A strategy is a plan on how to win in the mission you’ve set out, whatever that may be. It is the formula to carry out your visions and goals successfully. The job of a strategy is to communicate the actions to be taken. It is best if it is written, clear, and specific.
Strategy is a set of interrelated and powerful choices that positions the organization to win. Roger Martin
Strategy is one piece of the process
Some steps need to be taken before you get to decide your strategy.
First, we must define the mission of the business, product, or event we are developing. Generally, this means the problem we are trying to solve.
Second, vision is our picture of how we want our business or product to impact the world.
Third, only at this point are you ready to develop the strategy. Here, the strategy is the overriding decisions you make at the beginning to help the vision become a reality. You should include preferences and constraints that will impact the strategy. Preference can be how you want to appeal to the world; constraints mean any limit on time and resources.
Fourth, a step-by-step plan to implement your strategy. You can get into the exact details of actions to take. It can be as detailed as you want, and it has the advantage of course correcting along the way.
Fifth, is the actual execution of the plan and strategy to accomplish your vision and the mission you have set.
Characteristics of a great strategy
A successful strategy needs specific characteristics. It should be simple, truthful, specific, leverage, calculated, and forward-looking.
Simple-A strategy must be distilled down to a clear and manageable action. This is not an easy task, as it takes work to put your complex plans into something understandable and actionable.
Truthful-A strategy needs to honestly explain the current situation, the threats that exist to the business, what has to be done to protect the business, and what strategy is required to make it successful.
Specific-A strategy includes what market and customers you will target, what benefits you want to give the customer, your place in the market, what value you provide, and how to position yourself against the competition.
Leverage-Leverage is generating a large effect from a small effort. There is more benefit to leveraging your strengths than spending time fixing your weaknesses. It is by leveraging the strengths that differ from your competition and are durable. A durable strength is long-lasting and can withstand wear and tear.
Think about leverage as a moat, the idea made popular by Warren Buffet.
A company needs differentiation that others cannot copy, especially differentiation that customers care about, a competitive advantage.
“The most important thing to me is figuring out how big a moat there is around the business. What I love, of course, is a big castle and a big moat with piranhas and crocodiles”.—Warren Buffet
Calculated -In a calculated strategy, the actions taken are designed to move the business forward regardless of setbacks. This means that the upside has to greatly exceed the cost, so even if it takes longer to achieve you still win.
For instance, you make a bet with an activity you think is a good strategy. The downside is that you lose 100% of what you invested, a quantifiable risk, but if you win, you win really big, perhaps 100, 1000 times, or more—a few successes make up for many failures.
Forward looking – In a strategy you must take the long view. It considers the vision you want to accomplish. Once you can define this, you can work to overcome the long term challenges facing the business.
For instance, lets image your vision is to provide a service to a large population. You realize you are missing an important system or a piece of the framework to make it happen. As part of your strategy you first have to plan to acquire this important element before you can move forward. This will be part of the strategy you setup.
Using a Blue Ocean Strategy
When discussing strategy, we must include ideas based on the classic book, Blue Ocean Strategy.
The Blue Ocean Strategy is about differentiating your business from the competition. Creating and capturing new demand so you make the competition irrelevant. It is done with a new value proposition where you define yourself outside the normal industry so the competition is eliminated.
Creators of the Blue Ocean Strategy, Chan Kim & Renée Mauborgne’s, developed a four-action framework, the eliminate-reduce-raise-create (ERRC) grid. Read the details and examples.
Their definition and explanations:
Eliminate: Which factors that the industry takes for granted should be eliminated?
Reduce: Which factors should be reduced well below the industry’s standard?
Raise: Which factors should be raised well above the industry’s standard?
Create: Which factors that the industry has never offered should be created?
The first two questions, eliminate and reduce, help you understand how to lower your costs versus your competitors. The second two questions, raise and create, help you get clarity to increase value and create new demand.
In essence, Blue Ocean is about creating new demand and growing your business rather than competing within the established industry. You can learn more at the links above.
Summary
If growing a successful business is your goal, follow the ideas above to develop a strategy that will work to reach your goals. If you want to succeed far beyond your competitors, consider putting yourself in a category of your own and learn how to create your Blue Ocean.
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