Business and technology keep moving faster and faster. Strategy doesn’t.
Change brings opportunities. Change can also be confusing. The mistake that managers make is that they see all the changes, exciting opportunities, and new technologies and say, “gosh, we have to get out there, take advantage and implement a sound business strategy”. They forget that if they don’t have a clear direction, a distinctive competitive advantage, it’s going to be very hard to win.
Many of my executive clients are very busy, fly around the world, jump from meeting to meeting, and say: “I don’t have time for strategy, the world is changing so fast, we have to move faster. Making time for strategy is a waste of time.” I argue, “It’s the opposite. You got to slow down, clear your head, reflect, think, then set the right strategic direction for the organization and decide what you are trying to accomplish in the future. Having a strategy actually speeds things up.”
Three Key Principles of Business Strategy
1. Goals and priorities
Business strategy starts with having the right goal, setting the right priorities, and having the appropriate mission. The essence of strategy is to set boundaries on what we are going to accomplish as an organization. It is about making choices, trade-offs. Rather than asking “How can we find more opportunities?” try to answer “How can we narrow down the opportunities that will help our company excel and give us the best return?”
Making a list of 15 “top priorities” is easier than saying “let’s focus on those 3 opportunities and let’s do it right.” Deciding what not to do is hard.
2. Deliberate choices
Good strategy is about making deliberate choices to be different, to be unique. How are we going to deliver superior value to our client that is different from how our rivals do it? We cannot be all things to all people. Companies without a strategy are willing to try anything. This is dangerous and not a promising recipe for success. If a company is trying to do essentially the same things as their competitors, they will end up in a price war. Gone are the price premiums.
3. Continuity
Finally, a good business strategy must have continuity. Too many organizations fall into that trap of constantly reinventing their strategy. Continuity comes into place when we clearly determine the big-picture questions around defining the target market, articulating our value proposition, and identify our competitive advantage.
There is a fundamental distinction between strategy and operational effectiveness. The latter is about delivery and implementing a service and product offerings. Once we set the right goal and direction (doing the right things), it’s about executing and making things better (doing things right). Operational excellence is about continuous improvement.
On the other hand, strategy is about making the (trade-off) choices.
Start by Answering 3 Fundamental Questions
1. Which clients you are trying to serve?
2. How do you add value to your clients?
3. How are you different and better compared to your competitors?
Setting and communicating a business strategy is one of the most important topics on the manager’s agenda. When people in the organization understand and define it, they can go out and execute with passion, creativity and focus. Strategy becomes a cause.
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