‘Strategy’ is a buzz word within the business world which has been thrown around in every corporate circle, business function, yearly kick-off conference and staff meeting for absolute years, but does everyone truly understand what it really is and how to maximise its potential?
What Is Strategy?
Strategy, within a business context, is commonly confused with strategic planning. Strategy is about the ‘what’ and ‘why’ of intended goals and objectives to reach, whereas strategic planning is about the ‘how’ to achieve them through tactics, campaigns and actions.
Strategy is all about the choices we make in utilising our resources within a competitive environment and relative to our customers, which give our organisation the distinct advantage at a point in time. Therefore, strategy is identifying the next ‘big thing’ before others do, and gaining a competitive edge in it to be able to take full advantage.
How Is Strategy Changing?
Business strategy is rapidly changing with the ever emerging trends and shifting developments within the modern, very connected world. In the past, the business concept and plan was set in stone and only changed yearly (if that). However, this is not flexible enough any more and will result in a poorly performing, stagnate organisation, lacking in innovation. This is why most of the top performing companies in years past, such as Kodak, are now nowhere to be seen today. Businesses must treat strategy as a living, evolving entity, ensuring that emerging trends, opportunities, threats and new information are all taken into account and integrated into it accordingly.
Every industry today alters and evolves so rapidly that an organisation which fails to update and adapt their strategic objectives and plan regularly will soon discover that the goal posts it set for itself twelve months prior will quickly become completely irrelevant or in the wrong direction. Most organisations don’t know they’re going out of business until it’s too late! They’re the ones that fail to recognise vital elements within the industry their involved in and then, when the consumer no longer sees their product offering as valuable, it’s often too late to react and update the strategy.
Additionally, in the past (and too commonly now too, unfortunately), strategy was built around a set budget, rather than the other way around. Using a budget as a cornerstone to build strategy is a very short-sighted and limiting method as it results in the organisation having to negotiate and water down the essential goals necessary to remain strong, relevant and competitive.
Obviously there are limited resources with any business, however strategy should be set first so that all goals are established initially, and then budget can be allocated in order to prioritise them and develop the best action plans associated with each with the resources at hand.
Why Is Strategy Important?
With the rapid shifting of market demographics and trends, strategy is more crucial than ever before and absolutely no organisation can afford to ignore it or become complacent. There are too many inevitable pathways for competitors to join the market and do something innovatively different which threatens a currently established business. And, on the other side, a new business entering a new market must have a comprehensive strategy to capitalise on their niche and fully utilise their strengths to take on the well-established players in the industry.
A solid, flexible strategy will focus and grow the organisation, while strengthening its position against potential threats.
Marketing’s Role In Strategy
Marketing has a key role in updating and enacting strategy, as it’s responsible for the revenue generating marketing mix and external communications, and is the only business function looking outward toward the market, alongside the sales force, obviously. Other internal functions, such as operations, accounting, I.T. and so on, are ‘supply-side’ biased, entirely focused on keeping the internal core operating.
Through the gathering of marketing intelligence, the marketing department can keep a close eye on fluctuations and changes that will directly impact on the organisation’s overall strategy and develop ways to address these. These can include, for example, regulatory and legal updates that impact on how business is conducted domestically and internationally. Remaining ignorant to significant changes in the marketplace is a guaranteed way to hinder progress and risk the health of an organisation.
Outgoing demographic shifts need to be monitored, and not simply taken for granted. With the rise of social media and technology, the consumer is far more informed and possesses far more power than ever before. Marketing must appreciate these fluctuations and rise to the challenge of developing strategy and tactics which best capitalise on new and rising niches.
Marketing must also come to always expect and defend against new competition, who see the opportunity within change and approach the market differently, not playing by the traditional paradigms or rules. They are desperate to ‘eat the big fish’ and can quickly eat away at market share simply by thinking outside of the well-established square.
The Five Questions Strategy Must Answer
When it all boils down to creating a comprehensive strategy, the following five questions must be addressed thoroughly.
(1) What is our winning aspiration?
(2) Where will we operate?
(3) How will we operate?
(4) How will we win?
(5) What distinctive capabilities and resources are required to win?
Once an organisation comes up with a complete strategy, it must develop and implement appropriate tactics to address the ‘winning aspirations’, while constantly monitoring and performing a regular check on all of its strengths, weaknesses, opportunities and threats to ensure than the strategy is still aiming in the correct direction, both efficiently and effectively.
What do you think about business strategy? Feel free to share your thoughts!