Everyone in business is faced with making decisions every day that could make or break their business. Some of these decisions are easily identified as the “Make or break” type – so we tend to take plenty of time (well, as much as we can anyhow) to make sure that we make the right one.
Ironically, it is rarely those decisions which bite us – it’s the day to day, week to week decisions we are making all of the time that can cause the most damage as the cumulative effect of making poor decisions reaches a tipping point which result in the business doing poorly and, in some cases, failing.
To be consistently successful at anything worthwhile – sport, life business – you need a game plan. Professional sports teams know this, and this idea applies to your organisation, your department, your team – and even to yourself as an individual.
In order to be successful you have to know how to use your talent and resources to best advantage, and it’s very difficult to be a “Winner” if you don’t have this game plan in place.
Your game plan is your strategy &, without a common-sense systematic approach to strategy development, you are going to struggle to establish a strategy that delivers on your needs.
Here’s a secret that most successful business people already know – armed with a well thought out & researched strategy, day to day decision making becomes much easier – why? Because your strategy provides you with the capacity to understand which decisions are going to contribute to your desired outcomes.
Basically, if you are faced with a number of choices, all you have to do is select the choice(s) that are most likely to enable you to achieve your strategic outcomes or goals.
So, how should you approach your strategy development?
In a for-profit company, for which competition and profitability are important, your goals will differ from those of a nonprofit or government department. Likewise, objectives for a department or team will have a different (likely, narrower) scope from objectives for your organisation as a whole.
For example, you may want to develop strategies to:
- Increase profitability.
- Gain more market share.
- Increase approval ratings, or boost customer satisfaction.
- Complete a project under budget.
- Lift brand awareness.
To determine your strategy, you must understand fully the internal and external environmental factors that affect you. With that understanding, you can identify your clear advantages and use these to be successful. From there, you can make informed choices and implement your strategy effectively.
Strategy creation follows a three-stage process:
1. Analyzing the context in which you’re operating.
2. Identifying strategic options.
3. Evaluating and selecting the best options.
Let’s explore this process, and review some useful tools that can help you develop your strategy.
Stage 1: Analyzing Your Context and Environment
Here you need to ensure that you fully understand yourself and your environment. Do the following:
- Analyze your organisation
Firstly, examine your resources, liabilities, capabilities, strengths, and weaknesses. A SWOT Analysis(Strengths, Weaknesses, Opportunities, Threats) is a great tool for uncovering what you do well and where you have weaknesses.
Also, look at your Core Competencies. These highlight your unique strengths, and help you think about how you can set yourself apart from your competitors.
- Analyze your environment
You need to examine your current operating environment to predict where things are moving. Are there exciting opportunities that you should pursue? What future scenarios are likely in your industry, and how will these impact the work that you do?
PEST Analysis & Porter’s Five Forces are great starting points for analyzing your environment. They show where you have a strong position within the larger environment, and where you may have issues.
Make sure that you’re working in a way that’s aligned with changes in your operating environment, rather than working against them. These external factors are often beyond your control, so if you pursue a strategy that requires a change in one of these elements, you may have a long, exhausting, unprofitable battle ahead of you!
- Analyze your customers and stakeholders
Your strategy defines how you’ll win, and winning is typically framed by how well you satisfy your customers. A for-profit company must keep their customers and shareholders happy. Governments, nonprofits, and project teams all have other stakeholders to satisfy as well. Strategy creation must consider these needs.
Identify your clients and stakeholders. What do your clients want? And who are the key stakeholders in your success? A Stakeholder Analysis will help you uncover these needs and preferences.
Also, look at your market in detail. Answer key questions such as “How is our market segmented?” and “What is our optimal Marketing Mix?”
- Analyze your competitors
In a traditional for-profit company, you must understand how your products/services compare with competitors’ products/services, and what your competitors’ competencies are. How easy, or difficult, is it to enter your market? What alternatives do customers have?
Non-profits, departmental teams and projects have competitors too. Other projects and teams within the department compete for money and other resources. Therefore, you must prove that you can add value, meet objectives, and contribute to organizational success.
Stage 2: Identifying Strategic Options
Now it’s time to think about the different things that you could do to create a clear advantage, and meet your objectives. Here are some fundamental activities that can help you make this decision.
- Brainstorm options
Use creativity tools like Brainstorming to explore projects that you could run to develop competitive advantage. Frame the sessions with reference to the organization’s mission statement, but, depending on your role in the organization, consider how far you should be influenced by this.
- Examine opportunities and threats
Your SWOT Analysis identified some of the main opportunities and threats you face. Using this as a starting point, brainstorm additional ways to maximize your opportunities, minimize your threats, or perhaps even turn your threats into opportunities!
- Solve problems
A problem-solving approach can also help at this stage. If your problem is that you’re not achieving your goals, ask yourself how you can ensure that you do.
For example, if you want to increase your customer satisfaction ratings in an industry plagued by poor customer relations, your starting position is “low satisfaction.” Brainstorm why this is the case, and create strategic options that would increase satisfaction.
Stage 3: Evaluating and Selecting Strategic Options
This final stage is to evaluate strategic options in detail, and select the ones that you want to pursue.
- Evaluate options
By this stage, you’ve probably identified a range of good projects that you could run. You must now evaluate these to choose the best strategic options. Consider every option you’ve identified, but don’t make a final judgment until you’ve completed your assessment.
Start by evaluating each option in the light of the contextual factors you identified in Stage 1. What do these tell you about each option?
Techniques like Risk Analysis, can help you spot the possible negative consequences of each option, which can be very easy to miss. Make sure that you explore these thoroughly.
Many options will be analyzed on a financial basis. Here, techniques like Cost-Benefit Analysis, Break-Even Analysis and Internal Rates of Return (IRRs), and Decision Trees are helpful.
- Choose the best way forward
With your evaluation complete, you now must choose the best strategic option or strategic options, making sure that you don’t choose so many options that you spread your resources too thin!
Check your ideas for consistency with your organization’s Vision, Mission and Values, and update these if necessary. It’s easy to forget about these critical elements during strategic planning, so ensure that what you want to “win” is something that contributes towards the organization’s overall purpose.
There’s a lot of debate and alternate views about the best way of developing a strategy. Don’t be afraid to adapt this approach to your own, specific circumstances!
It’s no good developing a strategy if you don’t implement it successfully, and this is where many people come unstuck.
Your strategy tells you how you’ll achieve success, no matter how that success is defined. And whether you’re developing a strategy at the personal, team or organizational level, the process is as important as the outcome.
If you can identify your unique capabilities, and understand how to use these to your advantage, while minimizing threats your strategy development will have a greater chance of success.
Practice strategy development by thinking about your own, personal circumstances. Complete the analyses below to think about your personal way forward. Here are some key questions to consider:
- What are your personal strengths, weaknesses, opportunities or threats, and what are your “core competencies” (what do you do best)?
- What are you capable of achieving if you put your mind to it?
- Where would you like to be 3 or 5 years from now (your vision of your future)?
- What are the “Big picture” trends in your environment that could impact on this vision?
- How can you monitor or adapt to these “Big picture” factors?
- Who are the people who are important to your success (your stakeholders)?
- What options do you have (& what resources are required for them)?
- Which of these should you consider?
Ausbizlinks www.ausbizlinks .com.au
Dennis Hall is the Principal of Ausbizlinks with an MBA in Marketing Management & has been involved in the online environment for over 15 years. He helps local businesses develop sustainable online marketing programs by applying a strategic focus to laser target what a business needs to be doing & when. He can be contacted at email@example.com