I think everyone would agree that having the right strategy is important if you want to maximize your chances for success.
Yet, I find many small businesses not maximizing their chances of success - at times even unintentionally weakening their chances for improved results, greater profit and more sales.
It really comes down to getting two critical areas right:
- Having a clear strategy
- Executing on that strategy
Are You "OK" With The Status Quo?
I still speak to business owners that are OK with the status quo.
Since strategy is essentially about change, these business owners don’t have a strategy.
So if you’re reading this and you are OK with the status quo, this blog is not for you. I would argue that since the business environment is changing so rapidly, NOT have a strategy is not a great idea. If, however, you are looking to change something for the better in your business, read on.
Now that we are on the same page regarding the fact that strategy is important and that you must have the right strategy (series of choices) to be successful, the next step is to execute on that strategy.
Every needs to know HOW you're going to build that new thing or HOW you are going to get to that new place. In other words, what specific choices are you going to make?
In this blog, I hope to share some valuable insights from multiple sources which will help your business have the right strategy and execute on that strategy.
Why is all this important?
It’s not just so you can say you have a strategy.
It should not just be an intellectual exercise.
This is all about improving the results of your business and I define results as increased revenue, profit and all the things which drive revenue and profit, because without these, you won’t have a business.
You Must Have A Small Business Strategy
I defined strategy in some earlier blogs, but “strategy” is simply how you will attain a goal (your point “B”).
Webster defines strategy as “a plan of action or policy designed to achieve a major or overall aim”.
One HBR article said that “Strategy is inherently about creating something new or getting somewhere new”.
So you can see that embedded in the concept of strategy is change or accomplishment of a goal.
Another HBR article describes strategies as a series of logical choices that fit together and represent a coherent strategy. The choices need to make logical sense together.
A clearly defined goal (your major aim) allows you to KNOW if your strategy (your plan or change process) is working.
Here’s a really simple example.
My major aim or goal is to lose 10lbs in the next 60 days.
What’s my strategy (my plan)? How will I lose 10 lbs? My strategy could be to:
You can see how these choices fit together and see to address specific areas like nutrition, exercise and motivation.
So you need to have a plan to have a strategy. Strategy is the “how” you are going to get from point “A” to “B”. It’s what you are going to change. It’s the deliberate choices you are going to make.
How Do You Develop A Small Business Strategy?
The HBR definition of what strategy is offers another perspective on developing a strategy - “creating something new or getting somewhere new”. Start with where you want to go or what I call your point “B”.
Using this concept of change and choice, a really simple way to determine your point “B” is to ask several questions (both qualitative and quantitative) about what needs to change.
Qualitative & Quantitative Questions
- Revenue / Sale change questions
- How much more revenue do we want to generate?
- How much more of product X do we want to sell?
- Which products do we want to STOP selling?
- Profit change questions
- By what % do we want to improve our profit?
- What areas of the business are we going to invest in?
- What new products are we going to build?
- Gross Margin change questions
- What is the bare minimum that we will accept for a gross margin on this product?
- What changes do we need to make to our pricing?
- Customer change questions
- What new customer segment to we want to work with?
- Who do we want to STOP working with?
- Culture change questions
- What elements of our culture need to change?
- What do we want our customers to say about our company?
- What do we want our employees to say about our company?
- What do we want our customers to STOP saying about our company?
- Employee change questions
- How many more employees do we want to hire?
- To execute on the changes who do we need to hire?
- What employees do we need to let go of?
- How much do we want to improve employee happiness / retention?
I could go on and on, but I think you get the picture. Just asking your team “What needs to change?” can help determine what to focus on in your pursuit of your point “B”. This can often get revealed doing a SWOT analysis or a “Fires” exercise which you can read about here.
These questions help paint a picture of what you want to change and by how much so that you’ll know if you’ve actually achieved the result you want to achieve. The objective here is to create as much clarity as possible around the future and change you’re looking to accomplish.
Once you developed a list of questions and answers, you could then prioritize the changes you and the team felt were the most important AND by your ability to make the change. Just because you want to make a change doesn’t mean you have the ability to make it. Be brutally honest about the prioritization.
The process of prioritization is critical since the organization only has so many resources. An essential component of determining your strategy is deciding what to say “No” to and this is what the prioritization does. It says, “no” to certain changes.
How Do You Execute Your Small Business Strategy?
In order to get to “B” you need to actually “execute” on your strategy.
Execution turns out to be pretty difficult for most organizations. In his book, “Thirteeners: Why Only 13 Percent of Companies Successfully Execute Their Strategy--and How Yours Can Be One of Them”, Prosser highlights that only 13% of all organization actually execute on their strategy.
To “execute” is to carry out or put into effect the plan, order, or course of action. If you’re a “Chief Executive Officer”, you should be the chief executor of the plan.
Your plan will not magically execute itself. The clearer you can be about what you’re trying to accomplish (the changes you're making), the easier the execution part becomes.
People in your organization need to do things, make decisions, act in a way that is consistent with the plan in order for your strategy to be successful.
According to the HBR article, the “Secrets of Strategy Execution”, “Execution is the result of decisions made every day by employees acting according to the information they have and their own self-interest.”
Again the HBR article gave some interesting insights into what matter most in strategy execution.
Information must flows freely across the organization - everyone needs to know the strategy
- Everyone must know what role they play in eccuting on the strategy
In another HBR article entitled, How the Most Successful Teams Bridge the Strategy-Execution Gap, Research found that:
- The best companies spent more time translating strategy into actionable goals (in other words, goal setting)
- The best companies spent more time engaging the organization, surfacing barriers and unmet needs and communicating direction and behavioral guardrails (communicating the strategy)
You can see that communication of the strategy and breaking the strategy down into actionable goals is critical.
I hope this blog has helped to give you a clearer view into strategy, its importance and how to make strategy truly stick in your organization.
If you’d like help developing your strategy and translating it into goals which can be communicated and tracked, we can help.
We even offer a free strategic planning agenda to give you a sense of how this might work in your organization.