally, reacting to external challenges and current problems, this is also a strategy. But, perhaps, not the most effective one.

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What does having a business strategy give to your company? When you have a strategy, you are the one to determine where the company is going and not external factors. Instead of “putting out fires”, you work ahead of time on firefighting measures.

There are many definitions of “business strategy”, but here is the simplest and most universal one: it is a plan that should lead your organization to a goal.

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What happens if you don’t have a business strategy

  • If you have a startup, for example, you run the risk of failing after the first difficulties you came across. Having a strategy helps define the main goal and find different paths to it, using failure as a tool.

  • The company’s departments work according to the “swan, pike and cancer” principle: each department lives its own life and focuses on fulfilling its own KPIs, and we all know it leads to no good.

  • Leaders make decisions intuitively, based on their considerations and ideas about the goals of the company, and not within the framework of a clear system.

  • Your business is operating in a “fire mode” all the time: you react to situations that have already happened.

  • You don’t have a clear vision of who your client is. By working for “everyone who buys the product”, you are not really working for anyone.

  • You are like everyone else. You sell the same thing, the same way, through the same channels… There are no unique features that make you stand out, and in the end, price is the only thing that determines a customer’s choice.

Each of these situations is unpleasant in the short term and can “kill” the organization in the long term.

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What will you get by developing a business strategy

  • Understanding your target audience.

  • Analysis of the strengths and weaknesses of the company, threats and opportunities.

  • Mission and strategic goals of the company.

  • The value of your product.

  • Possible points of growth of the company.

  • Analysis of existing trends.

  • Risks that may interfere.

  • A system for making coordinated decisions at all levels.

  • Detailed analysis and examples of the work of your competitors.

  • Development and new ideas.

  • Unified action plan for the next several years.

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How to create a strategy: a step-by-step guide

If you don’t know how to get started, the Internet will come in handy. There are a lot of templates and tutorials to help you figure it out. The main thing is not to get confused in complex terms and concepts, because there is nothing extra complicated in drawing up a strategy. Below is a list of the main stages of strategy development.

Any strategy starts with setting the main goals for the next few years. Set ambitious, but achievable goals: in the end, you will spend as much time and effort on small goals as on global ones, but the result will not be nearly as impressive. And if you raise the bar too high, you’ll end up just wasting your energy. The SMART system is excellent for formulating goals: according to it, the goal should be specific, measurable, attainable, relevant and time-bound. At first, you can outline the goalless specifically, and at the end return to the goals and adjust them according to SMART.

Estimate the market size and growth rate: is it a bull, a stable or a bear market? A growing market is one where the growth rate exceeds the rate of inflation. You don’t need to be an economist to analyse the market: industry research, which is easy to find on the web, will help you. Look at the research over the past few years to get a sense of the trend.

Analysing trends will help your organization stay aligned with the interests of its audience. You can use different tools — from Google Trends to expert journalistic articles. One example of good analytics is RBC Trends. Your own experience will also help. Analyse not only the trends of your industry but also general, cultural, social and technological trends, all of which affect the business. Try to apply the acquired knowledge to your company: how can you change communication channels? What marketing tools can you add?

Analyse approximately 3–5 major competitors by answering the following questions:

  • What are the competitive advantages of your main competitors?

  • What makes them stand out in the eyes of your target audience?

  • How do they position themselves, what sales channels do they use?

  • Are there interesting tools and solutions that you can use in your organization?

  • What are their weaknesses?

  • What makes you different from them?

Excel spreadsheets work well for competitor analysis, and there are many ready-made templates on the Internet to help you make sure you don’t miss a beat.

Your organization has probably done a customer analysis before, but it doesn’t hurt to come back to this question when developing a strategy. Try not only to describe who your target audience is, but also to create a consumer profile. Who are these people? How do they live, how much do they earn? What are their needs and desires? Why do they need your product? It is advisable to find specific search queries, articles in the media, and read blogs your customers write. Custom portraits will come in handy both in shaping your marketing strategy and in finalizing your product.

Please note that shopping behaviour and consumption patterns change over time. For completeness, you can also consider how competitors work with users. What are some best practices they have? Can you learn from something?

You can use a simple template: “We are company X, we help clients of type Y in situation Z to solve problem P with technology/solution S and get value V”. Try to formulate a value proposition for all segments of your audience, try different wording for your product.

With your goals outlined, you’ve marked where you want to get. Now you need to decide on where you are now. Answer the following questions:

  • What market segment is the company working with now?

  • Who are your clients?

  • What is the organization’s sales model?

  • What is the marketing model?

  • What are the main problems hindering the achievement of the goals now?

  • Who is in your team? How do you develop your team to achieve your strategic goals?

  • What are your advantages? What supports them?

This is where the SWOT analysis system comes in handy: you will consistently analyse the strengths, weaknesses, development opportunities and threats for each item.

Do you have a key idea around which the company is being built? In the previous paragraphs, you determined what you are doing, for whom, how, and now is the time to answer the question of why? Why are you doing this? The answer to this question will be the mission of your company.

Great entrepreneurs talk about the importance of a mission for a reason. First, an organization that has a mission brings the best people to the team. Second, customers choose you not only for what you do, but also for why. The mission can become not only your guiding light, but also a competitive advantage. If you want to understand the role of a company’s mission, check out Simon Sinek’s TEDx talk ‘How Great Leaders Inspire Action?” There are many convincing examples.

Having formulated the mission, think about the current image of the organization: how does it correspond to this mission now? Is your company associated with the mission? What can you change?

Now, if you didn’t phrase your strategic goals using SMART at the very beginning, it’s time to get back to this. And after that, with clearly defined goals and all the information from the previous paragraphs, it will be easier for you to set deadlines and schedule the steps required for implementation. Don’t go too deep, tho, remember that this is a strategy, not an overarching plan of action. Ask yourself what the most important steps to achieve your strategic goals are.

Now compare the strategy you wrote with the one you wrote earlier. What has changed? How will the new strategy help you achieve your company’s goals? The answers to these questions will help you explain the importance of strategy to your employees.

So, you’re all set with the strategy now! Remember, you don’t develop it once and for all. Return to the document every six months to think about it again and, possibly, adjust it. However, your organization should not change the course too often.

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Summing up: why is strategy important for a business

To prepare a business strategy means to take control and independently determine the development of the company and its processes. Once you’ve written the strategy, in addition to well-coordinated work at all levels and understanding the company’s goals, you will receive a bonus: many new ideas for improvement and development.

Do not be intimidated by the thought that developing a strategy takes ages, is difficult, has to involve analysts, and so on. You can do it on your own, even if you are still a small company. Just invite a few key employees for 1–2 days to answer the questions on the list. Most of the tools, templates and necessary data for analysis are in the public domain — just a couple of clicks away.

Good luck creating your business strategy! And do not forget Sun Tzu’s wisdom that’s been around for centuries: tactics without strategy is the noise before defeat.

16 Jul 2021

 

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