One of the primary benefits of business strategy is providing focus for the organization. Without strategy to serve as the mantra, the organization can wander into chaos as people pull in different directions or as a stream of new priorities emerge.
Business strategy is a statement of where and how the organization will compete. It defines the competitive advantage that the organization seeks to develop in meeting the needs of a defined set of customers. It then serves as a screen for the decision-making process of the organization. As such, the business strategy statement must be crisp and clear. (See a previous article that describes what strategy is not.)
Without a clear business strategy chaos can ensue within the organization. For example, the engineering function may want to differentiate based on technology while the sales function wants to compete on price while the marketing function wants to offer customized products while the manufacturing operations gears up to only provide standardized products. Another trap for chaos is a leadership team that pursues a new priority every day. This can often be a weakness of an entrepreneurial founder.
A business strategy that is well thought out, clearly defined, and enjoys the buy-in of the leadership team focuses the organization. The strategy becomes the banner behind which the organization marches together. Moving the organization forward in the pursuit of the strategy is the permanent number one priority of the organization. The leadership team can refer to the strategy in every decision to assure consistency.
There can be danger in too much focus on the established business strategy. If the strategy becomes groupthink that prevents the organization from recognizing changes in the business environment or customer needs, then the process has failed. The organization needs peripheral vision to stay aware of the world outside and it needs to be open to occasional changes in strategy when clearly necessary.
A crisp, clear, and consistent business strategy focuses efficient allocation of resources and drives a sense of urgency to move forward in building the core competencies that lead to competitive advantage. This focus alone can be an advantage over competitors who are wandering in chaos without a clear strategy.
Does your organization have a clear strategy that provides focus?
