As soon as you make up your mind on setting off across a new territory you’ll want to consult a map, otherwise, you’ll get lost. And what do they need to make sure they don’t get lost? A strategy, of course, which some may also call a roadmap.
Whether you’re looking to set new business priorities, outline plans for growth, determine a product roadmap or plan your investment decisions, you’ll need a strategy.
For many people, the idea of creating, developing, changing a business strategy always brings them into a stress. Why? Because some people focus too much on the tools: environmental scans, SWOT analysis, customer analysis, competitor analysis, financial modeling, and so on. Other people get into trouble because they think it’s all about the broad, conceptual, future-oriented, big picture because they tend to confuse strategy and tactics.
So, let’s make the things clear and talk about some easily mixed up terms.
Strategy or tactics?
The strategy is the art and science of planning and marshaling resources for their most efficient and effective use. A method or plan chosen to bring about the desired future, such as achievement of a goal or solution to a problem.
Tactics is a set of means by which a strategy is carried out; planned and ad hoc activities meant to deal with the demands of the moment and to move from one milestone to other in pursuit of the overall goal(s). In an organization, strategy is decided by the board of directors, and tactics by the department head for implementation by the junior officers and employees.
Why is strategy important?
The strategy is important because the resources available to achieve these goals are usually limited. Strategy generally involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources). The strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes. It involves activities such as strategic planning and strategic thinking.
Strategic planning or strategic thinking?
Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy.
When applied in an organizational strategic management process, strategic thinking involves the generation and application of unique business insights and opportunities intended to create a competitive advantage for a firm or organization. It can be done individually, as well as collaboratively with key people who can positively alter an organization’s future. Group strategic thinking may create more value by enabling a proactive and creative dialogue, where individuals gain other people’s perspectives on critical and complex issues. This is regarded as a benefit in highly competitive and fast-changing business landscapes.
7 Steps to successful business strategy
#1 analyze the evolution
To know where you’re heading, you have to know where you are right now. So before you start looking ahead, you should review the past performance or the current situation. Look at each area of the business and determine what worked well, what could have been better and what opportunities lie ahead.
There are many tools and techniques available to help with this process, such as SWOT (Strength, Weakness, Opportunities, and Threats) analysis.
You should look internally at your strengths and weaknesses. And for the opportunities and threats, you should look at external factors. A great framework for looking at external factors is PESTLE (Political, Economic, Social, Technological, Legal and Environmental). So, for your big idea or plan you would ask: what threats and opportunities could arise under each category?
#2 develop a vision statement
This statement should describe the future direction of the business and its aims in the medium to long-term. It’s about describing the organisation’s purpose and values.
#3 establish a mission statement
Like the vision statement, this defines the organization’s purpose, but it also outlines its primary objectives. This focuses on what needs to be done in the short term to realize the long-term vision. So, for the vision statement, you may want to answer the question: “Where do we want to be in 5 years?”.
#4 enumerate success factors the business must meet to achieve its vision and mission.
Critical success factors can vary from business to business, but some examples include achieving credibility in the industry; a business financial plan that ensures a positive cash flow and sufficient revenue to grow the business; conducting market research to meet customers’ needs and desires
#5 compile the business strategies and objectives.
The strategies of the business are which actions need to be taken and who in the business is responsible for completing the action. Strategies typically include marketing and advertising actions as well. While a strategy may be a general action, a list of steps required to complete the action is also listed.
They need to highlight the priorities and inform the plans that will ensure delivery of the company’s vision and mission. Crucially, your objectives must be SMART (Specific, Measurable, Achievable, Realistic and Time-related).
#6 set tactical plans
The strategic objectives here must be translated into more detailed short-term plans. These plans will contain actions for departments and functions in your organization. You may even want to include suppliers. You can even think of these tactical plans as short sprints to execute the strategy in practice.
#7 performance management
All the business planning and hard work may have been done, but it’s vital to continually review all objectives and action plans to make sure you’re still on track to achieve that overall goal. Managing and monitoring a whole strategy is a complex task, which is why many directors, managers, and business leaders are looking to alternative methods of handling strategies. Creating, managing and reviewing a strategy requires you to capture the relevant information, break down large chunks of information, plan, prioritize, capture the relevant information and have a clear strategic vision.
So, coming to the sum-ups, mind that the strategy needs to be reviewed regularly to make sure it remains relevant to market conditions and the company’s capabilities. As well as feeding into the business plan, the strategy needs to be communicated to the management team and filtered down to everyone in the organization so that everyone understands their role in helping the company achieve its strategic goals.
Source:
Chron, Business 2 Community, Harvard Business Review, Raconteur, Business Dictionary.