What is Business Strategy?
Have you ever taken a road trip, maybe to a quiet beach or remote cabin in the woods, for the purpose of resting and recharging your batteries? Chances are that you mapped out your driving route before leaving for your destination, hoping to get their safely, avoid traffic, and arrive in time to make the most of your first day of vacation. So, you had a destination in mind and a road map to get you there in a particular manner, all for the purpose of resting and relaxing.
Let’s think of business strategy similarly. As with planning a vacation, business and nonprofit organizations should have a destination in mind, a road map to get from where they are to where they want to be, and a purpose for doing so. Of course, the planning process for business involves different factors, but it requires a similar thought process to planning a road trip.
Business strategy is the process of evaluating the organization’s current situation; determining your vision for the future, i.e., where you want to be; understanding your purpose for such desires; then mapping out how you will get there, while arriving with certain conditions in mind.
Rather than making sure suitcases are packed, the car has fuel, the route is mapped out, etc. as we do when going on vacation, business planning looks at factors such as the company’s products and services, market opportunities, competitiveness, internal operations, communications, marketing, sales, financial resources, and many other factors that may affect the company’s ability to get from where they are now to where they want to be in the future.
This process of planning for the future results in a road map to help everyone understand the plan, know their responsibilities, stay on the same page with others on the team, and accomplish goals that will help the organization arrive in time to enjoy the results of their efforts.
Why is Business Strategy Important?
Similar to a vacation road trip, if we don’t have our route mapped out (assuming we’re not relying solely on our smart phone’s GPS app), there’s a good chance we’ll get lost along the way, waste time and fuel traveling miles that aren’t helping us reach our destination, become frustrated because we’ll arrive late and lose most of our first day of vacation, begin bickering with our family members because that’s what people do when they become frustrated, miss opportunities to stop and visit interesting places along the way, etc.
The same is true of business planning. Without a good business strategy, well documented and disseminated appropriately throughout the organization, with the right people involved doing the right things at the right time, then chances are we’ll get lost along the way… although we won’t even know where we’re going (our destination), we’ll waste time, money and other resources working on the wrong things; we’ll miss opportunities to take advantage of certain market conditions; we may be defeated by the competition, or at least hurt in ways we may not even recognize; broken internal processes may not be fixed, so inefficiencies and quality issues may persist; customers will continue to be disappointed in ways that could have been avoided, and so on.
Business strategy is important because it helps you get from where you are to where you want to be, as an organization, in the most straight-forward, efficient, enjoyable manner possible, within established timeframes and budgets for doing so.
Otherwise, you may not get there at all, wherever “there” may be, or you may end up somewhere that you didn’t want to go in the first place.
How to Create a Business Strategy
A business strategic planning process consists of several phases, including:
Clarifying the organization’s vision for the future
Confirming the mission to be accomplished
Affirming organizational values which guide decision making and activity
Identifying and analyzing external factors which may affect the company’s ability to get from where it is to where it needs to be
Identifying and analyzing internal factors which may help or hinder the cause
Determining strategic objectives based on the analysis
All these phases must be done with budgetary factors and other resources in mind. Then, the company’s strategic plan can be used to develop functional plans, including marketing, sales, operations, human resources, technology, financial, accounting, legal, etc.
We believe it is best to have a qualified facilitator to help your organization develop its business strategy. You probably wouldn’t have your technology team represent the company at legal proceedings, or your human resources team buy and install high-tech manufacturing machinery. Likewise, it is best to have a strategic planning expert help with development of a solid business strategy to ensure your objectives are clearly determined, delineated, communicated, and implemented. This improves the company’s chances for achieving growth, increasing profit, gaining market share, or accomplishing other objectives established for your organization.
If you try to develop a strategic plan on your own, keep these important factors in mind:
Assemble the team
Cast the vision
Confirm the mission
Affirm organizational values
Analyze external factors (especially market opportunities and competitiveness)
Analyze internal factors (especially structure, function, leadership, communications, capabilities, capacity, resources, processes, customers, equipment, tools, etc., along with critical functions such as marketing, sales, operations, and support)
Establish a budget
How is Business Strategy Different from Functional Strategies?
Business strategy and functional strategies are different, but they should be very much related. Imagine that we’re preparing for the road trip, and the driver is making plans to go south to a nice, warm, sunny beach resort, but the person in charge of packing suitcases is thinking the family is headed north to a remote cabin in the cool, brisk winter air with fresh fallen snow. Both options sound wonderful, but they are different, and the family will end up in a sunny paradise wearing heavy coats and gloves.
The business strategy informs and helps to determine functional strategies.
If our driver would have informed the suitcase packer about plans to head south to the beach, the packer could have loaded the suitcases with shorts, t-shirts, and swimwear. Likewise, an organization’s business strategy lays the framework for building appropriate functional plans to accomplish the overall business strategy. This includes the sales plan, marketing plan, operations plan, financial plan, human resources plan, technology plan, and so on.
If functional plans are not intertwined with the organization’s business strategy, and therefore not moving in the same direction, they will be pulling against each other. The result will be confusion and frustration, wasted time and resources, missed opportunities, etc. which may make matters worse than if there were no plans developed at all. With no plans, the company may have at least maintained the status quo, rather than going backwards.
How to Implement a Business Strategy
Many strategic business plans have been developed only to sit on the shelf and collect dust. They are of no value unless implemented. In fact, it may cause more harm than good to go through the process of developing a business strategy and then fail to implement it. Think of the time and resources invested, and the enthusiasm generated among participants… only for the plan to fall off the tracks. This can happen for a variety of reasons, but almost always results in disappointment among hopeful participants and can lead to more problems than were present before the planning process began. It would be like the entire family planning that much-anticipated vacation together, packing suitcases, loading the car, piling in, and then having the car break down in the driveway.
Again, qualified professional assistance with implementation may be a good option to seriously consider. To be done effectively, implementing a business strategy requires communicating the overall business strategy to functional leaders, supporting their efforts in developing operational plans consistent with the overall strategy, involving others who may be part of implementation efforts, informing all members of the organization appropriately and timely, providing resources and tools necessary to implement the plan, supporting those leading and those involved with the effort, reviewing progress periodically, making adjustments along the way, holding each other accountable to mutually agreed upon goals and timelines, communicating and celebrating progress and success, gathering valuable information that may inform future business strategies, etc.
Having a well-developed and executed business strategy could represent the difference between business growth and failure to grow, revenue growth and stagnation, profit and loss, greater market share and shrinking market share, innovative products and services being developed and watching the competition do so, operational processes being improved and the bottom line being negatively affected by inefficiencies and poor quality, gaining and retaining customers and losing them to the competition, and so on.
Take the calculated risk. Invest the time and resources. Develop a winning business strategy for your organization. Implement it as effectively as possible. Have fun doing so. Enjoy the results.
For more information or help on this and other topics, contact our team.