5 keys to building a better business strategy
5 keys to building a business strategy
Your business strategy provides essential context that should inform every decision you make, from how you structure your organizational design to how you build out your rewards system. For example, if your strategy involves product differentiation and you need to innovate quickly to bring new products to market, you’ll want a flat organizational structure with little middle management so things don’t get slowed down. And it should be clear to everyone in the company that your rewards system—from promotion paths to annual bonuses—compensates creative employees who act fast.
When you follow best practices for developing and communicating your business strategy, it becomes the single source of truth that acts as a foundation for everything else you do. But if your business strategy wasn’t well-built or properly communicated, you’ll struggle to build your business upon it. In fact, your whole business might come crumbling down.
You can develop your business strategy in one of many ways as long as it’s:
- Agreed upon
When these five conditions are met, your strategy becomes a single source of truth that will guide and align your entire organization’s collective efforts.
Keeping those five keys in mind, let’s look at how you can develop and communicate your business strategy.
The first key to building a successful business strategy is to make sure it’s deliberate.
Your business strategy must be the result of deliberate consideration as to how your organization:
- Competes and prospers in its environment
- Delivers on its mission
- Takes advantage of both external opportunities and internal assets
- Structures its operations
Your business strategy should reflect careful consideration of the market and competitive landscape to ensure adaptability and relevance, but it’s always the result of conscious choices.
To ensure that your strategy is deliberate, your leadership team should regularly assess your strategic intent and vision.
The second key to building a successful business strategy is to make sure it’s simple.
A strategy that attempts to do too many things is certain to fail. You might find it hard to keep a narrow focus; that’s why strategic planning models are useful. Strategic planning models force the leadership team and stakeholders to choose among options.
Several strategic planning models exist. These include:
- The Balanced Scorecard
- SWOT analysis
- strategy mapping
- Blue Ocean Strategy
Review each strategic planning model and choose the one that best fits your business needs.
The third key to building a successful business strategy is to make sure it’s actionable.
Once you’ve deliberately chosen your strategic intent and ensured it was simple, it’s time to express your strategy in actionable ways. This will allow your leadership team to prepare a plan for strategy execution.
For example, “Competing on the basis of innovation” could mean a few different things. To execute that strategy, your organization might seek out and manage external partners to develop new products—or it might rely on its own internal resources to maintain a constant stream of innovative ideas. Either approach is valid and each requires a specific set of assets, behaviors, processes, and resources.
Always express your strategic intent in a way that allows your leadership team to determine its execution requirements.
4. Agreed upon
The fourth key to building a successful business strategy is to make sure it’s agreed upon.
A common challenge with strategic planning is that various stakeholders may interpret the strategy differently. To ensure everyone’s aligned, make your strategy development process a collective exercise and start early on. This way multiple people can weigh in on it, pressure-test it, and identify—then eliminate—any differences in understanding. Don’t leave the room until every stakeholder is in alignment regarding what the strategy is and how it should be executed.
This is why simplicity matters: The simpler the strategy, the less room for differing interpretations.
You can make sure the leadership team is aligned by:
- Conducting briefing sessions
- Holding alignment workshops where stakeholders play back their understanding of the strategy and reconcile differences
The fifth key to building a successful business strategy is to make sure it’s communicated.
Too many companies view business strategy as belonging only to the leadership team; they handle it as a confidential topic. That’s a big mistake. If employees don’t understand the goals the business is trying to achieve, they’ll never know whether they’re pushing the company forward or holding it back. But with proper strategic understanding, everyone in the company can make faster and better choices regarding their work—with the result being better outcomes.
Communicating your strategy to everyone in your organization is vital for its successful execution. Communicate in simple, clear terms that everyone can understand. Too often, strategic plans are full of jargon that sounds impressive but doesn’t resonate with employees.
You can make sure your employees “get” your business strategy by using surveys to poll them on their understanding. Everyone should know what goals the company is working toward.