What is a Good Business Strategy, and how do you create one?
Business Strategy is a response to overcoming challenges a company faces in achieving its Ambition. A Good Business Strategy will help you grow your company, protect it from future market shocks, and increase employee happiness, among other benefits. But what exactly is a good Business Strategy, and how can you create one?
We've broken down key areas you need to focus on to create a good Strategy.
A Business Strategy starts with a clear Ambition
As a leader, partner, or CEO, it's essential to articulate the purpose behind your business. Think about why you are in business and what you want to achieve. These elements shape your Ambition, which serves as the foundation of your Business Strategy.
While this phase can be enjoyable, contemplative, and motivational, it must also retain a commercial perspective. Your emphasis on each aspect will vary based on your specific goals and aspirations.
If you find yourself uncertain about your Ambition or if it lacks clarity, a helpful starting point is to ask yourself the following questions:
Where do you see your company in three to five years from now?
What would make you proud?
If you had a wish, what would you like to achieve personally?
What can you be among the best in Australia at?
What are you deeply passionate about?
What does "winning" look like to you, your customers, your partners?
Imagine that in 2030, the Australian Financial Review (AFR) features a front-cover story on your company. What does the headline say?
We love working with leaders to define and refine their Ambitions. It's one of the reasons Tomorrow Strategy Co. is in Business. Let us know if you want some support with this part of the Strategy Discovery process.
Micro and Macro Market Influences
Once you have defined your Ambition, it's time to begin the strategy development process. Start by zooming out and analysing external factors influencing your business environment, such as market trends, competitor strategies, and what's happening in international markets, including innovations.
Consider your competitors. While drawing inspiration from competitors is essential, avoid mimicking their products, services, or strategies. Instead, focus on leveraging the insights you get from competitors to inspire and inform your Business Strategy.
We often look to start-ups for inspiration. How start-ups choose to play and win in the market offers fresh perspectives and an opportunity to future-proof yourself from new entrants into your market. When looking at start-ups and competing businesses, consider their value proposition and Business Model. Again, you don't want to copy them, but you should learn from them, as their approach can bring forward new ideas, opportunities, and gaps you may have yet to consider.
Customer Feedback Underpins a Sustainable Business Strategy
Take the time to solicit feedback from your customers. Customer research is a critical step, yet it is among the most overlooked when creating a sustainable Business Strategy.
It's important to acknowledge that customers won't tell you what to do; they won't have the answers and aren't responsible for helping craft the Business Strategy.
What customers can do is highlight your good, what you could be doing better, and where the opportunities are. They might confirm what you already know, but experience tells us that the learnings are valuable with every customer research project.
It's essential to ask your contacts the right questions and frame them properly, or you risk skimming the insights. Speak to a research expert or the Tomorrow Strategy Co. team about running your next customer research program. Make the process worthwhile for you and your customers.
If you're confident enough to go with the customer research piece alone but could do with some guidance, read on.
Kick off your customer research project by creating a list of open-ended questions that are enough for a 30-minute chat. And ask the same to each customer. The output of your research should be a golden trend of insights. A way to present and structure the feedback is to break it down into three sections:
The data you have collected
The insights derived from the data
How you can respond to or action the insights
Leveraging Internal Resources
Look inward and assess your company's capabilities and resources. Determine what strengths you can leverage and identify areas where investment or development may be necessary to overcome challenges hindering your Ambition.
When evaluating your capabilities, you need to ask: What do we have internally, what do we need to outsource, what can we bring in, and what will they leverage? This might mean recruiting key talent or forming partnerships.
When you know your business's capabilities and limitations, you can review them. Consider opportunities that can lead to a growth strategy, innovation, and new products, to name just a few.
Effective Communication and Business Growth
Strategic Leadership and Communication go hand in hand when it comes to strategy development and strategy execution. Ensure alignment and understanding among stakeholders, employees, and teams regarding the strategic direction and business roadmap. Clear communication fosters accountability, motivation, and engagement and is essential for business growth. Tell your employees about your Strategy and use multiple platforms to share the message.
Voice, email, text, posters, intranet, and video are a few options available. You want to tell your teams how you got there, why you're doing it, and how it links to the Ambition. Make them part of the journey.
Setting Objectives and KPIs
Strategy Execution involves establishing clear objectives and key performance indicators (KPIs). These metrics will help track progress and determine the success of your initiatives. They will also help to hold team members and individuals accountable.
Iteration and Improvement
A business strategy isn't static; it requires regular review, iteration, and improvement. Continuously revisit your Strategy, incorporating new insights and adapting to changing market dynamics to ensure its relevance and effectiveness over time.
Strategy Execution
Executing your Strategy is crucial for translating plans into tangible outcomes. Remember, a Strategy is not a Plan, but managing one may require a roadmap or plan of attack. Activate your Strategy by implementing action plans, allocating resources, and monitoring progress towards your goals.
Simplifying Complexity
Crafting a great business strategy involves:
Balancing and utilising available tools.
Leveraging insights.
Fostering innovation while staying focused on your ambitions.
Sound like a lot of work? It can be, but it is worth it.
Final word
Enlisting the assistance of a consultant can help hold you accountable and accelerate the implementation of your Strategy. Additionally, involving your team in discovering and activating your Strategy can infuse the process with energy and enthusiasm, making strategy development effective and enjoyable.