Peter Drucker, known as the “creator and inventor of modern management” – Tom Peters and “the greatest management thinker of the last century” – Jack Welch, provides guidance and insight to business management and the development of a business strategy to focus your business on the future, create competitive differentiation and improve the economic performance of your business. We will draw upon Drucker’s (and others) management guidance to build out your Business Strategy.
A business strategy ensures focus across the entire organization. Employees want to know they are working towards larger goals and how their actions contribute to these goals, customers want to know what you stand for and where you are taking your business to determine if you are a strong and dependable long-term partner, partners want to know where they fit in to your ecosystem, and the overall organization needs to be working together towards common goals to optimize the business.
More than 80 percent of the 300 small business owners surveyed in the recent 4th Annual Staples National Small Business Survey said that they don’t keep track of their business goals, and 77 percent have yet to achieve their vision for their company. – Inc.
Business Strategy Benefits
- Provides the opportunity to look to the future of the business as opposed to the current day-to-day running of the business or a historical performance review of the business. In general, we do not spend enough time thinking about the future of the business as we are mired down in the day-to-day activities. This process will ensure you take the time to do that.
- Aligns the organization around the activities that are important to the business.
- Communicates to all stakeholders where the business is going, what the focus is and where resources will be allocated.
- Provides a framework for securing funding and approval for initiatives that support the business strategy.
- Provides a framework for detailed business planning across all business units and departments in the organization.
- Facilitates the required changes in the organization.
The Business Strategy is NOT:
- An Operational Plan. All stakeholders should be able to see how their day-to-day activities help accomplish the goals outlined in the strategy, but the strategy does not define these day-to-day activities.
- A Business Plan, but it does provide input to the Business Plan.
You are probably saying, “Why do I have to go through this Business Strategy process? I am really just trying to get my IT projects justified and approved. “ All IT projects and initiatives should tie directly and support the attainment of the company goals and completion of strategic initiatives. If your project does not support the company goals, you will find it very difficult to get your project justified. So…even if you don’t complete this business strategy process, or if you are in IT and not responsible for the business strategy; you must understand the strategy enough to show how your project will support the attainment of the company goals. If you do not have a Business Strategy or it is just not down on paper, the steps here are fairly straight-forward and facilitate the conversation required to capture the essence of the business mission, vision and goals and then derive the key applications and business processes that must be supported by IT.
So…if you are in IT…why do you need this? Well…you need it to explain the importance of your projects and how they will help make the business successful. Then you will be able to justify your projects.
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> What is a Business Strategy?
This is a sample Business Strategy for a fictitious company that you can reference throughout the business strategy process.
< What is a Business Strategy?
“We usually think of a business strategy as some sort of aspirational market positioning statement. Doubtless that’s part of it. But I believe that the number one strategic strength is excellence in execution and systemic relationships (i.e., with everyone we come in contact with).” – Tom Peters
“Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”. – Johnson and Scholes, Exploring Corporate Strategy
Creating your business strategy is the process of identifying the company’s goals, defining strategies and initiatives to accomplish these goals and then allocating resources to accomplish these goals. Your business strategy is a 2-5 year plan, developed by business owners and business leaders that guides the future of the business and outlines the long-term direction for the business, which is written down and reviewed every six months. It includes:
- SWOT (Strengths, Weaknesses, Opportunities, Threats). The organization’s Strengths, Opportunities, Weaknesses and Threats (SWOT) both internal and external to the organization.
- Mission. A brief compelling statement of an organization’s purpose.
- Vision. Conveys the future picture of success for your business.
- Values. Basic principles that guide behavior and establish the company culture.
- Business Strategy Goals. Defined and measurable goals which are realistic and attainable. Usually 2-4 goals in each area are sufficient to outline what the organization needs to accomplish. Remember that business units and departments will break this down further with goals in their particular areas that support the strategy goals.
- Financial Goals. The most important goals for the company outline the financial targets over the business strategy time period. All other goals in other areas must support these goals.
- Customer Goals. The required customer goals which will result in the necessary sales to accomplish the financial goals.
- Products & Services Goals. The goals for delivery and support of the product/services which will result in the necessary sales to accomplish the financial goals.
- Partner Goals. Goals for the strategic partnerships which will deliver the required product/services or customer results.
- Employee Goals. Goals for the required employee training, development, productivity increases and retention needed to support delivery of the organizational goals.
- Internal Goals. Goals for internal systems efficiency improvements which will enable the organization to deliver on the outlined customer and product/service goals.
- Community Goals. Goals that focus on giving back to the community, volunteering, philanthropy, engaging local businesses, and/or protecting our planet and natural resources.
Business Strategy Outcomes. The following are required outcomes form the business strategy process which will be inputs to the organization’s Technology Strategy and other planning activities.
- Strategic Initiatives. These are 3-5 company initiatives that will help accomplish the company goals. The organization must align behind these initiatives and help them be successful. Executive ownership and sponsorship should be assigned to each strategic initiative and cross-functional team assignments made to ensure the success of these efforts.
- Strategic Business Processes. These are the strategic business processes which will support the company goals and strategic initiatives. It is likely that the activities that have to occur to accomplish the company goals will require modifications to these key business processes. These processes must be identified, documented, owners established and potentially cross-functional teams assigned to support the modification of these processes to support the business goals.
- Strategic Business Applications. Supporting key business processes is inevitably a set of technologies that help run the business. It is likely as you implement new business processes, these applications must be enhanced, modified, or integrated in new ways to support the new business processes. These applications must be identified during this process to help the business prioritize required IT activities.
This discussion outlines a high-level exercise to help you complete your business strategy at the company level. The same exercise can be completed at the business unit or departmental level. There are many more in-depth materials and resources available to help guide you through this process at a deeper level. In addition, there are many consultancies that can help facilitate this process for you. The materials and process provided here are intended to distill the business strategy exercise down in to an understandable and manageable process in order to obtain the required inputs in to the company’s Technology Strategy.
Above is the format for the business strategy that I have used in the past that is relatively simple and conveys the essence of the strategy in an easily communicable manner. Here is a completed, sample business strategy for a ficticious company that you can reference throughout this section.
Business Strategy Sample
< Why do I need a Business Strategy?
> SWOT (Strengths, Weaknesses, Opportunities, Threats)