Illustration of 3 elements of business strategy

3 questions to refine your business strategy

Every company will set a strategy at some point. That process could be time and resources consuming. But strategy is not a complicated concept. It’s just the way to get from point A to point B. However, if your strategy session dates back a couple of years, a new itinerary may be required. If it’s the first strategy setting exercise, structured approach is even more important.

The framework below gives an easy, pragmatic tool to set a growth strategy for your business. Do not hesitate to contact me for help in going through this exercise.

Strategy quote

#1 : What strategy game do we play?

I use the word “play” as it shows that we will be acting in a dynamic environment, interacting with others and changing the tactics along the way.

In order to answer this question, we should understand the following three components of it.

First, what market do we want to be in? The answer may seem obvious. But market dynamics may have changed since we last asked ourselves this question. So we need to understand the current state as well as changes over past 3 years:

  • Our target customers and their needs;
  • Market growth rate and how it has changed;
  • Regulatory environment;
  • Players consolidation and new entrants;
  • Existing and emerging trends.

Otherwise, you may end up building a strategy for the wrong market.

Second, what is the prize? This is a desirable measurable outcome we thrive to achieve (market share, ROI, NPS)? Pretty often strategies are set to achieve everything at once: for example, to build a market share while increasing ROI. But you can’t have a cake and eat it too. Some investors may want you to but pleasing them will leave you with a strategy that is impossible to execute. Thus, focus on a single metrics that is most useful to achieve your next strategic goal.

Third, who do we play with/against? That includes suppliers, distributors, competitors, partners, regulators, investors, even customers. Yes, you’ve heard me right. Your customers could play with you, for example, by trailblazing your innovative product or play against you by defaulting on payment terms. As in any game, it is key to understand who is on our team and whom do we play against and to build our strategy accordingly.

#2 : How to win in this strategic game?

If we are planning to “grow” instead of winning, we might be too much internally focused and forgetting that we need to “win” the customers over competition.

Here again, we need to ask ourselves the following three questions.

First, what is our unique value proposition? Front line employees could highlight customers “pain” points and possible ways to reduce those (product features, delivery, support etc.). At the same time, company’s management can create ways to maximize customers “gains” (partnerships, social impact, emotional and financial rewards etc). Now we can formulate it in a bold statement and demonstrate with evidence how we can make that happen.

Second, which products do we offer to help the customers and how competitive are they? Product-market fit is not a test you do just once when you start the business. Numerous companies start as pioneers, quickly grab early adopters and … stop. No, they still sell products and demand premium prices. But they become complacent and stop constantly benchmarking themselves against competition. This is a death sentence for a business, as nowadays products are being copied and turned into a commonplace faster than ever.

Third, how sustainable is our game plan in terms of costs? Resources we invest in competing in the marketplace cannot undermine the prize we get at the end. Therefore, it is crucial to make mindful trade-offs in terms of money, time, quality, ownership, talent etc. Take a step back from putting off daily fires to reflect on those and make sure that we are not going to win and die. At the end, we are playing this game to win and thrive.

#3 : What can we do to execute our strategy successfully?

This is our action plan that is a component of the strategy itself rather than its bastard child.

The choice of words in this third and last question is not random but rather based on the following underlying reasons.

Can” refers to the resources required, both internal and external, including those accessible via partnerships and alliances. Apart from money and people, this could also include time, technology, brand, network, lobby, etc. Unless resources are available or can be secured fast, the strategy is flawed.

We” is opposite to “them”. The plan should be based on the actions that are under our control. Strategies based on M&As and other external factors expected “to happen” tend to fall short on execution.

Do” is about priority and focus remembering the famous 80/20 rule. That could include anything from innovation pipeline to repeated business. The key is that they are clear and shared by all functions and levels in the company. And by sharing I mean both accountability and eligibility for receiving a part of the prize!

So these are 3 simple questions to refine your business strategy. Once you spend time reflecting on and formalizing the response, it is important to start moving towards your goal. At the end, strategy is a navigation path to bring you to your business destination. Have a safe and enjoyable journey!