As a manager or CEO, growing a business or building one goes beyond just opening and closing the doors of your office or just resuming every day or running the business without looking forward or backward to plan for the future.
Some years back as a COO with Center Point Network (an IT company in Abuja), I gave up trying to define strategy. During the years I was in that business, I discovered, slowly, that most people believe they are naturally good at strategy. They may not be able to define it, draw it in business diagrams, but they understand it. I think I’ve seen that most times strategy development is intuitive.
· People generally understand that strategy involves focusing on priorities, and why that’s good for a business.
· People generally understand that strategy involves playing towards strengths, and away from weaknesses.
So, whether or not you can define strategy, you know it when you see it. That’s what I’ve seen through the years.
The real problems with strategy
In one of my long-term consulting relationships, a large and very successful company would send groups of managers to 2- and 3-day offsite meetings (retreat) to develop strategy. I watched in wonder as groups of very bright young managers developed brilliant strategies at these meetings, but failed, year after year, to implement them. The ideas that energized the offsite meetings were lost back in the office, drowned in the daily routine, putting out fires, answering the telephone, solving the everyday problems.
I learned the hard way that the problem with strategy isn’t as much as developing good strategy as it is in implementing strategy. Not that we should underestimate the importance of strategy, but we should at least be cynical about how much of business strategy remains in the realm of ideas only, and doesn’t really change a business. Why waste money and time developing strategies that will not be implemented, why come up with fantastic plans you can see to conclusion? As managers or CEO, we should be as smart in developing as in implementing strategy.
Strategic conceptual models
I’ve worked with many different conceptual models used to diagram and dissect strategy. Several of them have been discussed on this page in the past. But there is one that I use most often that has always worked for me the 4Ws and an H (‘WHAT, WHERE, WHY, WHEN and HOW’) I use more than that when discussing in seminars about strategy but the above is probably my favorite, first because it emphasizes implementation, and also, of course, because it is my own work, my own service mark.
However, I really think that many different conceptual models are valuable, and the choice of the model doesn’t matter that much. People think in different ways. If a model works to help you see through the cloud, focus, and develop your strategy, then it is a good thing. Somebody else will use a different conceptual diagram and arrive at the same place, or at an equally good place. Some models work better for some people, and anything that helps you visualize and understand reality is a big step forward.
General principles of small business strategy
This is not an academic exercise and I can’t claim results of research. The following principles are based on what I’ve seen close to 10 years of consulting and research, plus my MBA, and a lot of wisdom contributed by some very smart clients and colleagues.
1. Strategy is focus: Allocate resources where they will do the most good. Work towards your strengths and away from your weaknesses. Develop the company by doing the most important things, according to your long-term objectives.
2. Strategy is consistent over the long term: Better a mediocre strategy consistently applied over several years, than a series of brilliant strategies. It takes time to develop and implement a strategy, more time for the world to react and turn in the right direction. It’s very hard to stick with a strategy, because the people executing the strategy get tired of it long before the rest of the world does.
3. Your business’ strategy is unique: Context is everything. Formulas and generalizations don’t apply. Understand your situation, both external and internal, and develop your strategy to work towards your strengths and away from your weaknesses. Understand your situation, where you are, and what knobs you can turn. Imagine yourself sitting in the driver’s seat of a vehicle, and recognize that your controls are limited. You have controls for faster and slower, but not for up and down. Look at your business in the same way, understanding what you can do, and what you can’t do.
4. Understand the problem of displacement: Strategy is subject to displacement, meaning that everything you do rules out something else that you can’t do. Drop a brick into a full bucket of water and watch what happens: splashing. That’s displacement. Small business strategy has to deal with displacement.
Main elements of the strategic plan
A strategic plan should probably include some or all of the following main points:
1. High-level strategy: Strategy is focus. It guides your growth. Strategy assigns priorities. Of the whole range of possible market segments, and the whole range of services and possible sales and marketing activities, which are your main priorities? Strategy is often a matter of understanding when and how to say no, selecting among opportunities.
2. Tactical foundations of strategy: In the real world, strategy by itself isn’t enough. It’s just too easy to develop strategy and then forget about it. A strategic plan should base its strategy on specific tactics that make that strategy realistic, implementable, and trackable. You need strategy to move an organization forward but the day to day running should be dependent on tactics at every level.
3. Specific responsibilities, activities, deadlines, and budgets: We call these Milestones. They are the bricks and mortar of business planning, critical to business success.
4. Financial plan: One of the most important gains from an annual plan is the financial plan, which of course hinges on cash flow. A business needs to stress its priorities by making sure they get the right amount of money. Growth costs cash.
The importance of developing a strategy for the upward movement of a company or firm goes beyond visioning or ‘missioning’. It involves the holistic look at the entire company, the processes of developing the products, services and the mode of delivery to customers. The handling of the revenue and income to the preparation of budget, target or review of both in such a way that it matches what the industry can absorb. About all these think and meditate on till we meet next week.