Let’s think a little bit about business strategy. What are the key reasons that you would develop a business strategy in the first place?
Well, first of all, let’s think about the definition of business strategy.
A business strategy is a methodology or the way in which an organization positions themselves–so that they win in their particular sector, marketplace or environment in which they operate.
It’s important to have this business strategy because there are a number of different ways in which an organization operates at any time, and defining how they’re going to position themselves and how they’re going to win is critically important.
It also plays to harmony within the organization…
Quite often employees will suggest that there is no business strategy–or they’re certain that it’s not communicated and, that being the case, then nobody really knows what they’re aiming for!
To create a harmonious environment within an organization, it’s imperative that we undertake a robust strategic approach that is a forward-thinking, advanced view of how the world works.
It’s not just about how we’re going to win today, but it’s how the marketplace is evolving for tomorrow and what does our position look like tomorrow to be able to win in the space?
A forward-thinking approach is critical. Finally, it’s how are we going to gain a marketplace advantage.
Clearly, most organizations operate in marketplaces where there is intense competition. So, quite frankly, how are you going to differentiate yourself to win in your marketplace?
You need to adapt the business strategy to align with the overarching vision and goals of your organization.
In many ways, the business strategy can be crafted at the same time as the organizational goals & strategy.
You want to be able to, especially in larger organizations, have a robust way to communicate the strategy to your population, or to your employees.
In fact, you may want to communicate it more widely than that, across your various stakeholders.
Whether they be shareholders or suppliers–they need to know exactly the direction you’re going down, to be able to help you along the way.
Then, think about execution–there needs to be alignment between goal setting and how you intend on taking it to market and making it a reality.
There’s absolutely no point if a strategy just sits and lives and breathes on a page!
It has to be much more than that–it has to be a fluid document that will encompass how you intend to go to the market and win in your space.
An execution plan comes as the next phase of the business strategy–here, having an action plan with different phases is critical.
Product Strategy Creation
Another thing to think about when developing a digital business strategy is that of a product strategy.
Now, why is this important? Because in essence, your product shapes everything about how your customer perceives you.
What exactly are you planning on selling in the marketplace and does it fulfil a consumer need? Also, how is it differentiated from you and your competition?
Ultimately a product-based strategy has to add value to someone, somewhere along the line.
Now, that can either be the end consumer, or you could be part of a larger value chain which then aids/forms a component within a larger product that then helps the end consumer–so you can go for both a B2C play and a B2B play.
The other thing to think about is: How is your product-based strategy achieving the overarching corporate goals that you’re going for?
Quite often it’s the case that small young organizations may start as a B2B play but have the ambition to move into a B2C world in a few years time, once they’ve gained traction and have enough cash flow.
A product-based strategy actually aids B2B whilst gaining key capabilities to create a B2C strategy as well.
Features & Innovation
Finally, how do you future-proof yourself?
Think about some of the key features and innovations that you have which either complement existing products out there–or enable you to get one step ahead.
Think about where the market is moving to so you can capitalize on that and get ahead of your competitors.
Again, thinking about product-based strategy here is vitally important for the future.
Another key aspect (which is more of an external strategic imperative) is competitor analysis.
One of the really dominant tools that I’m sure you’re familiar with is the SWOT analysis.
Understanding (both internally and externally) what market opportunities are out there and how you as an organization can take advantage of those opportunities are important for the success of your organization.
For instance, doing it the opposite way around where you do an OT first (the opportunities and threats first) and then bringing it back to determine well how well your organization is positioned to take advantage of the opportunities while mitigating against the threats is a great way to go about this.
Objectives to Define in Business Strategy
Consider the objectives to define your business strategy–there are a number of different ways in which you can come at this jigsaw.
The first thing is to identify: What are your brand-based objectives?
What is the brand trying to achieve by being and operating within a particular marketplace?
So for example, in an organization that I used to work within the insurance industry–it was all about being disruptive.
It was all about being an organization where customers could come to you ahead of anybody else, or rather than having to go through a middleman, to purchase their insurance.
Now that’s the ethos of the brand, how do all the other objectives that you have to try and support and strengthen that approach?
For example, some of the marketing communications objectives could be to highlight some of those proof points around the brand objectives and what they’re trying to drive.
You could also think about the customer experience as part of the marketing objectives.
Clearly, if the brand is trying to drive a direct experience by cutting out the middleman, it’s then important to think about how your customer experience plays to that and creates a seamless experience for your customers.
As a consequence of doing that, you should be able to increase your commercial imperative and get more sales under your belt.
But how do you drive those sales in this environment?
Having direct digital sales is a great proof point for your brand to be able to determine exactly what customers come to you directly, as opposed to going somewhere else.
Finally, your audience objectives: What exactly would you want your customers to go through? Again, very much linked to your brand.
It may be the case that your core target audience is really busy people with busy lives and all they want to do is purchase insurance very, very quickly.
