Business Strategy – What is Actually Involved?
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Businesses refer to their strategy but what does that really mean?
Strategy is commonly defined as “A plan of action designed to achieve a long-term goal or overall aim”.
So the ‘plan of action’ could be to double sales and we’ll hire another sales person. No, this is not strategy, this is simply wishful thinking, a knee jerk reaction and a hope that additional resources will achieve the long-term goal.
How many sales people have joined a company, been given a customer list and told to ‘go sell’. They know the goal is to increase sales but they don’t know the business strategy or their unique selling point, the USP.
Business strategy concerns:-
- The analysis of a situation
- Choosing intended future actions
- Implementation
Before we get carried away, I just want to distinguish between business strategy and operational strategy.
- Business strategy concerns ‘what we do’.
- Operational strategy concerns ‘how we do’.
It is too easy to get lost in the detail of ‘how’ before you have established the ‘what’ you do.
Business strategy concerns the analysis of the external environment together with a thorough understanding of your internal resources and capabilities (tangible, intangible or human). Next you need to understand your key success factors to analyse how your business obtains its competitive advantage.
A thorough understanding of these factors enables you to develop a clearly defined business strategy to be shared with your employees. When your employees know and understand the business strategy you can really leverage your position in the market.
“What on earth is he waffling on about? Resources, capabilities, key success factors, competitive advantage, what – I just want to grow my sales!”
Sure, if you throw enough mud around, some of it will stick and you will increase sales however, focusing your efforts according to your competitive advantage will yield greater results with just a little more effort than you employ today.
‘I can just pile it high and sell it cheap though’. Of course, and if that’s your competitive advantage then it could well be your business strategy but you should still be aware of how you retain that competitive advantage or somebody else will eventually sell it cheaper.
Most people have heard of the term SWOT analysis (strengths, weaknesses, opportunities, threats) and it is useful to understand your current position however, it is a snapshot in time and should be used in conjunction with other tools to develop your overall strategy.
So why doesn’t every business have a detailed strategy?
The simple answer is time and / or knowledge. A thorough strategic analysis is not a 5 minute job and the outcomes will be heavily dependent on the quality of the research however, thorough understanding will take you 3 – 5 years into the future, a SWOT analysis will be accurate until tomorrow. Sufficient time must be dedicated to the research and analysis to obtain the best outcome.
There are many frameworks to consider and how the research and analysis are conducted will be unique to your business hence I’m not going into great detail in a blog post or editorial, we can discuss this further at a later date.
What next
There are several options available:-
- Do nothing, it’s working as it is so leave it alone (– short term thinking).
- Do it yourself (- but ask yourself where your time is best spent).
- BMCC can support you in the creation of your business strategy.
- BMCC can analyse your business to help you define your business strategy.
