Business strategy is the linchpin between vision and action plans. With a good statement of strategy organizations are on the fast track to success. Without a good statement of strategy organizations can feel like they’re wandering in the desert. Some time ago we described a strategic management system that led from mission and vision through goals and objectives to strategy and on to tactics and action plans. Strategy is the critical element that bridges from what the organization hopes to be to the actions that will get it there.
Business strategy describes where and how the organization will compete. A good statement of strategy looks like the following: “We are an injection molder of large, flat parts for high-quality applications such as medical or business equipment where customers need short runs and quick turnaround of orders.”
Here are some descriptors of business strategy:
- First of all, a business strategy is a statement. It is not be a document or a book. It may be part of a strategic planning document. It may result from a strategic planning process. But a business strategy is simply a statement of where and how to compete.
- The best strategies are concise, stated in one sentence. Certainly a strategy shouldn’t be more than a short paragraph, perhaps three sentences.
- A strategy statement is an internal communication tool to align the organization and its activities with the vision and objectives. It assures that we are all working towards the same objectives in the same way.
- Strategy is built on a knowledge of markets, customers, and their needs. It describes the unique value that we offer to customers based on this knowledge of their needs.
- A strategy statement is a confidential communication about our competitive position. Strategy describes how we intend to differentiate our organization and its value offering from that of competitors. To broadcast the strategy outside of the organization and its strategic partners would open the door for competitors to gain the same knowledge and follow the same path.
- Strategy describes the core competencies the organization intends to exploit to provide superior value to your customers. In our example we can see that core competencies might be capabilities for high-quality manufacturing, efficient production of low volumes, and the ability to quickly respond to orders.
- Strategy defines a path to a sustainable competitive advantage. A core competency should be more than “just as good” as the competition.
- Strategy guides decisions and our allocation of resources. Will hiring this person or investing in this piece of equipment enable us to enhance the core competencies that set us apart from competitors?
- Strategy enables prioritizing our business opportunities. It describes our target market or target customers. Who are the customers that will most value the products or services that we’re offering? Every potential business opportunity can be vetted by the strategy. This might not mean bypassing every opportunity that doesn’t exactly match the ideal, but it enables us prioritize various business opportunities and focus our efforts on business that will be most profitable.
- Strategy is the driver for all tactics and action plans. The action plans are simply the implementation of the strategy. Any action that does not support the strategy is wasted energy.
- And finally, a business strategy must be realistic, not a pipe dream. The strategy should challenge the organization to a higher level of performance but not represent an impossibility.
What other descriptors would you have for a good business strategy?
Does your organization have a clear, concise statement that defines your business strategy?
Is it guiding your decisions and likely to take you towards your vision?