Benjamin Franklin said: “If you fail to plan, you are planning to fail”.
4 out of 5 Small Medium Enterprises (SME's) fail within the first 3 years. If you are an entrepreneur, the odds are heavily stacked against you. One of the main reasons for this sustainable success problem is a lack of strategic planning and management of the business. If you are only operationally focused and not undertaking ongoing adaptive strategy development, your business is likely to suffer.
Tim Cook, the CEO of Apple, one of the world’s most profitable companies, believes strongly that a good strategy is key for a company to be successful.
You cannot hit a goal you have not set. Through strategic planning you can increase both the sustainability and the growth prospects of your business.
Organisations that implement an adaptive strategy are more likely to be proactive, responsive and effective, leading to sustained business success. This is even more important for SME’s, that do not have the resources that large businesses may have at their disposal.
6 reasons why every business should have an adaptive business strategy
It results in more effective decision making; decisions are most impactful on the things that matter most
It provides focus and coordination; this means that resources work well together on the things that drive success
The business is more proactive in identifying and realising new opportunities
An improved understanding of the risks associated with strategic choices and how to mitigate these
The business is better able to respond to negative external shocks and take advantage of market opportunities that may arise
The strategy provides a structure that improves the ability to manage the increasing complexity of a growing business
But what is good business strategy?
Jack Welch, the former Chairman and CEO of General Electric said the following about strategy "Strategy means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size of your business or how deep its pockets”. A.G Lafley, former CEO of Procter and Gamble said: "Strategy is an integrated, mutually reinforcing set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.”
Business strategy is about business choices. It is an adaptable set of coherent (focused and coordinated) choices that leads to coherent action in order to achieve a success outcome.
Your business strategy is therefore the choices your business makes to be successful. If you are in business, you are constantly making choices. The effectiveness and impact of these choices will determine the sustained success of your business.
Strategy development has two extremes:
Haphazard strategy where the business makes key choices “on the fly” as dictated by circumstances. There is no formal, documented strategy. The business operates mostly in a reactive manner without being proactive in moving towards a particular vision of its future.
A fixed plan that does not adapt with changing circumstances. The typical business plan is an example of such a fixed strategy. A business plan is developed to obtain funding but the business is not managed with the business plan in mind and in a short period of time the business plan is outdated and not a reflection of the business or its operating environment.
Good strategic management requires a proactive and adaptive approach. The business develops and documents a plan that guides the business on an ongoing basis and adjusts the plan to reflect change and new opportunities.
Implementing a good strategic plan means that your business is likely to be proactive and able to adapt to a changing environment, continuously become more efficient, maximise revenue streams and optimise its profit potential on an ongoing basis.
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