Let’s talk about strategy. A subject easily related to war and rugby, but a little hazy when it comes to business.
So, here is the time-poor summary for those of you who are still not planning your time effectively! There are entire books devoted to the definition of strategy in business, but a simple definition would be: “Working out how to succeed in the upcoming business period”.
In a business context, a strategy must be applied simultaneously across the 2 primary levels of the business – 1) corporate leadership (the whole organisation) and 2) business unit (division or market) – and then applied practically and tactically at the team level in order to achieve the relevant definition of success. Each level requires a different starting point and skill set in order to be successful. Done. (Oh, by the way, there is a link at the end of this post to a great free tool that will help you decide on your strategy!).
Still with me? Let’s dive a little deeper.
“Working out” ties back quite nicely to my previous blog on planning, and this is really the flip side of the same coin. Strategy at the corporate level is a natural progression from the vision and mission development process that defines the long-term scope and direction of the organisation as a whole.
The vision and mission will also determine the fundamental configuration of the business in order to meet the needs of the target market and the stakeholders. The scope, direction and configuration, together make up what is commonly defined as the “corporate strategy”, and this is what is used to shape the big picture of what the business is and does.
The individual business units then work out the part they play in achieving the big picture, and this is then cascaded down to individual team level to ensure that the day-to-day activities support the big picture, and keep the organisation on track.
The beauty of our simple definition is that it applies equally at every level, so let’s look at each of them individually.
This is the overall direction of an organisation that is usually made up of multiple facets, operating in multiple markets. This can range from all of the functions of a one-person home business carried out by that “one person”, all the way up to the corporation running multiple business units operating in multiple fields.
The corporate strategy needs to be aiming at the unicorn of synergy in it’s purest form – how to combine all the different elements in a way that creates greater value than the sum of the individual parts. This is normally achieved by building robust core competencies, developing and growing a strong brand identity, capitalising the business in a cost-effective way, and applying the economies of scale by sharing resources and technology across multiple business units or functions.
The corporate strategy should merge seamlessly with organisational design to combine the different functions and business units together in a way that allows the available resources to be applied most effectively. This then creates competitive advantage and supports the business goals, both of which deliver the success the business is after, in the period under consideration.
At a business unit or functional level, the strategy needs to focus on competing successfully in the applicable market. We can tweak our definition in this context to “Working out how to succeed in this market or function, in the upcoming business period”, whilst supporting the corporate strategy.
Clearly analysing your core competencies and applying these effectively to meet your prospective customer’s needs is a great starting point. Gathering as much information as you can on your competition, their strategies, strengths and weaknesses, allows you to work out how to exploit your competitive position.
All of this can be done very efficiently using a simple SWOT analysis of your – and your competitors’ – business. In a small business context, there will be a significant overlap between corporate and business unit strategy, but as a business grows and starts operating in multiple markets, each individual business unit will need to work out it’s own unit strategy, whilst staying aligned to the corporate strategy, in order to develop brand identity.
People involved in the individual functions, or business units, need to be able to see the obvious link between the work they do every day and the business unit strategy. A clear understanding of how what they do helps the business unit “succeed”, creates a motivated and, therefore, productive, workforce.
At a team level, the strategy needs to create the environment in which teams work together effectively. Every team contributes something different to the overall business, and the team strategy must link all the different activities and contributions in a way that achieves, and where possible enhances, the business unit and corporate strategies.
KPI’s, SSF’s and even an MBO system help to define both the team’s boundaries and purpose. Optimising service quality, operational excellence and managing relationships with suppliers, all work towards efficient teams that contribute to the strategic goals set at the corporate and business unit level, and underpin an effective team strategy.
So what does this mean for you?
On a practical level, “Working out how to succeed in the upcoming business period,” means that you know what to change and what to keep doing in the next season of your business.
To help you get to the root cause of some of the issues you are facing, I’ve put together a quick and easy-to-use tool called The WHY Analyser™, that will help you clearly identify what is ACTUALLY slowing you down, and let you prioritise the order in which you resolve the issues. You can download it here.
If you aren’t sure what all of those 3 and 4 letter acronyms stand for, or if you are not sure how they apply to your business or team, give us a shout at www.version8.com.au, or through our Facebook page or Twitter feed, and we’ll be happy to walk you through it.
Alternatively, if you need some help with any level of your strategic planning, we have a number of ways of helping you and your team.