What does the word strategy mean?
Google defines it as derived from the Greek word strategia, which means generalship and refers to leading an army. In the military sense, it means the art of planning and directing overall military operations and movements in a war or battle. In the business sense, it refers to a plan of action or policy designed to achieve a major or overall aim.
An effective business strategy must describe the way you will achieve your goals, the means with which you have to do it, and what achieving your goal will look like in the end. Your business strategy provides a framework for strategic decision-making and provides overall direction for your company.
1 An effective business strategy starts with the end in mind.
In order to formulate an achievable, substantial, and effective strategy, begin with the future. Clearly articulate your vision. Your vision is based on your values and core beliefs and is the essential character of the organization.
The values you respect and esteem will guide your vision. Your strategy outlines how you will achieve your vision within the context of those values.
Secondly, define the purpose of the organization in practical and concrete terms. Include objectives that are measurable and goal-oriented. Everyone in the organization should be able to see whether or not their actions contribute to the company’s overall success.
When combined, vision, purpose, and strategy are the basis for successful action. With purpose and vision in mind, stand in the future and look back. Which paths are the most productive paths to the future? Identify those paths and start mapping your strategy.
Focus on what you do best. In Apple’s case, one of the hallmarks of their iconic brand is an exceptional customer experience. It begins with the sleek design of its products, that are intuitive to the user, and extends to its exceptional tech support.
The formulation of an effective business strategy includes the process of writing and implementing policies and procedures designed to achieve your major objectives. It also includes allocating resources to achieve long-term success.
Inertia can build up in the area of resource allocation due to such factors as a reluctance to take risks, the organizational political climate, and too much emphasis on short-term business metrics.
By focusing on what the company did well, Apple was able to make the most of their unique capabilities. Instead of expanding into personal computers, the company continued to target consumers with improved generations of Mac computers.
Rather than becoming a world-class performer in manufacturing, Apple sold its factories and outsourced its production. Apple’s market share and profitability are among the highest in the industry.
Periodically reviewing and reallocating resources to reach strategic goals often results in higher performance. Strategically investing in value-creating businesses activities generates a growth cycle, which, can in turn, create further investment opportunities.
2 An effective business strategy is clearly understood by all members of the organization and the leadership team.
Create a strategic plan in the form of a document and use it to communicate your organizational goals, the actions needed to achieve those goals, and all other critical elements of your business strategy.
Spend time discussing all aspects of your plan with members of your team. Clearly define the framework of your business strategy and their role in it.
Communicating your business strategy can inspire the staff as they recognize the benefits of implementing the plan, and it can motivate them to greater productivity in creatively achieving its directives.
When explaining key concepts, include the role of employees, their assignments, and the time constraints. Assign the use of resources available and establish priorities.
Strategically align your employee’s efforts to support the overall strategy. The process of interacting and synchronizing their efforts can result in increased performance. Your business strategy is only as strong as it is understood and can be implemented by all members of the team.
Without a clearly defined and understood framework to achieve the company goals, organizations can lose pace with changes in their immediate environment, which leads to a slow and gradual erosion of any gains made.
To avoid this, encourage open and constant communication between teams and team members. The more people participate, the more comfortable they are to express their opinions. Disagreement can lead to innovation and greater creativity in solving problems.
A company’s organizational culture determines its ability to support new strategies, policies, and other changes. In the case of Apple, its organizational culture is a key to the company’s success.
Innovation is at the heart of the Apple culture. All employees are encouraged to contribute to the firm’s product development processes and to be innovative in terms of their own work. Employees hired to be directly involved in product design and development, are especially creative. By emphasizing creativity and excellence in the corporate culture, Apple consistently leads the industry in innovation and quality.
3 Sound and effective business strategy incorporates flexibility as well as discipline.
Each industry has its own features, characteristics, and structure. Your company is part of a larger ecosystem. The position your company has within the industry determines who your closest competitors are. When creating your strategy, think about the industry and your competition.
Use your knowledge and understanding of the industry to determine elements that will make you a stand out. Being unique in your field can create higher margins than the industry average, which translates into higher profits. Market share is directly related to your ability to differentiate yourself from your closest competitor.
One key to Apple’s success lies in its ability to consistently stand out from its competitors. For example, Apple’s entry-level iPad Air costs $274 to make and sells for $499 resulting in a profit of $225 representing a gross profit margin of 45.1%. Competing tablets often cost much less. Apple can command a premium customers are willing to pay, because it has a reputation as a superior brand.
Any reputation, no matter how well deserved is fragile. Once you are in the lead, you become the biggest target in your industry. The only way to stay on top is to continually deliver the best value, the best product, and the best service to your target customers. Incorporate metrics designed to measure improvement as well as deterioration, and be disciplined enough to respond to the results.
Effective business strategy must be customer and profit driven. Product development has to be part of an ongoing process. Your target market is defined by your company’s core identity, i.e. who you are as a company, and what service or product you provide.
Apple, a company who positions itself as a think tank of unconventional, ahead of the curve, and cutting-edge thinkers celebrates the individual who values innovation illustrated by their Think Different advertising campaign. Their customer also wants a well-made device which is easy to use combined with tech support Apple provides via the Apple Store.
No industry is static. Technology evolves, customer needs change, and competitors create new products. Use evolving technology to give yourself the edge on new value being created in your industry.
Incorporate customer feedback into your overall strategy. Create other feedback systems, and monitor them closely with the goal of anticipating customer demands while increasing market share and profits. Stay focused and adapt.
The goal of a strategic plan is to enable the organization to focus its energy in a concentrated way. Create momentum in the organization by disseminating the plan to everyone in the company and encouraging input.
An effective business strategy requires successful implementation.
Prioritize the components of your strategic plan. Decide which are most critical, and carry out the most important ones first. It is difficult for an organization to absorb too much change at once.
Commit to your vision, your point on the horizon, and plan your course. As pilots watch the weather and deviate for storms, keep an eye on market conditions, making adjustments when necessary, as you, chart your strategic path to success.
Lori Boyle is the TV Host of Wicked Housewives on Cape Cod, The Lori Boyle Show and Why I Serve, Radio Show Host of Lori Boyle Radio and CEO of Lori Boyle Media. She is a retired International Airline Pilot. Contact – Website 1 – Website 2
Photo Credit – Paid for and provided by Lori Boyle. Girl Playing Chess© Cherezoff | Dreamstime.com