One of the biggest oversights I observe time and time again in a small to medium sized business is lack of business strategy. Strategy does not have to be complicated but it does have to be done.
Strategy is important because it is a plan designed to bring about a desired future, such as achievement of a goal or solution to a problem. The implementation of strategy is then specifically focused on the art of marshalling and deploying resources for their most efficient and effective use in meeting goals and destroying problems.
I understood strategy more when I found out that the term is derived from the Greek word for generalship or leading an army.
Over the next four weeks, we will explore the 5 steps of strategic planning. If you have not done any strategic planning in a while, then you can follow along with a step a week.
The 5 steps in strategic planning are:
- Establish Visions and Objectives for Success
- Environmental Scanning
- Strategy Formulation
- Measurement & Evaluation
This week we will look at Establishing Vision and Objectives.
Step 1: Discussion
Write down the key points of the following:
Customers & Clients: Describe your customers/client
Describe your target customer/client. What are their key attributes? What resonates with them? Do they have customers/clients they’re trying to impress and, if so, how does your product/service help them?
Key Problems: What Are the key problems faced by your customers/clients?
In two or three short paragraphs, describe the problem(s) that your company addresses along with a brief overview of your sector/industry.
Address Problems: How do you address your customers’/clients’ problems?
Name and describe your product(s) and/or service(s) and how they address the problem(s) described in the question above.
Competitors: Who are you competitors?
Describe your competitors. How large are they? What are their offerings, their strengths, their weaknesses? How are you unique/different from them?
Business Model: What is the business model?
Describe how you generate revenue. Use bullets if you have multiple revenue streams. Describe the channels and/or marketing approaches you plan to use to reach each of your target markets. Be specific.
Expansion Options: Describe the options.
Are there other potential revenue opportunities either now or in the future? If so, describe them. What significance would these opportunities be?
Ultimate Aspirations: What is your ultimate aspiration?
Describe your company’s long-term aspiration in one to two sentences.
Step 2: Define Your Strategy
Too often, companies create strategy that is complicated, cumbersome and fails to communicate. And if it’s tough to communicate, it’s tough to align the staff around it. A better idea is to summarize your strategy into one or two lines. Here’s a brief strategy definition followed by a guide to creating a short strategy statement.
Strategy is a beacon that specifies a goal, a time frame for achieving that goal, the context in which the goal will be reached, and the company’s unique approach that guarantees its success. Read that again and then letʼs look at it more closely. Understanding the five key elements of the strategy definition makes it easier to create your own strategy. Here they are:
The word “goal” is singular.
Strategy focuses the entire organization around a single sharp point. Do one thing and do it exceedingly well. Sharply defined strategy pierces like a well-honed spear; a strategy with multiple goals pierces like a marshmallow.
A time frame is vital.
It provides impetus and motivation. Combined with a clearly stated goal, the time frame becomes the first of several metrics that are necessary to successfully implement your strategy. Choose a date that’s two to five years away.
The context describes the specific competitive arena in which the company will operate.
Be crystal clear on this. Don’t just say, “By 2019, weʼll grow to a 10-restaurant chain.” It’s too broad and provides no real guidance. Instead, say “By 2019, we’ll grow to a chain of 10 family-oriented, sit-down, full-service, Italian restaurants in southern Oregon.”
The most important part of strategy is defining your unique approach.
What makes you different from your competitors? Why would somebody choose to eat in your Italian restaurant rather than the one next door? Is it the food? The location? The physical design? The live Italian music? It must be unique and it must be something that your competitors can’t easily replicate.
Finally, strategy is a beacon.
Once a strategy has been created, it needs to be simply stated and widely communicated throughout your company in order to achieve its full potential. One of the best ways of doing this is to reduce your strategy to a single sentence.
This fifth point is magic. We started this section talking about strategies that are complicated, cumbersome and unwieldy. Reducing your strategy to one sentence makes it easy to remember, which makes it easy to say, which makes it easy to communicate.
Let’s finish off the strategy for an Italian restaurant. The last thing we need to add is its unique approach:
By December 2019, we’ll grow to a chain of 10 family-oriented, sit-down, full-service, Italian restaurants in southern Oregon, each of which will be 50% owned by a 4-star chef from Italy.
Perfect. One sentence that can be spoken in less than 15 seconds.
Next week we will look at Environmental Scanning.