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By Mitch Glasser, May 6, 2012 10:54 AM

For Part 1 of this series, please click here.  For Part 2, please click here.

Creating a real strategy is the ultimate expression of working on a business vs. in a business.

Sure, there are those who define their business as being a seller of landscaping services, or office furniture, or marketing and branding services, etc., but these are not business descriptions.  Rather, they are statements of the industries in which companies participate.  A company’s business is really defined by the combination of what it offers, who its customers are, the needs it meets, the unique value it brings to the market, etc.; that is, its strategy.  After all, all marketing agencies are not the same, even though they compete in the same industry—just ask their principals.  Those who truly understand their businesses will describe it in terms of the elements of its strategy.

A real strategy not only assures that all company efforts are directed at achieving the same goals, it establishes a set of rules for running a business that are essential for achieving a high level of success:

1)      Choose a value proposition different from those of competitors in ways that result in a product or service having the greatest value to targeted customers

2)      Create the ability to deliver that value proposition through a unique set of capabilities, activities and resources that is difficult for rivals to duplicate or neutralize

3)      Make trade-offs; take only those actions which support the strategy, and consciously and deliberately say no to plans, proposals or otherwise good ideas that don’t

4)      Take action; purposefully, and with high priority execute the strategy by following through with the changes necessary to fulfill the value proposition

The absence of a sound strategy often causes a company’s resources to be wasted, keeping it from taking full advantage of its investments in its capabilities, its assets and its people.  Business decisions are made independent of each other to address immediate, local problems without sufficient regard for the possible disruptions they may cause elsewhere.  Value-adding activities wind up neutralizing or conflicting with each other, producing unnecessary problems for both the business and its customers—and they usually go unnoticed until quite a bit of damage has been done.

An SMB puts itself at a great disadvantage if it dismisses the creation of a real strategy as too academic or time consuming to be of practical use.  Yes, creating a real strategy does take effort, but usually far less than that required for dealing with the chronic business problems which result from not having one.  The big difference is that with the former, a business has far more control over its potential achievements and a much better chance of out-competing its rivals.  In fact, many strategy experts believe that having and executing a real strategy is one of the best forms of competitive advantage a company can have.

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By Mitch Glasser, May 4, 2012 10:18 AM

For Part 1 of this series, please click here.

Although there are many areas of agreement, experts in the field don’t all see eye to eye on what constitutes a strategy.  They define its underlying ideas differently, use dissimilar frameworks to depict its structure and sometimes include aspects of its development and execution as being part of the strategy itself.  What’s more, most writing on the subject uses jargon, descriptions and examples relevant only to those in large corporations.  The upshot is that for those SMBs who do realize they’re short of having a real strategy, it is difficult, if not impossible to figure out a realistic way to apply the concept to their organizations.

A strategy is not a one-liner; it’s not a high-level, overarching statement of why a business exists, what it hopes for in the future, the annual revenue growth it wants to achieve, etc.  Nor is it a bolt-on afterthought to a company’s otherwise developed plans.

In practical terms, a real strategy lays out how a business believes it must meet the needs of its customers and engage its market to reach its goals; that is, it is a company’s formula for achieving success.  It answers the question, “given its strengths and weaknesses, those of its competitors and the business environment in which it operates (relative size, position vs. competitors, customer needs, regulatory realities, etc.), what approach will a company use to win in its market?”

So that it can serve as a working guide for running an SMB, that ‘formula’ should be thought of as being comprised of the six integrated, core decisions that are the foundation of every business:

1. The products and services to be sold
2. The customers to be targeted
3. The subset of their needs to be addressed
4. The unique value proposition to be offered
5. The set of activities and capabilities that will be used to create the unique aspects of the value proposition;  that is, the ones that differentiate the offering from those of competitors, and make it most compelling to prospective buyers
6. The overall approach, or policy to be used by employees to guide their business decisions

These are the fundamental internal and market choices that determine a company’s potential success; that is, how well it sets itself apart from its competitors and uniquely meets the needs of its targeted customers.  They define its long-term position in its market and serve as the basis for all future business decisions.

Beyond coherence, this straightforward view of strategy offers several important benefits.  First, it enables the most fundamental aspects of a business to be kept at the center of management’s attention; not on one or two of them based on the pressing issues of the day, but on all of them.  Second, it is easy to understand and communicate to all levels of a company (and yes, every employee should know what business their company is in).  Third, it serves as a user-friendly tool for not only managers, but for all employees to actively evaluate their activities and decisions against those fundamental choices.

For Part 3 of this series, please click here.

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By Mitch Glasser, May 2, 2012 12:38 PM

Strategy is a complex topic, and not because consultants deliberately make it so (not usually, at least).  It’s complex because it seeks to make sense out of the many-sided, real-world environment of competitive business—the workings of which are anything but straightforward.

The problem is, even though everyone agrees that a business needs a strategy to achieve its goals, few know what a real strategy is.

Simple phrases like, “Be the market leader”, “Grow revenue by 20%”, “Increase social media use”—statements typically offered as strategies—are really goals, objectives, tactics, aspirations, etc.—not strategies.  An honest-to-goodness strategy makes a unique contribution to the success of a business that cannot be made by any other organizational concept, idea or notion.

That’s because when properly developed, a strategy serves as the master guide for operating a business.  It is the mechanism that directs everything a company does, assuring that all its investments and activities are coherent; that is, they integrate with and reinforce each other to contribute to a common set of goals and objectives.  A strategy is essentially the filter through which all proposed initiatives and activities must pass so that consistency and focus are maintained.

The absence of a real strategy is at the center of many of the issues facing today’s businesses.  Here are just a few examples:

•  “We’re as good as or better than our competition in so many ways, so why are we failing to close a higher percentage of deals?”
• “We’ve made substantial improvements to our systems and operations; why haven’t we seen the improved performance we expected?”
• “We’ve spent a fortune on all types of marketing and sales activities; why aren’t sales increasing as we forecasted?”
• “Why are we having trouble holding on to customers?”
• “What should we be doing differently to enable the company to grow?”

Without a real strategy business decisions are often made independent of each other to address immediate, local problems without sufficient regard for the possible impact they may have elsewhere.  Activities wind up neutralizing or conflicting with each other, producing unnecessary problems for both the business and its customers.  Even more worrisome, it makes a business appear unfocused and inconsistent to customers and prospects, undermining its credibility and reputation.  The company is unable to create a compelling reason to buy, build a powerful brand or support a strong company image, making it far more difficult to deliver a comfortable level of profitability over the long term.

No strategy means no focus; and without focus, a business is essentially depending on a collection of random acts of business for its success; a situation that should give pause to anyone running a company.

If you read much of what’s been written on the topic, strategy often comes across as an abstract concept, making developing one for a small-to-medium sized business (SMB) appear to be too daunting an exercise to undertake.  What is needed is an approach designed to make that process easier and an actionable strategy more achievable for these organizations. The academics and complexity need to be simplified and presented in a way that SMBs can more easily identify with, understand and realistically apply to the business issues they face.

For Part 2 of this series, please click here.