It’s remarkable how often business strategy, which is designed to achieve a certain outcome, leads to the exact opposite. Strategy should bring clarity to a business, instead often it just creates confusion and distraction.
This is because people make strategy much harder than it needs to be.
For some, the problem is that they focus too much on the tools and process they should follow (think environmental scans and SWOT analysis). Other people get into trouble because they think it’s all about the broad or conceptual, future-oriented or big picture “stuff”. They’re focusing on the “stuff”, not the tactics and the real steps they should be taking.
For another set of people, they’re taking the steps to follow industry “best practice”. They’re taking the same steps as everyone else in the industry. This means they’ll maintain their existing market share, their existing problems, and their existing profitability. Sure, they’re moving with everyone else so they don’t get left behind, but their overall position in the market won’t change.
The reality is that strategy needs to set you apart from the market, not help you converge with it. Strategy needs to build momentum in the business, not confuse and distract from core business.
Strategy needs to be deliberately designed to help you innovate with new ideas in your business.
What designed strategy should look like
Most business have ‘next steps’ they’d like to achieve on their plans (read more on planning here). Many however don’t implement those same next steps through a lack of momentum.
Designed strategy is about each of the steps in the plan interlinking with the next. The first “baby” step leads you on to the next step automatically, building momentum. This momentum helps you feel good about it, meaning you get more done.
Designed strategy is also about standing out from the crowd, and not following industry best-practice (which often seems counter intuitive). To stand out, it’s important to get clarity in your thinking (read more here) and understand the assumptions you’re making about your business (read more here).
Why should I bother?
In short, (1) because you’ll stand out from the crowd, and (2) you’re more likely to get things done in your business, rather than spending all your time fighting fires.
For example, knowing who your most profitable customers are means you can change your strategy to target more customers like them. By knowing what your distribution costs are means you can change your distribution strategy. By knowing who your productive staff are you can change your hiring strategy.
Once you’ve identified or changed your strategy, you’re able to work out the ‘next steps’ to take.
Some things to look at
To help identify what your strategy could be, and the next steps you could take, you should give thought to:
- The Business Growth Curve helps identify what has made you successful to date, and what’s holding you back from being more successful in the future. With this understanding, you can tweak your strategy to reach the next level of business sooner.
- This involves looking at the potential risks your business faces (for example in a disaster situation or if a key staff member was suddenly taken from the business). By understanding these risks, you can change your strategy to implement safeguards or procedures to mitigate them.
Deliberate niching or scaling
- By focusing on a narrow niche in the market, or alternatively going broad to help everyone in the market, you can gain a higher market share. Different strategies will work for either option, preventing you getting stuck in the middle (no-mans-land).
Process improvement plans
- Identifying areas to improve a business can help boost profitability. By understanding where your processes are lacking, you’re able to change strategy to make up for your deficiencies.
By having the right strategy, your business is able to stand out from the crowd (rather than converging with the crowd). A well design strategy will also help you make small/easy wins initially, building momentum.
To build the right strategy for your business, a good starting point is to check out what good business design looks like. Alternatively, we’re happy to facilitate a no-obligation Discovery Session for you and your business to look at the options available to you.
iif Chartered Accountants help businesses all around Wellington to refine their business plans and stand out from the crowd. For more information, feel free to get in touch today for a no-obligation appointment. We’re also helping Wellington, Porirua and Lower Hutt businesses with their day-to-day accounting, tax, and tax planning.