The word strategy is often bandied about but if you were to ask 100 people for the definition, you would get 100 different answers. Understanding it and having the discipline to sit down and formulate your own business strategy is critical to your success as an entrepreneur. It fascinates me how few entrepreneurs – particularly those who are struggling – fail to invest in their understanding of strategy and how it can be applied to their own businesses.
Now, I confess that I am in no way a strategy guru or even consider myself to be a great strategist, but I have spent the last two decades trying to understand what strategy is for me and how I can apply it in my business. Each year I get a little better because I learn from experience and evolve my methodology to best suit my business.
Below are six questions to ask yourself as a starting point to evolving your own business strategy. I urge you to adapt and evolve these questions over time so that they become more appropriate to your particular context.
What do I want to achieve?
You can ask this question of yourself and your business as the two are interrelated. But, for the purposes of this article, let’s focus on what your business wants to achieve. Knowing what you want for your business is critical in deciding where you want to go. Spend time describing the targets you want to achieve in as quantitative a way as possible. What are the revenues, profit margins, employee numbers, geographical locations you want to achieve? Even more importantly, though, you should spend a lot of time interrogating how and why you have come up with these numbers.
Which market will allow me to best achieve these targets (given my assets and competencies)?
Once you know what you want to achieve, the next step is identifying which markets will allow you to achieve those targets. You need to look at market size, the level of competition, the possible price points, etc. as clues on which market would be the right one to target. While doing so, you should retain a clear understanding of how best you will use your current assets and internal competencies to engage this market.
What do I need to succeed in this market?
Most often, your current assets, resources and competencies will be insufficient to allow you to effectively dominate your identified market. It’s important to understand and take note of the additional resources you will require, and the new competencies you must acquire to achieve your objectives.
How will I identify or buy my resources?
Having identified the resources you’ll need, you will then have to determine how you will pay for and find these resources. Essentially, this is a funding question and will require you to fully understand the financial implications of moving into a particular market with the requisite resources to succeed.
What team and structure do I need?
Form follows strategy. The organograms of two businesses in the same industry which are following different strategies should look different. The types of roles, their seniority and their quanta should reflect their intentions. For example, a strategy that emphasises customer service should have a customer-service department with a reporting line directly to the board, while one focusing on new product development might have a board member heading up that role.
How do I start?
According to Richard Rumelt (one of my favourite authors on strategy), strategy without execution is bad strategy. In my experience, if you do not clearly identify and describe the first steps in your strategy, it will often lead to inaction and a beautiful strategy document gathering dust on an obscure shelf in your office. A good strategy is an executed strategy.