The quote above by Michael Porter is particularly insightful as it emphasises the importance of being different or innovative when defining your company strategy. One of my favourite definitions of strategy is, "A set of actions managers take to increase their company's performance relative to rivals - Essentials of Strategic Management, C. Hills and G. Jones, 2008
As part of defining strategy, it is undoubtedly helpful to explain what it is not. A strategy is not:
– A wish list
– An operational plan
– A project plan
– Cast in stone.
Strategies are a driving force behind business decisions and can allow businesses to identify and remediate their weak points. Strategies guide decision-making, business unit, and employee performance plans. The overall strategic direction should inform key operational activities that are carried out daily in business.
Asking the right questions about your business strategy will allow you to highlight its strong points, areas for improvement and keep your strategy execution on track. Following 25 years of research, Harvard Professor, Robert Simons recommends that every business ask these seven questions to ensure effective implementation of their desired strategic direction.
1. Who is your primary customer?
Targeting the right audience or customer base is essential to the implementation of an effective strategy. Focusing on the right customers will ensure the effort you put into customer outreach is focused on people who will continue to buy your products and services and help allocate resources effectively. As a business, you are bound to always have varying competition for your resources, so it's vital to ensure your efforts are targeted.
2. How do you prioritise the needs of employees, shareholders, and consumers in light of your core values?
In the hierarchy of employees, shareholders, and customers, who do you aim to prioritise? Whose needs matter the most, and how do the core values of your business influence this? Satisfied employees are essential, but so are customers, as their decisions can impact your business, for example, their purchasing decisions. Also, companies must strive to meet shareholder needs as well. Successful companies understand how to balance all their key stakeholders' needs and can move the business forward while making compromises that all parties can live with.
3. What critical performance variables are you tracking?
Determine which metrics are most important to your market and business goals and track only the key variables that can help drive business success. Effective implementation of business strategy will involve assigning accountability and monitoring performance of the variables that matter to your business, especially those that can cause it to fail.
4. What strategic boundaries have you set?
Employees like to have as much autonomy and flexibility as possible. This can, however, leave room for lines to be crossed in a direction that is potentially unfavourable to the business. Setting boundaries allows employees to have the freedom they need to thrive and help maintain balance.
5. What are you doing to produce creative tension?
Innovation should be at the core of everything you do as a business. Without it, companies do fail - and very quickly too. Pushing employees out of their comfort zone to look forward, rather than backward, can give the company the creative edge it needs to adapt to the increasingly dynamic business world we operate in.
6. How committed are your employees to helping each other?
Some organisations are built on employees focused on their individual success and advancement, while others are built on employees' commitment to achieving shared goals. Think about what would work for your business and take measures to develop the sort of culture that can help your business thrive.
7. What are your strategic uncertainties?
Your strategy is going to change in the future. Adapting to each strength, weakness, or improvement made is essential to keeping your business successful. Your current strategy will not work forever, and being adaptable is key to ensuring your business can manage any uncertainties that arise.
There is no magic formula for success, but through constant dialogue, responding to trends, vocalising assumptions, and making tough choices, businesses can formulate successful strategies that set them up for success.
Our team of consultants at Enterco can help inform your strategic direction and help you navigate the tides of business with increased certainty and the support you need every step of the way.