The Importance of Strategy in Business Growth

STRATEGY IS HARD!!

It is also misunderstood, not considered and neglected in business.

Strategy can be difficult for business leaders for several reasons, stemming from both internal and external challenges. The complexity of modern business environments, the need for long-term thinking, and the pressure to balance short-term demands make strategy development and execution particularly challenging.

As business leaders we invariably are just interested in 'getting on with it' and not taking the time out to understand the importance of a well executed strategy in business growth.

So hopefully at the end of this short treatise you will understand its value.

So let us start from the beginning. Definition of strategy!

Strategy is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty.

So what strategy does is to help the businesses be clear on the mission of the company (where it is going) and outlines some headlines on how it will accomplish this mission.

As we head into the final quarter of the year, it is super important to take time out to consider where the business is and whether the direction of the business is going in the way that you want it to go. This is the power of a strategic plan.

So how does one create a strategic plan?

Creating a strategic plan is a crucial task for a business leader to ensure long-term success, guide decision-making, and allocate resources effectively. Here is a step-by-step process for business leaders to create a strategic plan:

1. Clarify the Vision, Mission and WHY of the business

The vision sets the destination theme of the strategy. Ask yourself these questions. What does the business look like in 3-5 years. What is turnover and profitability look like? What customers will the business be serving at this time? What skills will be in operation at this time? What infrastructure, premises, manufacturing facilities etc are needed for that time.

This medium term thinking is important in that it sets picture of the destination of the business.

It is super important to review the WHY of the business. Why is the business still relevant? Do you still have the solutions to meet the needs of your customers? Have your customers changed? Will they change over the next 5 years?

These are all key questions that may mean you will have to do some additional research to answer. But I need to be clear here. If you do not get your handle on these key questions then it is FUTILE to expect that you will have a business in the next 5 years, as you will unfortunately create a business for a different customer base than that one that is developing.

But all this is the easy part!

How to get there is the key.

2. Conduct a SWOT Analysis on the current business activities

• Strengths: Identify internal strengths that give the business a competitive advantage (e.g., strong brand, skilled workforce, technological capabilities).
• Weaknesses: Identify internal weaknesses that need to be addressed (e.g., operational inefficiencies, lack of expertise in key areas, manufacturing or service equipment).
• Opportunities: Explore external opportunities that the business can capitalize on (e.g., emerging markets, new technologies, customer demands, partnerships).
• Threats: Assess external threats that could impact the business (e.g., competitive pressures, regulatory changes, economic downturns).

3. Identify the gaps between the vision and the current business activities

Take the vision that you have developed and work backwards.

Identify what is required to move from where you are currently, to where you want to be.

One little trick that I use is to create an organochart of the people and positions needed in the business at Year 5, and then identify what is gaps are in place in the resources of today.

4. Analyse the Market and Industry Trends

As mentioned above it is essential to have an in-depth research on the target market, customer behaviour, and industry trends. This helps in understanding market demand, customer needs, and where the business can differentiate itself.

Analysing competitors’ strengths, weaknesses, strategies, and market positions is very important. This will help you in identify opportunities for differentiation as well as anticipating competitive threats.

Use this part of the strategy review to identify where innovation (new products, systems, ways of working etc ) can make a difference in differentiating the business from competitors as well as giving you a competitive advantage and lead in the marketplace.

5. Define Key Strategies

Once you have identified your goals, break them down into key strategic initiatives. These initiatives should answer the question: How will we achieve our goals in the next 3-5 years?

• Growth Strategy: How will the business grow? Options include expanding into new markets, launching new products, mergers/acquisitions, or increasing market penetration.
• Product or Service Development: Define how the business will innovate its products/services to meet customer needs and stay competitive.
• Marketing and Sales Strategy: How will the business attract new customers, retain existing ones, and build the brand? Identify marketing channels, campaigns, and sales tactics.
• Operational Strategy: How will the business improve efficiency, productivity, and customer service? This could involve streamlining operations, adopting new technology, or improving supply chain management.
• Financial Strategy: Outline how the company will manage its finances, including revenue targets, profitability, cashflow, cost management, and capital investment plans.

6. Create an Action Plan

Break each key strategy initiatives into specific, actionable steps and plans. Assign clear responsibilities for each task or project to teams or individuals.

Identify from this action plan what plan is likely to be more important. Setting priorities and timescales is important. Remember you can not do it all, but in the short term with the resources and capital at your disposal focus on the plan that brings the greatest ROI and thereby move you towards your 5 year goals.

7. Communicate the Plan Across the Organization

This is key:

Ensure that every department and team understands the strategic plan, their role in achieving it, and how their efforts contribute to the overall success of the company is the one activity as a business leader that will define the success of the strategy.

Engage the leadership team and key stakeholders to gain their commitment and support.

Maintain open channels of communication throughout the implementation phase to provide updates, share successes, and address challenges.

12. Evaluate, measure and Refine

This is where most business fall down. Measuring the successes and having a dashboard to review performance with the executive team and the wider business is super important. Use the insights gathered from execution and feedback to refine future strategies.

It is important to note that strategic planning and execution is an ongoing process, and business leaders should be continuously learning and adapting.

With a solid strategic plan in place, a business can chart a course towards long-term growth and success. I hope this treatise helps you in your business growth journey. We help customers a lot in creating a strategic plan that grows businesses. Reach out on the link here if you want to know more.

Or for a deep dive on understanding this subject then why not check out our intensive online course on the subject on the link here .