“Why do I need strategy?” is a question many business owners and their executive teams ask. I know my team and I did when I owned my company. To understand strategy and what it can do for your company, let’s start by explaining what exactly strategy is. My next two white papers will then address how to develop a strategic plan and how to execute that plan.
So, what is strategy? Strategy is a nimble plan for achieving what the business deems is success. The plan defines the executive team’s priorities on where the business will be in three to five years and breaks down long term objectives to manageable quarterly goals, which involves knowing the products or services your business offers, the customers you serve, and how the business focuses its attention to achieve the objectives.
To understand what strategy means in practical terms, let’s break down the definition.Nimble means growing your business cleverly. From what I have seen over the years, the more in love you are with your own plan the greater your opportunity for loss because if you are not nimble, you cannot adapt to a changing market. If you have not been nimble you’re probably having cash flow issues because your market has changed but your approach has remained the same. In today’s new economy I see this behavior over and over again: the business owners and the executive team members don’t want to admit their market has changed. Usually, the team realizes they have an issue when they are on the verge of going under. At that point, egos are no longer guiding decisions so the team members can look at themselves as they are instead of with the unrealistic and overconfident impressions they may have previously had of themselves. In short, being nimble means changing your plan as the market changes.
Next let’s evaluate the word plan. A plan is a roadmap for the future that is developed in advance. I have watched many businesses during my career and the most successful always have a sound strategic plan. The companies that fail don’t. They don’t objectively evaluate their failures and they have little or no humility. They complain about not succeeding but have no plan for changing their course of action except to cut, cut, and cut cost. If a business wants sustainable change, the team has to know the direction of the change, how to change, and what the change looks like when it happens.
To achieve means to bring about an intended result. So in order to achieve anything we have to have a plan; a nimble plan. In order to achieve a long term objective one has to develop a series of short term goals with intended results. The example I like to use is eating an apple in one bite. If your objective is to eat the apple, would you stick it all in your mouth at one time? No; you’d take bites all around the apple until you reached the core. With each bit you can see yourself coming closer to the objective; you’re doing it one bit at a time instead of all at one time. When you take small bits you’re able to chew. If you stick the whole apple in your mouth you’re not able to chew at all. If you’ve recently developed a plan, are you sticking the apple in your mouth all at one time? If so, you’ll never achieve your desired outcome. Instead, try taking small bits that lead to eating the whole apple.
The final part of defining strategy is for the team to decide what success means to them. Everyone and every business have different definitions for success. One definition is not better than another. The definition has to be what feels right to your organization in line with your beliefs. Your beliefs are your Core Ideologies which includecore values (your rules) and a core purpose (your passion) for the business. If you and your executive team are not succeeding then I would bet good money your team has many competing definitions of success. When we have multiple definitions the team moves in many directions. The cost of chasing all these different definitions cost time and money.
You now know a strategy is a nimble plan for achieving what the business decides is success. Do you need a strategic plan? In my next white paper I’ll provide some insight on how to develop a strategy.