What’s your business strategy? Perhaps even more critical, what is business strategy in the 2010s?
At its core, business strategy is a practice. It’s a way of communicating ideas, of setting goals and then achieving them. But some of the things that have always been baked into the concept of business strategy are undergoing a change.
It's time to take a fresh look at business strategy, where it came from and where it's going. If you haven't built and executed a formal strategy for your business, listen to these business leaders make a case for why and how you should.
Not Just For Big Business
“Strategy is still a relatively young discipline,” Angus Dawson, director of McKinsey & Company, says in the company’s recent short film, "The Art of Strategy." “It emerged in academia in the ’60s, and went into corporations in a mainstream way in the ’70s. And so, if you look back 10 or 15 years, we’ve probably doubled the sheer stock of experience of doing strategy work in corporations over that time period.”
But if the stock of experience has doubled, it has also transformed, says Nat Wasserstein, business restructuring adviser at Lindenwood Associates.
“What I’ve noticed, perhaps because of this most recent recession, is that strategy has evolved a bit from just setting goals, then objectives, then the tasks necessary to achieve objectives,” Wasserstein says. “There’s a whole lot more emphasis on getting very granular about goals. Not just what the goals are ... but why those particular goals.”
Changes to the way we think about business strategy aren't confined to breaking goals down into shorter-term achievements and examining their value, either. The kinds of businesses that are adopting business strategy as a practice, in the first place, are expanding.
“Strategy was originally designed for big business,” says Alex Glassey, founder of StratPad. “It was complex, expensive and focused on longer time frames—five years or more.”
Not so anymore, he suggests. Now, business strategy can be “practical and accessible to entrepreneurs and owners of smaller businesses,” Glassey says. And smaller outfits can roll a plan out within “whatever time-frame makes sense for their stage of business.”
The point is, for small businesses, there's time to grow as well as room to incorporate a business strategy as part of that growth.
"Eighty percent of a company's growth can be explained by business leaders’ decisions about where to compete and market selection," Dawson says.
As he puts it, "Position improvement is as important as performance improvement." Leaders need to position a business against the right trends, catch the right waves and put bets on the right markets. These days, however, the ways that we do these things are increasingly different.
“Small and mid-sized businesses have two new components in their strategy formulation they never had before: globalization and social media,” says Iqbal Ashraf, founder and CEO of Mentors Guild. “A small retail store nowadays directly competes with a mammoth like Amazon and a slew of manufacturers in China. This is unprecedented.”
This is also a new stress upon the old and established concept of what it is to compete.
“Business owners are under pressure to have a Web presence—a social Web presence in particular,” Ashraf says. “While it has all kinds of benefits, like driving loyalty, not having a presence is giving up competitive space.”
And then there’s the art that goes with all this empirical craft: the art of communication, and the art of sculpting the new shape of company hierarchy and decision-making processes.
“Employee engagement is so important now, primarily because command-and-control methods, strategy decided by management and executed by staff, no longer works,” Ashraf says. “Everyone needs to be involved in a dynamic strategy formulation. [This is] critical because of increasing business uncertainty.”
Uncertainty, perhaps. But what is also true is that as strategy evolves from the stuff of industry-giant boardrooms into a practice for all kinds of business, the demands of the environment that’s helping to drive that change—mainly, online commerce—is also supplying leaders with the tools.
Expert knowledge is increasingly democratized. It's available via blogs, YouTube and other sites. Media-savvy business owners have never had so many consultants at hand, and the price has never been so affordable.
Make It Work For You
So, if business strategy has evolved into a tool set that is easily accessible to small businesses, what's an effective approach to getting a strategy in place and making it work? At McKinsey, Bradley’s recommendation for a business strategy template is as follows:
- Diagnose. Formulate a point of view about why your business makes money.
- Forecast. Form a point of view on the future.
- Search. Come up with options that you can pursue to create value for your company.
- Choose. Select the strategy that will take you toward value, and assign alternatives.
- Commit. Finish your strategy by turning your chosen options into tangible goals that you can communicate to others clearly, and to which you can shift resources.
Or, as Bradley puts it: “One of my colleagues often says, ‘I don’t want to read your strategy plan; I want to see what’s shifted in your budget. Then I’ll tell you what your strategy is.'”
James O'Brien, PhD, covers business, technology, travel, food, wine, home improvement, writing and news. His new book on writing, The Indie Writer's Survival Guide, is available at Amazon.com.
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