10 December, 2024
From Chaos to Clarity – A step-by-step guide to Creating a Winning Business Strategy
The true fault of business strategies failing or never being implemented can and will be argued long after I’m gone. The reality is that they fall flat because companies are too busy to strategise!
It is the elephant in the room. Why? It is an uncomfortable journey with an uncertain destination. Often, it takes an accident before a real strategy is born. I’ve been reading historical details surrounding a pedestrian crossing outside a school near me recently. The correspondence back and forth between the campaigners and the council makes for tough reading. The overwhelming decision (it seems) by the council not to reduce the speed limit is because there had been ‘no incidents’ at this crossing. On the face of it looks like a data-driven decision, right? However, if we think about the logic of that decision it is madness. A school with over 1000+ children, crossing a road twice daily, 5 days a week for around 39 weeks a year. Unfortunately, the accident happened. A boy aged 11 lost his life after being hit by a car. The details of how it happened are still being investigated but this tragedy could have been avoided if the right strategy had been in place. Now, if you were the decision maker, would it not make sense for you to have a blanket 20mph speed limit on crossings by schools?
The council, in this case, like many businesses, is too busy managing the business and doesn’t have the time required to create a strategy. If they had, simple errors would have been mitigated, which may have saved not just one life but many. Equally, they may fall into some cognitive bias traps. Here are a few to be aware of;
- Razor bias; where the tendency to assume the most obvious decision to be the best one
- Inertia bias; is the tendency to select options that allow you to feel, think and act in a familiar way
- Confirmation bias; the tendency to only pay attention to information that supports your point of view.
So, what exactly is a business strategy? It is a process which documents, using the available knowledge the direction of the business’ intended direction. I must stress that it is an ongoing process and not a one-time event. We can break it down into 3 simple steps;
- Forward focussed vision
- Analysis of performance
- Adaptation
Having a north star to anchor your organisation is crucial for understanding what you hope to achieve, defining the purpose and who you serve. This will make your business attractive to those who have the same values as you and keeps everything clear on the mission. Within this look for 3 to 5 breakthrough objectives. These should be significant improvements that the business is looking to make over a 3 to 5-year period.
We will need to break these objectives down further into tasks that take no longer than one year to complete but still move you forward towards your breakthrough objective.
To be effective, not only do you need to foster accountability within your team but you also have the steps to measure your performance. Recently, I was invited into a business to understand some of the challenges that they were experiencing better. The team was super engaged, and the business performed well. The founder wanted the team involved more in the business, driving the many projects and decisions that he was making daily. However, the issue was crystal clear to me. The management team were totally focused on the numbers.
On the one hand, this was great, but on the other, it meant that anything that didn’t drive their monthly P&L (profit and loss accounts) was pushed to the back of the pile. They were constantly striving for short-term success, which was the disconnect between the founder and the management team. By fine-tuning the KPIs, we were able to realign the team’s focus to create harmony and great organisational success.
Mike Tyson famously said, “Everyone has a plan until they’re punched in the face!” He is right; your plan may change, and we have to be agile to that. I always use the lawn analogy. The business strategy that you create has to be organic. Like your lawn, which you may have cut last week will need cutting again. Perhaps some feeding and/or watering, too. What is clear is that it is not a one-and-done scenario. The lawn is affected by the environment in which it grows, it too, has to adapt and so do you. We’re all human, and something will get missed, something will go wrong! Just be agile, find the solution to the problem/s at hand and resolve it. Create > Re-evaluate > Re-create.
These insights are valuable to your organisation and you will find greater success by taking the time to create a business strategy. Before I leave you to make your winning business strategy, here are some simple errors I’ve seen firsthand;
- Doing the same as you did last year. The world is constantly changing, and so are you, and your business will be evolving too. Don’t be the next Kodak.
- Losing momentum. A slow strategy will mean that you don’t make decisions, and by the time you’re ready to make them, you’ve missed the boat.
- Being overly complex. This doesn’t need to be complicated, try to simplify it for you and your team.
- Forgetting who you serve. Remember, the customer should be at the heart of what you’re doing.
- Not thinking about the market. Competitors and trends are evolving don’t forget them.
- Failing to get buy-in. Your team help you achieve your objectives, take them on the journey.
- Having no measurement. You cannot succeed unless you can measure it. Have KPIs!
- No way to implement it. A strategy with no way to implement it… is just an idea.
- Not using data. You should trust your gut but blend that with what the data tells you.
- Having no feedback loops. We need constant feedback to measure and give us our agility.
If you want more details on how to create a business strategy, then contact us. For further reading on business strategy, click on some of the curated links below.
https://online.hbs.edu/blog/post/why-is-strategic-planning-important
