- KNOW YOUR PURPOSE
Your purpose is your WHY – why does your business exist. This should be a constant in your strategy and should be the ‘north star’ that drives every decision. Purpose can sometimes get mixed up with vision, or mission. Your vision is your long-term goal, dream, picture of what the future looks like. Your mission is your roadmap of how you will achieve it – guiding the strategy. This is a great article that explains the difference:
An example of a strong purpose statement (in my opinion) is by Kelloggs:
“Our purpose is to nourish families, so they can flourish and thrive”
- UNDERSTAND YOUR BUSINESS MODEL
It is really important you understand your business model, as this is your baseline for any future growth plans. The business model canvas (created by @Strategyzer) is a great tool to help you to check that your business model is (a) desirable (b) feasible and (c) viable.
3. DEVELOP YOUR VALUE PROPOSITION FROM YOUR CUSTOMER’S PERSPECTIVE
You can explain what your product or service does, but it can be much harder to explain the ‘job to be done’ of the customer – what is it they need that your product or service helps with? Take a drill for example – the customer doesn’t need a drill, they need a hole!
- REGULARLY REVIEW THE EXTERNAL ENVIRONMENT
You can have the best business model in the world, but that world keeps changing around us. Over the past few years businesses have had to adapt to unexpected (and some expected) events such as Brexit, a global pandemic and a war. It is important that you regularly analyse the external environment and current trends and think about the potential impact on your business – either in a positive way or as a threat. The PEST is a good tool to use here. PEST is an acronym for Political; Economic; Social; Technological. These categories help you think widely about the market in which your business operates. You can then plan accordingly to minimise the risk or maximize the opportunity.
- KNOW YOUR COMPETITIVE ADVANTAGE
Who are your main competitors and what are their relevant strengths and weaknesses compared to you? There are various ways to compete in a market. One theory (Michael Porter) suggests you either focus on cost leadership (being the cheapest) or you differentiate your product/service – this may be on the quality or the customer service. Unless you are a very large organisation who can benefit from economies of scale then being the cheapest is a difficult strategy to follow – and for many businesses their customers don’t want cheap! Your price point can psychologically translate in a customer’s view to the quality they will receive. Therefore, if not price, how does your product or service differentiate from the others in the market? Why should the customer buy from you? One way to know this is to ask your customers, especially those who go on to be repeat buyers and/or refer you to others.
- CHOSE YOUR GROWTH STRATEGY
You can grow your business through a variety of strategic approaches. According to Ansoff there are four main ways:
- Market penetration – sell more products to your existing markets
- Market development – introduce your existing products to a new market
- Product development – introduce new products to your existing markets
- Diversify – enter into a completely new market space
The more you move away from existing products and markets, the more risker the growth strategy so make sure you have done your homework and research!
- SET KEY PERFORMANCE INDICATORS
Make sure you set yourself some strategic measures (also known as KPIs) that will take you towards your goals. It is important you have KPIs in place so you can make sure your strategy is working – and to alert you if a change is needed! It is also a good idea to have a range of KPIs that cover financial, growth, operational efficiency, people (if you have a team), customers, and CSR (corporate social responsibility). This is also known as a balanced scorecard approach to make sure one area is not being successful to the detriment of another – for example you may be achieving your profit goal, but your customers are not happy with the service. Also make sure you only have KPIs that you can actually measure and report on.
- ENGAGE YOUR STAKEHOLDERS
As you grow our business there will be an increasing number of other people you need to engage with, and often need to influence. This might be to land a new client, obtain funding or successfully deliver a project. Whatever you are trying to achieve it is likely you need the support of others. So, with whom should you invest your time and energy?
The stakeholder map is a simple way to plot your relationships depending on their level of interest and their potential to influence your success.
- CHECK YOUR STRATEGY IS STILL THE RIGHT STRATEGY
The strategy you adopt needs to fit with the industry and environment you operate in – and this needs to be reviewed regularly. It is not as easy these days to follow a ‘classical’ approach to strategy which is ‘Analyse, Plan, Execute’. Most businesses need to be much more agile in their approach and be ready to react to changes in their environment. As was seen with the pandemic, there are times when businesses need to drop their current strategy and go into survival mode. A good model to follow is the strategy palette:
- DON’T DO IT ALONE!
Last but not least is that it is very very difficult to develop your strategy alone. This is where a business mentor can be a good investment. They will act as your critical friend, challenge and support you through your journey. Here are just some of the ways your mentor can help:
For more help and advice on making strategy simple, please contact our expert Brenda Etchells (firstname.lastname@example.org)!