Business strategy: What you need to know as a leader.
What exactly does business strategy actually mean? The answer is anything but simple. The strategy expert Henry Mintzberg says:
“Strategy is one of those words that we like to define in one way, but use in quite another.”
A multitude of definitions exist for the term strategy. I find the following definition helpful in the business environment:
A company busines strategy is a long-term plan. It describes how, and by what means the company’s vision will be attained. As such, a business strategy provides an orientation for future actions. Objectives and action plans are then developed to implement the strategy.
Business strategy: focus on fewer operational aspects!
Unfortunately, many executives spend too little time on their strategy. Many are literally trapped by operational thinking. Using several examples, Michael Porter (Harvard Business School) highlights this problem in the Video “What is strategy?”:
When asked about their strategy, managers will for instance say:
“We are globalizing.”
“We are outsourcing our products.”
But these are not strategies!
Business strategy or action plan?
Neither globalization nor outsourcing is a strategy. These are action plans. In contrast, a business strategy will state why the company is globalizing or why it’s outsourcing.
A business strategy describes the positioning of the enterprise, the long-term benefits, the future unique characteristics of the company and the potentially unique competitive positions.
Firstly, describe crystal clear which direction the company is heading. Then define the action plans and objectives.
Does your company have an actual strategy and a crystal clear positioning statement?
7 pointers for a successful business strategy
Your business strategy defines the long-term direction of your company. The strategy is the guiding principle. Therefore, it provides the needed orientation for important company decisions.
The following 7 pointers will show you what mandatory components must be included in your strategy. That will help you to get a clear picture for developing and implementing your business strategy.
The most important need for people is the desire to have a purpose. That’s why, your strategy must be rooted in an attractive and motivating image of the future. If they have a business vision they can assign a purpose to their own work, and to that of others.
2. Focus and concentration
Your business strategy not only determines the direction, but also what activities to pursue. You must clearly define what you are not going to offer. You must also be clear about who your customers are, and who is not. Define which market segments you will operate in, and which are best avoided. Focus!
Your strategy must be straightforward, and easily understood. Otherwise, it will be difficult to get your employee’s buy-in.
Your strategy must clearly define how you will be different from your competition. How do you position your company in the marketplace? What do you do differently, and what are you better at – to the benefit of your customers?
5. Customer value
Regardless of what you produce, or what service you provide, it is essential that your product or service provides a value to your customers. No value – no business. Define precisely which customers you benefit, and how you benefit them.
Stick with your business strategy. Only continuity will ensure that your employees internalize your strategy. Act accordingly. You cannot be successful if you discard your strategy every six months.
Your strategy must implementable. You need clearly defined objectives by which you and your employees can implement the strategy. These objectives must be defined precisely. They must be measurable, attainable, relevant and have a completion date, a deadline. For every defined objective ask: Who does what by when?