My first article on strategy “Small Businesses and Strategy” was a general discussion on the importance of a small business having a strategy in place, however informal.
A number of people have asked about the term strategy and does it really affect the whole of the business?
This second short article is an attempt to clarify what I mean by strategy and why it is so critical to apply strategic thinking across the whole of the business.
For business owners, strategy involves a great many activities and understanding those which make a difference to the success of your business is a key skill. Business owners need to understand the uniqueness and distinctiveness of their business, its resources and capabilities and need to understand the challenges created by its environment.
A consistent, coherent, effective and appropriate strategy is critical to the success of an organisation. This applies to all organisations in all sectors and industries and is regardless of how that strategy is made or formulated.
Owners must be able to act on uncertain predictions, on an unknown future and seek out sources of innovation in the way their business operates and competes. They must also be able to implement change and take advantage of any new capabilities they develop.
There are as many different definitions of strategy are there are books on the subject. Here is mine, adapted from a strategy course book I read many moons ago, it is very straightforward;
Strategy is the pattern of activities followed by a business in pursuit of its long term aims.
I use the term aims because not all businesses pursue profit. Charities and Public sector companies for instance but there are many more and for a variety of reasons.
Strategy is concerned with the determination of the nature, domain and scope of your firm’s activities and the evaluation of their success.
Strategy is integrative and cross functional. Before you started your business you may have thought of business problems as a functional or technical specialist. You may have trained as an accountant, brand manager, scientist, systems engineer, banker, web designer or photographer. The experience you gained is immensely valuable, but is not enough to be an effective strategist.
Strategy traverses functional boundaries and the management of relationships across and between these boundaries is vitally important.
Strategy requires an ability to retain a balanced vision of the role of all the parts of the organisation in its overall business, while concentrating on those areas with strategic priority.
Quite a mouthful, but strategy is about the whole organisation interacting with its environment, it is about managing a dichotomy of unplanned and planned, seen and unseen occurrences and events.
It is about analysis and guesswork, structure and flexibility, your internal business environment and the external world; it’s about you and your competitors, your products and theirs, your people and theirs, process, systems, cash management………………………..
All are strategic issues and all offer strategic choices that must be made. You must choose your path from a myriad of choices available. Strategy is mutually supportive not mutually exclusive. If your sales strategy does not match your quality or customer service strategy it will fail.
Strategy is business!