Strategy is an overused term these days and the foresight in most cases is limited. When confronted with revenue growth, most companies focus on expansion into new geographic markets. Heard the age old saying numbers don’t lie ? A look into the financial model would reveal the the impact of such decisions and the growth metrics that the company would gain rather than just relying on instincts.
One mistake most business CEOs and startups in particular make is to utilize off-the-shelf strategic templates in a bid to realize quick results as they are usually time starved and stressed. But the results are usually disappointing as the outcomes are short-sighted and usually tactical rather than strategic in nature.
Below is a step by step method of developing a business strategy.
Developing a business strategy in 10 steps
1. Define and embody your true north
This is termed a BHAG (Big Hairy Audacious Goal) or your grand vision or purpose. Term it however you like, but it is what your business is set out to do and the reason why it exists. The true north should consider what success means to the company, its customers and the environment that includes market and economy. w Vision is an abstract word that means different things to different people.
2. Define your USP
Your strategy has to take into account your customer and how you deliver value to your customer that is unique from other competitors in the marketplace. You don’t want to swimming in a red ocean. Your strategy should look into how you can differentiate yourself either in terms of service quality, delivery models, pricing, product innovation etc.
3. Be specific about your target audience
Without understanding your customer and defining the right target audience, the chances are you are going to shoot in the dark or spread yourself too thin to see any tangible results. This results in poor sales, inefficient marketing and overall business failure. Defining the audience and focus area helps channel your resources and energies on delivering true value. By defining your revenue operations and integrating sales and marketing, you increase your chances of success.
4. Monitor for growth
If you aren’t growing and your growth trend is a flat line or worse, declining; you have to be really worried. Growth is essential to be able to invest into people, processes and technology. Growth can be defined in terms of revenue, technology innovation, R&D etc. The area you want to focus on is dependent on the nature of your business and which area delivers the goals you’ve set for the company. Be defining the areas of focus, it gives the business the clarity in terms of budgets it needs to allocate for various resources.
5. Data ! Data ! Data – Use them for decisions
Do you use your gut alone to make decisions or couple it with data? And is that data credible and useful ? Your strategy is as good as the data you use to make decisions. Tracking data and knowing what data is important to monitor is critical to helping business CEOs understand their business better and steer it in the right direction.
Business CEOs need to look into data about every function of their business and derive meaningful information rather than be perplexed by the swarm of data. Business dashboards and visualization tools can help you take informed decisions.
6. Don’t underestimate your results for the long term
We usually make the mistake of over estimating the results that can be achieved in the short term and under estimating what we can achieve in the long term. Businesses tend to make short term plans as the current markets are very dynamic. Consider the risks involved from political, economical, social, technological, legal and health perspectives and plan in mitigation into your strategies. Great companies treat strategies as an annual exercise making it long term yet giving them the ability to evaluate and tweak it periodically.
7. Pick your strategy team and invest time
If you want your managers to take strategy seriously, make them do their own research and prepare relevant information in advance of your strategy meetings.
8. Evaluate the performance periodically
A strategy is only good if it is executed well. It’s recommended that the strategic plan be reviewed and tracked monthly or quarterly. As the strategy covers various functions of the organization, key executives in charge of departments need to take ownership to execute the plan.
A great way to track the progress is using KPIs that help track the current progress and forecast the track to achieving the goals using leading metrics. Ensure that the goals reach all departments and that every person in your organization can relate to it and be clear how they contribute to achieving it.
It’s easy to set and forget unless you put it onto a calendar. This way you can keep track of the progress periodically and promote effective and more productive meetings. Strategy may start at the top as its a senior executive responsibility but needs to encompass the entire organization and keep the team set on the overarching goal.