What Is A Business Strategy?

A business strategy is a well thought out plan that guides the business in achieving its vision. A successful business uses the strategy to guide all aspects of the business, uses the strategy to prioritize activities, make decisions, and optimize performance. Think of the vision as the destination for a long trip and the strategy is the roadmap, or in today’s technology, GPS. Most people would not start out a drive from Los Angeles to New York without a plan. A strategy is needed to create the most efficient path from today to achievement of the vision.

There is a broad spectrum in how today’s businesses operate with regards to strategy. Most successful businesses have a well-constructed strategy that guides virtually everything they do. Some businesses have a that is locked inside the business owner’s head. While other businesses have an ad hoc “seat of the pants” strategy in which they operate reactively or transactionally from day to day.

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What are the Key Elements in a Winning Business Strategy?

The most effective business strategies incorporate the following features. A deeper dive into each of these elements may be addressed in future posts.

It Should Have A Vision

If the strategy is the plan to achieve the vision, there must be a vision. Just as a road trip without a destination has no real goal, a strategy without a vision serves a questionable purpose. Ask yourself what you plan on achieving with the business, what strategies you will employ to achieve it, and how those strategies will be executed. There are many aspects to creating a vision that serves a market need, but those need to be addressed separately.

The Strategy Should Be Aligned with the Vision

A strategy needs to be supportive of achieving the vision. A misaligned strategy results in inefficient progress toward the vision, or worse, diverges the path to another outcome and often results in reduced financial performance and productivity. Alternatively, a misaligned strategy may be an indication that the vision is wrong.

“If you cannot measure it, you cannot improve it.” Physicist Lord Kelvin (Sir William Thomson)

The Strategy Should Be Consistently Measured and Evaluated

For your business strategy to be operationally effective, each strategy should be measured and periodically evaluated so that it is known whether the business is on track or not.

It Should Be Dynamic

If, upon evaluation, it is determined that the strategy, or a portion of it, is not satisfactorily advancing the business toward the visions, the strategy should be adjusted or refined to improve its performance. Changes in the market, competitive, or regulatory environments often result in the need to adjust or refine the strategy. A strategy may be based on certain assumptions. These key assumptions should be assessed periodically, and if an assumption is proven to be incorrect, it may indicate the need to adjust the strategy.

It Should Act as a Guide

A good business strategy drives all tactical activities, decisions, and day-to-day actions.

Rewards should be Aligned with Strategy

Rewards should be aligned with strategic objectives. For example, let’s consider that your priority is long-term revenue growth over short term profitability. If your rewards are based on short term sales, poor decisions and time allocation that are incentivized may negatively impact the long-term goals. Misalignment of rewards is a common issue with many businesses.

It Should Be Unique

A business strategy should take into account the unique strengths, weaknesses, and objectives of the business – making it unique in itself. The more you understand your business, market, industry, and “wishlist,” the better the strategic plan will be.

It Should be Executed Effectively

If your business strategy is not executed effectively, one might question why the strategy exists in the first place. A strategy without execution will most likely never achieve the vision. Execution is tied back into earlier elements: rewards, decisions, tactical activities. The combination of strong strategy, coherent and effective execution, and the ability to adapt to change is key to success.

It should be Well Communicated and Simple to Explain

Many business owners keep their strategies in their head. This is counterproductive. The more the team understands the strategy, the more they can participate in its execution. Delegation of decisions and activities is more effective when the team understands the strategy and is working in unison towards the same goals. When combined with proper alignment of rewards, team members can be trusted partners in the execution of the strategy.

In Summary

An effective business strategy, one that effectively progresses a business toward its vision:

Is needed to provide a roadmap to achieve the vision.
Should guide all activities and decisions.
Must be measured, evaluated, and adjusted
Must be executed

Key Elements of a Winning Business Strategy