Being able to create an experience which gets them from A to B through the purchase journey in the most efficient way is going to be one of the most important things that you can drive–from an audience perspective.
You also want to think about how you can drive your audience through different channels that you have at your disposal.
You may want to get someone to start on your app, which then leads them to the website to finish their sale or vice-versa.
It’s completely up to you how you drive that connection with your customers through, but it’s important that you think about this holistically otherwise you won’t create a great strategic plan.
Adoption of Integration Strategies
Let’s think about the integration strategy. This is particularly important in the digital context and we talked about some of the key things around meshing traditional and digital channels.
What budget is available?
Now, why is this so important? Well, because there is only a limited amount of resources available–how you think about integrating your channels and which you choose to play out more than others is going to be a real differentiator for you when thinking about your competitive advantage.
How many suppliers/distributors are currently available in the market and how high is the profit margin?
How many suppliers do you currently have in the market, and how high is the profit margin of your current suppliers and distributors?
All of these things play a massive role in determining what your overarching integrated strategy could be.
For example, going back to the insurance group–they operate a brand portfolio model where one of their brands, Aviva, is on a direct comparison website.
You also have the ability to purchase on the Aviva website, as well as the telephone.
Now, it’s clearly more profitable for the organization to get customers to purchase directly as opposed to the price comparison website (who will take a commission).
So when thinking about your integration strategy–how do you get customers to form a preference to go through the channels that you want them to go through as opposed to the ones that they may have a preference going through?
Could your business alone support a supplier/distributor?
One of the key things to think about is the level of commitment that these various external people are giving to your organization.
This comes with a level of risk and reward here. A very successful supplier could give you a lot of your revenue but one of the big dangers is if they go under or if something changes from their strategy–it will have a massive impact on yours.
Think about how that integrates and how people have started to expand their ranges to have more diversified ways of generating revenue.
How reliable is your current supplier/distributor?
Often smaller organizations love to work with big massive agencies.
However, they may feel that they are getting a raw deal because they pay more for it and may get under-serviced because those agencies see them as ‘small clients’ which aren’t as important as the bigger relationships.
Trying to be on the same level as your partners and distributors isn’t a bad thing because it gives them the same level of importance and aligns your organizations better than if there’s a massive disconnect between organization size–although that’s not the only variable to think about.
Defensive Business Strategy
When thinking about business strategy, you also need to think about how you adopt defensive strategies. What does this mean, you ask?
In a competitive landscape–not only are you trying to win and grow your business, you’re also trying to evade any sort of financial loss or loss of market share or revenue.
Thinking not only about the growth perspective but also how you defend your current position is really important.
This comes down to a number of key things. One is the ability to think about your core capabilities.
Are you meeting your pre-defined objectives and targets?
This doesn’t have to be in-house, but you have to have a strong sense of how you can deliver to the client and always iterate with that customer and always offer them new key things so they don’t get bored of your products and services.
Defining those things outright and creating objectives around future-focus and how you can take your customers for the journey is really important.
Are you making a financial loss?
Thinking about your financials, there are many strategies out there where customers and organizations choose to take a financial hit in the short term in order to gain market share and profitability over the long term.
How long your organization can sustain that level of strategy is important. A market challenger is more likely to want to do this–if they’re undercutting you for a length of time, that poses some big risks for your organization because you don’t want to take that loss, yet you may be forced to do so.
Coming up with alternative strategies may be the only way for you to maintain your market share.
Are your stockholders content with growth/profits?
Thinking about stockholders content with growth and profits, a lot of the time there is shareholder angst and issues that they have to try and grow profits.
Quite frankly, that’s very hard to do. Particularly when you get big CEOs who are under a lot of pressure to deliver.
How do you make sure that you communicate to your stockholders and shareholders that your company is growing on a trajectory and you’ve got it under control?
Is one department failing more than others?
Is one department being more productive or failing more than the others?
Often this happens when there are different capabilities across the organization.
How you invest in one part of the organization over another becomes a critical component of that success.
Is your organization in need of reorganization?
You may need to reorganize especially when there are cost-heavy departments versus ones that are coming up which are more cost-effective.
How do you then balance this out from an organizational dynamic?
Has your organization grown exponentially?
Has your organization been truthful and grown exponentially?
“Can we defend our market share by constant growth?” Is a great question and one that you should ponder as a leader within your organization.
In summary, It’s important to adapt the business strategy so it aligns with the organizational goals.
The vision needs to translate into the business strategy and into the implementation plan.
It’s important to then start to seek out an external view and then determine exactly how well positioned you as an organization are to be able to meet those needs.
A SWOT analysis is a great technique and tool to be able to do this in a quick and surefire way.
SWOT analysis allows a business to assess the strengths and weaknesses of their competitors and establish where they can achieve a competitive advantage.
And then finally describing and putting together a value proposition becomes equally important as it explains what benefit you provide, for whom you provide it and how you do it uniquely well.