The “strategy” word gets thrown around so often in business and yet most people don’t get what strategy is really about. I often hear that businesses are working on strategy yet what they tell me doesn’t align to what I know as “strategy”.
So this leads me to the question, “what is strategy?”.
My take on this is different to what I hear other consultants talk to. Often you will hear the words Vision, Purpose, Mission and Values discussed. In my opinion, this is the foundation on which the business is created. These areas of the business help guide the business but aren’t truly strategic in my mind. I believe these are extremely important no matter the size of your business however that is not strategy from what I know it as.
The simple definition I use is; Strategy is defining the areas the business won’t play in.
It is a very simple definition but the simplicity of it all is what makes it so powerful. By defining what it is the business won’t do it creates space for energy, time and focus on the areas that business wants to work in. It creates a boundary for the team to work from. If the whole team (including the Director, CEO, Owner) acknowledges, understands and doesn’t go outside of those boundaries it will help the business significantly in market attraction, sustainability and growth (if your strategy is set out correctly). If your strategy doesn’t define what it won’t do it is more than likely sucking the energy, focus and time from everyone involved.
Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different. Michael E Porter
Here are just some of the basic aspects that a strategy should have:
- Clients the business will & won’t work with
- The products/services offered to these clients (and the ones that won’t be offered)
- The parameters of the business in which it will do business
- The partnerships that the business will & won’t work with
- Defining why these areas work & don’t work (to ensure the team understands the why)
In everyday life we see this from many businesses but many don’t see it from a strategic angle, they often see it from a consumer’s point of view and the hassle it creates.
Quite simply, by creating strategic barriers it allows the business to stick to its sweet spot and what it does best for the clients it loves to serve.
Here are three examples to ponder:
Location — Pizza delivery is only within 5kms of the shop. Why? Is it easier, faster and cheaper just to service the local area? Does the pizza become cold if we go to 6kms? Does that reduce the complaints?
Type of work — Only new home builds, no renovations. Why? Is it easier and cheaper to start with a blank canvas? Does this reduce the build time by starting from scratch? Is it easier to employ rather than contract for these positions?
Length of contract — 12 months minimum contract Why? Allows for relationships to be built, allows time for trust, gives time to prove ROI. Does it change the type of client that is attracted?
These are three simple examples of thousands of strategic decisions that we all come across everyday. There are millions of decisions like these out there.
Why should a business work on it’s strategy?
Return on Investment. Invest in the strategy which will then increase the reward for the business owners (both financial & lifestyle).
What would the return be in your business if it was to:
- Narrowed the focus (products & clients)
- Conserves the team’s energy (removed the frustrations)
- Allow the team to work on high payoff activities everyday
- Simplify the business (processes & interactions)
- The business had more market attraction (clients know exactly what is offered and why)
Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline. Jim Collins, Good to Great
How does a business know if there is room to develop its strategy further?
Firstly, I believe business owners must ask themselves these questions and be honest with the answer to each:
- Can the team clearly define the clients the business will and won’t serve?
- Can the team clearly define the product/service offerings the business will and won’t offer?
- Can the team describe succinctly what it is the business does and for whom?
“The best way to predict the future is to create it” Peter Drucker
The take-away from all this is to consider implementing better strategic discussions in business. A better discussion around the types of clients the business wants to attract and the types of products and services it should offer these clients. When the team is debating about products and clients you know it is on the right track.
These decisions aren’t easy hence why many don’t have them. Create the future the business deserves.
Want to talk strategy, send me a message.
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About the author:
Tim Lavis is a highly skilled business coach working with corporations, SMEs, NFP’s and executives developing leadership & strategy. Tim develops growth strategies, advance leadership skills and business development programs for business leaders wanting to grow their revenue.
Tim works with many Australian businesses in helping them grow and develop their business. Tim asks the tough questions, enjoys some banter and helps to change your perspective on situations. If you need someone to challenge your thinking while growing your business then Tim is your expert.
