The challenge to ‘continuously improve’ leads many business owners to focus just on cost cutting and squeezing ever more productivity from their organisation – when in reality a fundamental shift maybe required.
Business owners know that markets – trends-business conditions are changing all the time. Change can mean the development of new opportunities like new marketing platforms that enable one to one communication with customers and prospects (i.e. Social Media) – or change can be in the form threatening challenges i.e. new well resourced competitors; new substitutes for our products and services; a strong dollar bringing international pricing competition. We tend to me more conscious of the potential challenges (threats) to our business than we are of the opportunities. Certainly since the advent of the GFC – many established businesses have found it is increasingly difficult and costs more to secure new customers and existing customers demand better prices but with enhanced service delivery. The pressure to provide better products and services at lower and lower prices is a given and there are many examples of disruptive new models that have a dramatic impact on established business models – Cloud based services, smart phones, tablets, outsourcing via Freelancer –Odesk etc are some obvious examples.
In this environment driving business growth requires constant decision making responding to and anticipating change. But as business owners how are we certain that when were ’trimming the sails’ were not just being blown off course –away from the primary goals of our business? That’s where developing the right business strategy is essential. I use the term ‘right strategy’ purposefully –that means right for your business, given your objectives, resources and risk profile.
Your business strategy is effectively your business compass –it provides the guide to the management team to ensure the ‘trimming of the sails’ keeps your business on course and not just following the wind…
How do you describe business strategy?
Your strategy is the broad plans of how you will achieve the objectives for your business. The strategy articulates the vision and spirit of your business. It identifies the source of how your organisation will differentiate i.e. why will your customers will choose your products and services over your competition. It will identify who your target customers are –your goals for engagement with those customers and the size scale and scope of your business in broad terms over time. When the strategy is right and clearly expressed–it is transformative for the business –inspiring management and staff alike and translates into marketing messaging that ignites customer interest.
We can all know of successful businesses–where their key message (what makes them different) and their business model –how they make money are clear and aligned –resulting in an inspiring business. Obvious examples include –Virgin (in all its forms) Yellow Brick Road, Harvey Norman, Amazon, Nutrimetics, Aldi, Aussiebum –all different industries yet with distinct strategy, objectives, value propositions that are pretty transparent. What categorises these businesses is the ‘distinctive’ nature of their business strategy.
As a consumer we have an incredible choice today–whether of B2C or B2B products there is an amazing array of options. The impact for business is profound in reality if your business folded tomorrow- how long would it take your existing customers to find a competing or substitute product – matter of a few minutes I suspect. It is a requirement therefore for business owners to have crystal like clarity around their business strategy – and that that strategy is reviewed and objectively tested on a regular basis. The market knows when businesses have ‘gone-off the boil’ i.e. their strategy is unclear or worse no longer relevant.
Do you have the right strategy for your business?
To be able to answer that question you’ll need insight and objectivity; insight about your market, your customers, trends, pricing, competitor activity. You’ll also need objective analysis of your businesses capability and potential. You need a range of tools including market research to assist you to gain insight about your market–and because business owners are naturally emotionally attached to their business they need external assistance to be able to objectively evaluate your businesses capability.
Public companies have the benefit of a board that includes independent non-executive directors whose job it is to oversee the development of and evaluate a company’s strategy. For small and medium businesses the option is to establish a board of independent objective advisors that can provide an external perspective on your insights and capability. For smaller businesses that maybe an Advisory Board of one and can be a respected experienced business advisor or confidante of the owner, as businesses grow the Advisory Board can grow and become more formal. Their role is to understand the owner’s goals, test and challenge the business strategy, provide a supportive but challenging environment that questions the conventional wisdom of a business. There are also many commercial business support groups that provide an Advisory Board-like framework including TEC, CEO Institute, EO and many others as well as the My Board program from the Sydney Hills Business Chamber. The key is to acknowledge the need to objectively test your strategy and then find the right source of that external input.
In this article we’ve explored the value of building the ‘right’ strategy for your business and that key elements to develop that strategy you need insight and objectivity. In subsequent articles we’ll explore the tools to develop ‘insight’ as well as how a business model is different from strategy and how to evaluate alternate business models.